A friend, who is also an eBay PowerSeller, has been telling me for a while that eBay is "broken." Broken is a pretty abstract term when you're talking about a site as large and as complex as eBay. To my friend, it's not that abstract. Broken means that sales aren't good, and haven't been good for some time.
Being a seller's publication, AuctionBytes hears hundreds of anecdotal stories like this, and it's becoming increasingly difficult to believe that the problem lies entirely with these merchants. It's not easy to put a finger on what's really going on in this industry, but here's what got me thinking that my friend might possibly have a point - a plateau in the number of AuctionBytes subscribers over the past 2 years. The overwhelming reason given for unsubscribing? "I'm no longer selling on eBay."
I have been hearing similar stories from publishers and services who are hitting a "ceiling" in this industry. The informal consensus seems to be that although new users are coming into the space, existing ones are leaving just as quickly. Does eBay's number of 230 million (and counting) registered users mask a disturbing industry trend that this space has just been treading water for a while?
I can rationalize many reasons for sellers reporting poor sales - site maturity, bad economy, Internet fatigue - just off the top of my head. But for every explanation, there is another convincing scenario lurking just beyond the grassy knoll. Speculation and conspiracy theories run rampant in this industry. But most people - including industry analysts - are less interested in the anecdotal evidence that something may be amiss, than they are in data.
So I turned to outside sources, including industry Alexa rankings, Medved's eBay.com listing numbers and Nielsen/Netratings data on average time spent on eBay.com, and I came to the following conclusion: The first quarter of 2006 shows the beginning of a problem on eBay.com that has yet to improve. Before I state my theory for what may have sparked the problem, here is some of the data I looked at.
Alexa Rankings
I rely very little on Alexa (http://www.alexa.com) to give accurate single-site statistics. It's a ranking system that can be easily skewed. However, when looking at several sites within the same sector, it can offer an interesting perspective on trends. Here's a chart that shows eBay's Alexa ranking for the past 3 years. eBay's reach (the percentage of all Internet users who visit a given site) peaks in early 2006 and has been in steady decline since.
As I mentioned, Alexa isn't always the best tool for analyzing a single site. But in looking at the 3-year trends of a group of randomly chosen industry-related sites, something very interesting happens. Since early 2006, Alexa ranking for each of these online industry sites - Vendio, ChannelAdvisor, Marketworks and AuctionBytes - has trended steadily downward. It's hard to find an industry site, that has been around 5 years or more, that bucks this down-slope. Compare this with the 3-year Alexa graph below of the site that we all revolve around - eBay. Over the past 2 years, these charts show remarkably similar trends.
Listing Numbers
Medved has been tracking auction counts on eBay since late 1998 (http://www.medved.net/cgi-bin/cal.exe?EIND). The site charts the phenomenal growth that eBay experienced from 1998 until 2005.
Medved has so much data that it becomes difficult to see some of the finer trends because they get buried in the spikes caused by eBay increasing the frequency of promotional listing days. Medved allowed us to build a 2-1/2 year historical chart of eBay auction listings using his numbers. Note that between February and April 2006 the graph is missing data.
If we assume that eBay followed it's traditional path, eBay listings peaked at ~16 million during that period. According to the Medved site, it's because eBay had "changed the way they display pages." A little speculation on that later.
Through most of 2006, listing numbers largely mirrored those in 2005. This was the first year in the Medved chart that eBay listings had not grown significantly. In 2006, average number of listings are down - I'd estimate by about 1 million, on average - from 2005, year over year.
Average Time Visitor Spends on eBay per Month
This, I think, is a most revealing bit of data. According to data supplied to AuctionBytes by Nielsen/Netratings (http://www.nielsen-netratings.com), in February 2005, a visitor spent a monthly average of 2 hours, 9 minutes on eBay. In fact, for all of 2005, a visit to eBay lasted almost exactly 2 hours. Compare that with 2006 and the average number falls to 1 hour, 47 minutes. About a 10.8% drop. And if you compare the average time in 2005 with the average time from May '06 through the end of the year, the drop is even greater. Average visitor time was 1 hour, 39 minutes - a decrease of 16.7%. An interesting side-note is that eBay uses the same metric in the "Buyer Behavior Report" available in the Seller Central section of their site (http://pages.ebay.com/sellercentral/buyers.pdf) - see slide #5. However, the data only goes through March 2005 - before the downtrend occurs.
Stock Price
I wasn't sure if I was going to include this, however the graph is so strikingly similar to the others, that I figured that Wall Street must know something. For years, analysts handed out "Buy" ratings on the stock as freely as Cracker Barrel hands out cheese samples in the mall. Why not? eBay consistently had phenomenal revenue growth annually and was a tech stock portfolio staple. If you look at the stock price graph, except for the severe hit the stock took last summer, the chart has much the same pattern as the Alexa, Medved and Neilsen/Netratings graphs.
A Theory: "Stores in Search" the Origin of the Problem?
If eBay is indeed broken, one might look at the point when all of these disparate (yet related) indexes started to head south. And that point is sometime in Q1 2006. So, what happened in early 2006 that made so many different indexes trend downward?
In mid-February eBay put Store listings into search (SIS), then subsequently removed them about six weeks later. This sudden reversal caused a much angst from sellers and confusion with analysts. Remember the missing data on Medved's site? Coincidentally, the outage occurred at the same time that eBay was adding and removing SIS.
During his keynote speech at eBay Live in June 2006, President of eBay Marketplaces North America Bill Cobb stated that the reasons for reversing SIS were buyers exiting the site more often; buyers watching fewer items; and buyers returning less often. That may be correct. But if search was restored to the way it was prior to SIS, why the continued downtrend in these charts? If that was the point at which eBay became "broken," wouldn't putting it back the way it was fix it?
Yahoo Ads Not Helping?
The problem may have begun with Stores in Search, but other things may have aggravated the situation. First was the increase in Store fees. Sellers were both furious and devastated that eBay raised fees for Store listings after having just decreased their visibility. In addition, users began seeing advertisements served by Yahoo in the summer of 2006. And this year, the ads have gotten noticeably more competitive to eBay's own sellers' listings.
eBay's "Fix"
One of eBay's stated missions this year is to put the "Fun" back in eBay. Since 2006, eBay has launched Blogs, Wikis, MatchUps, MyWorld and Reviews & Guides - all developed to encourage user-generated content.
User-generated content accomplishes several goals. It inexpensively increases pages on the eBay domain, giving the site more saturation in natural search and keeping users on the site longer. When you walk into Wal-mart, their goal is to keep you in their store as long as possible. More time spent equals more money spent. So why is it that in 2005, before these new initiatives, visitors spent 20 minutes more per month on the site?
Make no mistake about it, "Fun" is another word for "Site Stickiness" or "Page Views," major problems for eBay over the past 18 months.
Personally, I always found eBay inherently fun - and interesting. I could spend hours surfing eBay's site, looking for hidden gems, misspelled items, auctions closing soon, or for research. Completed auction search was by far the best tool on the Internet for researching items. eBay already had the a corner on the market of compelling user-generated content, and that was an enormous variety of interesting and entertaining auction listings. It was also a more transparent site, allowing you to more easily follow sellers or buyers, and the community spent hours tracking and reporting potential fraud.
"Love me or hate me, but spare me your indifference." - Libbie Fudim
If eBay experienced an outage or raised fees, OAI discussion forums, including eBay's own forums, would be ablaze with angry users asking questions, making suggestions, voicing opinions, or just venting. You could almost HEAR the page views burning. Now, when a traditionally controversial topic comes up, it seems to be met with a collective shrug. Industry discussion boards are shells of their former selves, a case in point being OTWA, the oldest and largest independent auction-related site, which will be shuttering their doors in July.
Sellers are business people, first and foremost. They vote with their pocketbooks, and if eBay can't provide sellers with enough buyers and the right environment to make a satisfactory income, they'll invest less in their efforts on the site. Blogs, Wikis and the rest of the new initiatives become nothing but "busy work" to merchants already trying to deal with shrinking margins, higher fees, VeRO issues and everything else that goes along with maintaining an online business.
Is seller indifference symptomatic of a larger issue or is it the issue itself? I honestly don't know. Indifference is harder to change than anger. It appears that no matter what new feature eBay creates to re-infuse "fun" into the site, people are not sticking around to play. But these downtrends should concern users, analysts and eBay management.
So that's my theory. In a nutshell, eBay made a mistake in 2006 by adding and removing Store listings in search. They compounded the error by raising store fees, and in a rush to prop up sagging numbers, implemented a series of initiatives designed to re-invigorate activity on the site. However, those initiatives don't appear to be having much of an effect. I'm sure there's more to it than just this, and I would love to hear other views - agreeing or dissenting. I've set up an area in our blog where you can add to the story, or voice your opinion.
http://blog.auctionbytes.com/cgi-bin/blog/blog.pl?/pl/2007/7/1183405069.html
More information can only help gain a clearer picture if something on eBay is, indeed, broken.
