Ebay changes backfire as it loses ground to rivals

Click to follow
The Independent Tech

John Donahoe, chief executive of eBay, is facing questions over his leadership of the online auctions pioneer which has been trying to turn itself into a more traditional e-commerce website.

Website traffic data shows that cash-strapped consumers are shunning eBay in favour of rivals such as Amazon in their search for online bargains. The company's shares, which have been bumping around at levels not seen since after the dotcom bust in 2001, fell 3.4 per cent on the Nasdaq stock market, as analysts predicted it is about to post the first revenue decline in its 13-year history.

ComScore, which tracks website traffic, found eBay visitor numbers in the period since 3 November are down 16 per cent on last year, even though the site was the busiest on the web on the Monday after Thanksgiving, traditionally a busy online shopping day. Since 3 November, Amazon's traffic numbers are up 6 per cent.

Laura Martin, a media analyst at Soleil Securities, blamed Mr Donahoe's strategy to downplay eBay's famous auctions business and instead to encourage sellers to offer items at fixed prices, making it appear more like a traditional online retailer.

"Consumer spending numbers are going down for all retailers, but eBay has particular problems because it is becoming increasingly difficult for customers to find the deals that they want on there, amidst all the clutter of fixed-price items. I don't understand why eBay is making itself more like their competitors instead of less."

Mr Donahoe has changed the way eBay charges fees to sellers to favour fixed-price offers, provoking outrage among many of the semi-professional traders who use the site to hawk everything from toys and games to clothing and electronic equipment, and much else besides. Instead, eBay has tied up agreements with large-scale wholesalers, changing the look and feel of the website in the process.

The company says many customers prefer the speed and convenience of buying items at fixed prices, rather than waiting for the conclusion of an auction, but that such auctions remain an integral part of the website.

In an investment note downgrading eBay, Jeffrey Lindsay, an analyst at Bernstein, said the changes were not feeding through into improved user numbers, compounding other problems. The auction site is still the world's largest online second-hand car dealership, Mr Lindsay said, accounting for about 22 per cent of the company's gross global merchandise value, but sales of such expensive items have plunged.

Comments