eBay Losing Many Merchants To Alternatives, But Still Dominates Online Transaction Market Share

Posted Aug 13, 2008

eBay Inc. (NASDAQ:EBAY) has found a large number of competitors taking away some of their business.  Ever since eBay changed their feedback and fee policies, many of the merchants that were exclusively selling goods moved to competitors such as Wigix, Oodle, Etsy, and Silkfair.  Many of these alternatives charge lower fees and are niche auction sites.

The new breed of auction companies are leveraging social media to benefit merchants in connecting with the customer.  Some of these sites offer how-to videos, blogs, and advertising within social networks. 

One of eBay’s primary advantages is their feedback system.  When shoppers buy products from the new sites, it is hard to tell how credible the sellers are. 

“I don’t need a million people to see my things, just the right people who have hopefully good taste to buy my things,” stated Cathleen McLain, a jewelry maker that switched to Silkfair from eBay this year. 

According to a researcher at Forrester, every $1 out of $5 spent online is either made by eBay or Amazon.com. 

Oodle is a classified advertisement site that aggregates content from more than 80,000 different sites.  Wigix focuses on fixed-price transactions and doesn’t use auction-style transactions. 

“We built our business around eBay,” stated Jerod Husvar, a merchant that switched away from eBay due to lack of strong customer support. “They lost focus. All their money comes from sellers. Buyers are what drive the market, but you need quality and protection for the sellers or else they don’t even want to deal with the buyers.” 

Husvar stated that eBay started recently offering phone support.  Before that, he often times found himself on hold for about 30 minutes while waiting to speak a customer support rep.

The changes made at eBay is a cross between feedback given by users and how it affects their bottom-line.   However, it is apparent that merchants aren’t happy with a lot of the changes.  Hopefully eBay and merchants can find a middle ground.

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