I spotted on the Guardian‘s website that auction legend eBay is laying off about a thousand of its workers and is spending over a billion dollars buying up three competitors.
Although eBay is blaming the weak US economy, I would like to offer an alternative reason for company’s present plight. Simple greed.
We used to both buy and sell on eBay every single evening. At one time we were Gold Power Sellers as well as regular buyers. When we started selling fairly low value pottery items, we were able to generate a reasonable level of profit from sales that we shipped all around the world. It was nothing unusual for us to send out 20 parcels every day.
Over a period of time we noticed that sales were falling away. This mayhave been partly due to increased competition from other sellers, it could have been partly due to changes in exchange rates between the pound and the dollar, but mostly it was because eBay started hiking up their fees, and in particular the fees for using Paypal.
But all this was long before the current credit crunch.
In the end, we were selling less items to less customers for less money and our decreasing profit was eaten up by eBay’s fees, which always seemed to work out as a bit more than my calculations had predicted. So we stopped selling and eBay stopped raking in our cash. In fact, as I type this, I am looking at a few of the unsold items that are still on our shelves.
When we have talked to other people who were using eBay’s global marketplace as part of their own businesses, they describe very similar experiences. I am sad that eBay is laying off staff, but their own policies have effectively killed the goose that laid their golden egg during the good years. The odd billion dollars that are being spent on acquisitions might have been better used to reduce their fees across the board.
Mind, it wouldn’t make any difference to us. We don’t miss all the hard work in buying, listing, invoicing, packing and transporting parcels to the Post Office. Do we?