In response to screams of protest from its latest round of fee changes, eBay will soon be tweaking listing fees again–allowing sellers to list multiple copies of the same items with a single listing instead of going through the tedious (and expensive) process of creating a new listing every time. The change will also save buyers the hassle of having to sift through dozens of listings by the same seller for the same item, thus also improving the buying experience.
Given that bulk sellers have sold multiple copies of the same item since the dawn of eBay time, this change–like others at eBay–should have been made years ago. But better late than never.
Will it save eBay? No.
This change is symbolic of the way eBay is approaching its whole turnaround process: have cake and eat it, too. While eBay was sleeping through the last few years of Meg Whitman’s regime, the world changed. And the company has yet to fully acknowledge this.
Five years ago, eBay sellers and buyers had few other convenient options. Now, thanks to Google and Amazon, they have several. Amazon’s buying experience is vastly better than eBay’s, and it now brings enough buyers to the table that it is an excellent option for many fixed price sellers. Google, meanwhile, has made it possible for sellers to set up their own sites and lure buyers in with AdWords, thus bypassing the need to list on eBay altogether.
In short, eBay finally has competition. Under the new John Donahoe regime, it is responding to this competition…but it is doing so incrementally, trying to preserve its revenue growth and cash-flow in the process.
What should eBay do instead? Take its medicine all at once. Affirm to the entire world that it intends to once again provide the most value to buyers and sellers on the planet…and cut fees 25% across the board.
Yes, this would wallop cash flow. But eBay can’t figure out what to do with its cash flow anyway (Skype?). With the stock at $25, moreover, the market has largely given up: eBay trades at less than 15X trailing cash flow, a multiple once reserved for octogenarian companies like Time Warner. Also, after a decade of plenty, eBay undoubtedly has a lot of fat it can cut, so the hit to cash flow would likely be less than the cut in fees.
And, more importantly, the change would help get the eBay growth engine going again.
eBay sellers have a thousand gripes about the company, but what they all boil down to is, “you’re taking us to the cleaners.” Instead of trying to explain to pissed-off sellers that they really shouldn’t be so mad, eBay should make them happy: By providing the simplest, most efficient, and most cost-effective selling solution in the galaxy.
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