eBay's Real Problem: A World of "Auctions" and "Stores"

eBay is tinkering with listing fees and other elements of its site to attempt to recharge its core commerce business. These changes could help, but they won’t address eBay’s real problem: A limited and flawed paradigm of the online commerce world.
eBay still divides the world of commerce into “stores” and “auctions.” This is understandable given eBay’s heritage as an auction site, but it’s also the reason eBay has had such trouble moving beyond the auction paradigm into broader commerce. Online, “stores” are far less important than “products”: most consumers start by figuring out what to buy, not where to shop. Also, the majority of consumers don’t want to “play a game” or “”win/lose” when they go shopping. They just want to “find and buy.”

Specifically, most online consumers want to:

  1. Figure out what to buy (through research, reviews, pictures, etc.)
  2. Figure out where to buy it (a decision that most will base on a combination of price, service, reputation, and convenience).

The reason that eBay is having trouble growing its core commerce business beyond the small subset of consumers who like auctions is that it is neither the best place to figure out what to buy online (that would be Amazon), nor the the best place to figure out where to buy it (Google).

Whether eBay’s latest round of possible fee changes result in an increase or decrease in Gross Merchandise Sales, therefore, is merely a short-term concern. The long-term issue is whether eBay can move beyond its reputation as a giant auction/tag sale to a place where ordinary shoppers can figure out what to buy and where to buy it.

See Also:
Potential EBAY Listing Fee Change Scares Wall Street, Analysts
eBay: Time For CEO Meg Whitman to Go?

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