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The Evolution of eBay

Despite some unpopular changes, entrepreneurs still see it as the king of online sales channels.
May 29, 2009
URL: http://www.entrepreneur.com/article/201928

As eBay's senior manager of seller advocacy, Jim Griffith gets a daily earful about what's wrong with his company's online marketplace amid the ongoing wave of changes implemented there. But instead of discouraging or tuning out the feedback, Griffith is urging eBay members to keep it coming--as long as it's constructive.

Sales Tips from eBay's Ultimate Insider

The ever-shifting online auction environment means there's always more to learn and new tactics to try in an effort to bolster sales on eBay, whether you're a veteran of the auction wars or an eBay greenhorn. Here are some insider sales tips from Jim Griffith, eBay's senior manager of seller advocacy:

For new eBay members
. Do your due diligence. "Before starting an eBay business," says Griffith, "make sure you do extensive research on the market you are intending to enter, in the [auction] category you are intending to enter." He recommends newcomers check out Terapeak.com for low-cost eBay market research. Also visit the "eBay university learning center" portal for sellers.

. Start slow and build inventory over time.

. Take fulfillment seriously from the get-go. "Your follow-through has to be good from the start," Griffith says. "You need to be able to ship fast and at a low cost. Being overwhelmed by those responsibilities can be devastating for sellers, because it will almost certainly lead to low ratings" from buyers.

. "Never take your eyes off the marketplace," Griffith says. Keep daily tabs on the competition, hot products, pricing, etc., in the market(s) you sell into.

For established sellers
. Keep abreast of changes to eBay policies, procedures and features, some of which require sellers to change how they go about their online auction business. For help reckoning with those changes, visit the eBay University Learning Center, the "general announcements" posting page and the "system announcements" page.

. Be reasonable about sales expectations. The eBay marketplace is not immune to the economic slowdown.

"I don't want them to keep quiet," says Griffith, who joined eBay in 1996, when its users numbered in the thousands, not the millions, and years before it began building a corporate empire that now includes the online payment processing system PayPal, the internet communications company Skype and others. "The vitality of discussion among and between eBay and its members is critical to a vibrant marketplace, and the discussion has never been quiet or whispered."

Griffith and his eBay colleagues are discovering just how loud this diverse and vocal lot of some 86 million active members can be, particularly about recent changes to the auction format and related processes, and how those changes are impacting the many sellers whose livelihoods depend to varying degrees on eBay auctions.

"It's a balancing act for us," says Griffith. "We know it's impossible to keep every seller happy."

Among eBay's most vocal critics is the Professional eBay Sellers Alliance, which represents some of the site's largest sellers. It claims eBay itself is a prime cause of "deteriorating market conditions" in the auction space due to its "poor execution of changes" to things such as fee structure and how seller performance is measured.

"Gross merchandise sales [on eBay] are declining, the number of buyers is declining and sellers are either going out of business or leaving the marketplace altogether," says PeSA Executive Director Jonathan Garriss, CEO of Gotham City Online. "What's unfortunate is that the small community seller is getting hurt. Those are the ones you don't hear about. However, there are hundreds of thousands of them. And I think we're seeing the top sellers getting hurt as well."

What Garriss finds encouraging is that eBay is attempting to address those issues, albeit in a sometimes clumsy manner. "Just in the past 18 months or so, it feels like they are trying to refocus on the core marketplace."

Still, he says, merchants are increasingly looking to diversify into other channels, including online outlets such as Amazon.com, Buy.com, Overstock.com and narrower, niche-type online marketplaces. More are also launching their own websites and brick-and-mortar stores, he notes.

While disenchantment with eBay apparently is driving sellers to other outlets, eBay remains the unquestioned ruler of the online auction world it helped create. From sporadic individual sellers to businesses that use eBay as their primary sales channel, eBay is still the preferred online sales channel for entrepreneurs of virtually every imaginable ilk. "They're still the biggest e-commerce entity out there," says Garriss.

Even if the changes eBay implemented recently in the auction space haven't necessarily made their lives easier, long-time eBay sellers such as Gary Hendrickson of Grand Forks, N.D., say they still view the site as a vital, positive force for business growth. "Most of the people I personally know who sell on [eBay] view it as the only game in town. I still feel it's a good venue for the kind of stuff I sell," says Hendrickson, an eBay member since 1998 whose antiques and collectibles business is 90 percent eBay-based. His web site, theauctionrebel.com, is aimed at eBay sellers.

"I've sold more on eBay in the last four months than I did in the previous three years combined," says Colleen Allison of Chester County, Pa., who's been using the auction site for eight years to sell antiques and curios. Over that time, she says, eBay "has definitely become more user-friendly."

Both Hendrickson and Allison say it's tougher to make money selling on eBay now than ever before, which they attribute to heightened competition among sellers. "I don't think it's a result of changes eBay has made," says Hendrickson.

Yet even Griffith says he can understand how some sellers might fault eBay for introducing "unnecessary complexity" to the auction marketplace. "Our mission today is to make things simpler through streamlining and consolidation."

One subject Griffith has spent considerable time addressing of late is eBay's decision to allow big-box retailers broader access to eBay, which some observers contend endangers small sellers and fosters a bias toward fixed-price sales. Rumors that eBay is positioning itself to eventually do away with auctions or auction categories are unfounded, assures Griffith, who says the company has "absolutely no intention" of doing so. Changes in buyer-seller communication systems have also drawn criticism for inundating sellers with such a high volume of buyer messages that many lack the capacity to respond. Fixes to that problem are due in June, Griffith says.

Meanwhile, the company continues to consider ways to improve a feedback system that about a year ago stopped allowing sellers to rate buyers negatively, a move designed to address contentions that the previous system was deterring buyers from using eBay. It also must contend with ongoing criticism of changes to its 'best match" search feature, which required many sellers to adjust their listing strategies, and of its new fee structure, which PeSA complains is eating into some sellers' margins.

While veteran eBay sellers such as Allison say they have no intention of abandoning eBay auctions as their main online sales outlet, they acknowledge the recent spate of changes is prompting them to consider other options. For Allison, that could mean launching her own URL or selling goods on sites such as Craig's List and etsy.com. Griffith says eBay welcomes the competition.

"In my mind, [eBay] is still a great value proposition."