Wednesday, April 20, 2011

Death of eBay?



I find myself using eBay less and less, both for buying and selling.

Is eBay dead?  Hardly, of course.  But I find myself using it less and less for both buying and selling.  Why is this?

Well, as a seller, the prices have gone up a lot over the years.  In the old days, I hardly thought about the prices I was paying eBay to list items.  But today, well, it is not cheap.  I just sold an old service manual for $40 on eBay - a manual that retails for $80 or more.  I offered free shipping ($4.75) and a fixed price auction.  eBay charges me 50 cents to list the item and $4.80 ("final value fee") to make the sale, meaning I net maybe $30.

It is an interesting cost structure and illustrates why there is such an incentive to cheat on eBay and sell outside the system.  And it illustrates that eBay is wildly profitable.

How profitable?  Well for 2010, they had a revenue stream of 8.7 billion  and an income of 2.4 billion, which means a profit margin of 27%.

27%, not bad for a "dot com" stock, eh?  $1.83 a share while the stock is trading at 31.15 or about 3.476% if you are a shareholder.  Of course, like most of these "dot coms" it pays no dividends, even with these wild profits, so you have to hope the stock price stays high, right?

And whether it will stay high depends on whether eBay remains the "go to" site for e-commerce. And I think already, it may be seeing signs of losing this mantle.  And a 27% profit is sure incentive for someone else to try to topple them from the top of the mountain.

And right there is why eBay is vulnerable.  When "the next big thing" comes along, eBay might be left in the dust.  And on the Internet, the "next big thing" comes along about as frequently as the Shinkansen trains from Tokyo to Kyoto.

(That's about every 5 minutes, in case you missed that last sub-reference).

And I think a lot of folks such as myself are finding eBay less and less of an attraction for buying and selling.  Selling is expensive, and running auctions can be a hassle, particularly with all the inane questions people have.  And if the return on money is not great, why bother?

And thus, eBay gravitates more and more toward "power sellers" who are basically using the site as an e-Commerce platform instead of a real auction site.  And since eBay is nicking them for a huge percentage of their sales price, there are less and less real bargains to be had on the site, and more of just "sort of OK deals" to be had.

eBay's original model of people selling stuff out of their attic and buying things from neighbors (neighbors on the Internet, that is) is dead.  It is no longer you and I doing business with each other, but instead, a large shopping mall online.

And that is the rub, right there - shopping.  eBay has configured itself to encourage impulse consumption and purchases, which are the antithesis of sound financial purchases.  When you log on these days, they offer you "deals!" and try to entice to you to buy the latest Justin Bieber licensed merchandise (or some such shit).

Yes, you can still log on and look for a left-handed Imperial monkey wrench, but to get to that point, you will be bombarded with ads for crap you don't want.  And odds are, the site will steer you toward other "related" items (such as a crappy Chinese made metric right-handed monkey wrench) from power-sellers.  It is hard to find things on eBay sometimes, as the power-sellers SPAM the snot out of it with key-word spamming.

Craigslist is one alternative to eBay, but since Craigslist is FREE, it has the opposite problem of eBay - people are selling crap.  And since Craigslist has this "buy locally" mantra, it is a poor source for left-handed Imperial monkey wrenches.  At best, you'll find Cletus' broken English monkey wrench, which is at least ambidextrous.

A number of items are piling up in my "Sell it on eBay" box, and I am loathe to go on there and sell them, for the simple reason that it is a hassle to take pictures, write up a listing, fill out ALL THE STUPID ITEMS ON THE eBAY LISTING FORM and then list it and then answer 100 moronic questions from people who have no intention of bidding, but are just lonely.

(In my last auction for the service manual, I put "no e-mails".  It's a service manual for chrissakes, what sort of question could you possibly have?  Either buy it or shut up, period!  I don't want to "chat" about it!).

And then of course, there is the packing and shipping.  When you figure the cost per hour of your labor, yes, it makes more sense to throw things away sometimes.  But that would miss the point.  And yes, you might realize more from eBay than you do from a garage sale.

And yes, I will probably take one day next month and list all this crap on eBay.  But it won't have the same pleasure as before, as I am getting burned out on eBay and burned by their staggering fees.

And hopefully, down the road, I will own so much less "stuff" in life that I won't have to sell off things on eBay - and have no need to buy them.  And eventually, I won't need anything at all.

Possessions are slavery!

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