eBay logoKeith Rabois posted an interesting article today which suggested that the root of all eBay’s problems over the past years was primarily due to its lack of fun. He attributes the rising use of sites like Facebook, MySpace, and YouTube as the culprits for eBay’s loss of users. For those of you that aren’t familiar with Keith, he’s currently the vice president of strategy and business development for Slide.

While Keith does a nice job of displaying the importance of the user’s experience on a site, I believe that the real reasons behind eBay’s problems are not merely its lack of fun for the user. Instead, I submit to you that the life blood of eBay is its community of buyers, sellers, and affiliates which drive traffic to the site. After all without them, eBay fails to exist. So, exactly how did eBay get into the situation that it finds itself in today?

1. eBay Screws Sellers.
They jacked up selling fees so high that it pushed many powersellers out of business. eBay didn’t incite boycotts and disgruntled sellers because the site’s not fun anymore. The eBay Live conference and its meetings were empty because of eBay’s poor regard for its own sellers.


2. eBay Lost Publishers
eBay created their own buggy affiliate program when prior to that Commission Junction was handling it successfully. When the eBay Partner Network launched commissions dropped through the floor because the system wasn’t accurately tracking affiliate generated sales. Thus many publishers stopped running eBay ads.


3. eBay Changed Feedback System
eBay implemented the DSR feedback system which unfairly hurt the reputation of its sellers. While sellers were only able to leave positive feedback for buyers, buyers were allowed to leave negative feedback for sellers.


4. eBay Customer Service Failed
eBay customer support went downhill and users lost trust in eBay


5. eBay Fraud Protection Lacking
eBay does a poor job at weeding out fraudulent sellers and eBayl doesn’t stand behind their online buyer protection/insurance. Instead eBay’s one and only payment service, PayPal, is frequently being accused of unjustly holding payments, freezing buyers/sellers accounts, or failing to take action at all. There’s essentially no direct financial harm to eBay as they still recieve payment via PayPal fees which are non-refundable.

Keith is right in the sense that eBay is not very fun anymore. But the reason why eBay is losing users is clearly not because they are spending more time on Facebook, MySpace, or YouTube. It’s because of eBay’s poor business practices and the issues described above that caused buyers, sellers, and affiliates to leave in droves. Will eBay be able to rebound from this? Only time will tell, but it’s interesting to note that shortly after eBay reduced its fees, there was a spike in traffic. Hence, eBay needs to stop biting the hand that feeds it.

eBay Monthly Visitor Traffic Stats

Visitor Traffic Spikes After Seller Fees Drop
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