The most interesting finding is that eBay sellers are leaving eBay’s platform very quickly. The chart below details where merchants are currently selling their product, and where they plan to sell product 6 months from now. There is a massive 64% decrease in the number of sellers planning to sell on eBay 6 months from now versus today.
Consistent with the feedback I consistently get from merchants,
sellers are primarily opening up their own website storefronts and
leveraging search services to acquire new customers. The benefits to
merchants are obvious. They own the customer. They are not dependent
upon eBay’s ability to build adequate buyer demand. They aren’t at
risk of falling victim to eBay’s trust & safety policymakers. They
have far greater opportunity to merchandise their products in an
optimal fashion (again, this is limited by eBay’s policies). In 2006,
the profit margins appear to be much higher. There are obviously risks
as well, but this trend is becoming undeniable.
Needless to say, this is alarming news for folks that have an interest
in eBay’s success (as I certainly do). I continue to believe that eBay is in the early
stages of a developing "Market for Lemons" phenomenon, and bonding
sellers is ultimately going to be a critical part of any successful solution to eBay’s problem. Obviously, buySAFE‘s success on eBay is a pretty strong
indication that sellers think the bonded certification is an important
part of the solution.
I will continue to provide insights on eBay’s challenges over the
coming weeks, and on Monday evening, I will post a case study that is
currently being taught at The Wharton School, University of Pennsylvania. I believe you will find it to be a fascinating and insightful read on the eBay challenges.