This year can best be summed up as a year of change. eBay’s (EBAY) top executives left one by one, followed by buyers and sellers who vowed never to return. Shareholders were stunned when the stock plummeted to 10.91. The debt rating was lowered to A minus. The site’s instability grew with each passing day and the number of lawsuits filed against eBay and PayPal increased spectacularly. It hasn’t been a good year.

eBay started the year with about 12M listings give or take a few and ultimately hit a high of approximately 18M towards the end of July. Then a handful of eBay power sellers flooded the site with nearly 10M additional listings (reported to be free) from September to December but I’m not counting these listings because these aren’t paid listings.

Sellers warned him. Don't open Pandora's Box! But did eBay's (EBAY) John Donahoe listen? No, he ignored the combined voices of thousands of sellers. Now one of his disruptive innovations has come full circle and sellers are fighting back – in the courtroom.

Yes it's true. Another buyer reported being sued by a seller over feedback this week.

Most eBay sellers enjoyed a nice turkey dinner yesterday with all the trimmings but I suspect John Donahoe, eBay (EBAY) CEO found a generous portion of crow sitting in the middle of his plate because Nielson's numbers are in and confirm buyers, sellers, and shareholders worst fears – John's disruptive innovations backfired!

The numbers tell the story. 1) Nielson reported a steady decline in eBay traffic all year but in October traffic dropped by slightly more than one third over last year; 2) Medved charts indicate sell thru rates at the lowest point I've seen in years; and 3) eBay stock is making new 52 week lows – none of which occurred prior to John's disruptive innovations that began earlier this year.

Is it a glitch? Or is it another way to increase revenue? Who knows? I guess Donahoe knows but he's not talking. What am I referring to? eBay (EBAY) cleverly wove the mandatory use of Paypal into its user agreement and now that it's gone into effect, Paypal holds on sellers accounts have increased by leaps and bounds.

When is it going to end? My guess is when the State Attorneys General unite and regulate Paypal or when eBay ceases to exist – whichever comes first. My money is on eBay because there's been a 20% drop in traffic, the stock is at a low not seen in nearly 10 years, and disruptive innovations continue to drive buyers & sellers to user friendly sites like Bonanzle & Etsy.

When is a sale not a good bargain? When it's an eBay (EBAY) sale. Tuesday, eBay announced a new holiday buyer incentive program (starts Nov 3 for 45 days). It is a prime example of why eBay stock has plummeted under Donahoe's watch because discounts are not applied at the time of purchase. Who wants a Paypal credit 2 months later? Not me.

This long time seller read the terms & conditions and discovered:

October usually marks the time of year when eBay (EBAY) sellers gear up and prepare for a busy holiday season. New inventory is almost always purchased, shipping supplies are procured, and new listings are prepared so that sellers can list items at a moment’s notice during the busy holiday season.

But not this year.

Doesn't John Donahoe get it? Bill Me Later may increase sales but it will ultimately drive the last seller from eBay (EBAY) because allowing buyers to purchase wish list type items they can't afford without a short term extension of credit doesn't make sense.

There are no details of how Bill Me Later will impact eBay sellers have been forthcoming but this author predicts the following:

Does John Donahoe expect US media sellers to tie a book or DVD up with a piece of string, slap some postage on it, and hope for the best? I think he might or are the new shipping rates just another way for John to increase seller fees?

On August 20 eBay (EBAY) announced maximum shipping rates for US media sellers (books, DVDs & movies, music & video games) that go into effect in October. The new rates bear a remarkable resemblance to Amazon's (AMZN) but unfortunately most media sellers don't get a bulk discount for postage and will lose money.

Looking for something unique? You can’t find it on eBay (EBAY) anymore because of Donahoe’s latest disruptive innovation- eBay’s version of the game "hide & seek". Buyers are now expected to play and the only winner seems to be eBay.

On August 1, 2008 Jeff King, Sr. Director of eBay’s Finding Team posted the following:

The morning of June 20, 2008 started off like any other Florida morning – hot and humid. Little did I know that the day would be a turning point in eBay (EBAY) history, and that a hurricane would be far more welcome than the eBay announcement I read: 

In an effort to improve the buying experience on ebay, we are making changes to the Item Page. We've listened to the needs of both buyers and sellers and are gradually rolling out a page that resembles the one you see below. This newer design helps drive inspiration, transparency of information, and helps improve overall ease and navigation. We hope that you'll like this change. Our goal is to ramp to a point where globally all Item Pages reflect this new design by end of 2008 or early next year.

John Donahoe must have slept through SPIN 101 at Bain if he really expects buyers and sellers to believe that eBay (EBAY) is “better & safer” since he made PayPal mandatory for sellers that do not meet the following criteria:

1) The seller has higher than 5% buyer dissatisfaction rates (DSRs);

John Donahoe must think buyers, sellers and stockholders are as dumb as a rock, because he slipped the following disclaimer into eBay’s (EBAY) latest Annual Shareholders Report:

If these changes cause sellers to move their business away from our websites or otherwise failed to improve gross merchandise volume or the number of successful listings, our operating results and profitability will be harmed.

eBay (EBAY) used to be “just a venue” where sellers could list rare, unique, or unusual items for sale and buyers could find them. Now it appears that eBay is much more than “just a forum” and specializes in iPods that can be purchased anywhere. What happened to eBay's magic? John Donahoe gave it away.