nadine

What Will Become of eBay?

If auctions were simply "losing favor" in the marketplace, then eBay could have worked years ago to accommodate the switchoever to fixed price. Sellers naturally want to go wherever the market is. Instead, they keep trying to manipulate the sellers into fixed price deals that offer high margins for ebay and no margins for sellers. Thus sellers of all sizes are diversifying to other channels. eBay is only cutting margins to do deals with big sellers like Buy.com, on whom it will come to rely more and more. Of course, eBay won't have the leverage with the big sellers it does with the small ones, so we can expect a margin squeeze.

Meanwhile, the auction business struggles on, on a degraded platform full of glitches with far too many changes, all of which are designed to help the fixed price business and not the auction business. eBay originally tried developing the fixed price business on a separate site, but it failed, so now they are jackhammering the original site.

Analysts: Stop watching the listing numbers. They are meaningless. eBay can manipulate them at will. Watch the traffic numbers and the margin numbers. They tell the true tale.