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The Fall and Fall of eBay

By Rick Munarriz - Updated Apr 5, 2017 at 7:52PM

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Remember when eBay was cool? That's so 2004.

The holiday season isn't shaping up nicely for eBay (NASDAQ:EBAY). Third-party traffic reports are offering a grim prognosis during the telltale shopping period. Analysts see a dip in year-over-year revenue during the current quarter, widening slightly in the following quarter.

Watching eBay take a step back is sobering. The namesake auction site has been fading for some time, but there was always another verb in the company's portfolio to save the day. Unfortunately, PayPal isn't likely to be enough this quarter. Skype is growing quickly, but it's still too small to move the needle.

If eBay is going to dig itself out of this mess, it's going to have to start with eBay.com.

What's eating the marketplace maker? Check back in a day or two and you'll find out. The comment box below will probably be populated with frustrated power sellers who have left the site. This doesn't mean that they are selling through cheaper and more flexible auction sites like Overstock.com (NASDAQ:OSTK). Despite eBay's shortcomings, it's still the top dog in consumer-to-consumer auctions.

The seller is the one that has evolved. What's out there? Plenty.

  • There are free classified listing sites like Craigslist. They're clumsy and hard to police, but even eBay has become a major player in this niche.
  • Dot-com giants like Yahoo! (NASDAQ:YHOO) and Amazon.com (NASDAQ:AMZN) offer third-party merchants the ability to set up camp on their sites. eBay's response has been to promote fixed price listings in addition to the conventional bidding wars.
  • Google (NASDAQ:GOOG), Yahoo!, and Microsoft (NASDAQ:MSFT) offer cheap text-based paid search advertising, allowing crafty sellers to reach out directly to potential buyers. There isn't a lot that eBay can do to compete there.

It all adds up to one big problem for the company that was on top of the world just a few years ago. eBay has kicked in with some pretty silly policy changes and delivered poorly received site makeovers during the past year, but that's not the sole contributor to its waning popularity. eBay didn't fumble as much as have its power stripped by the rest of the playing field.

Everyone has a theory. Power sellers would argue that reversing unpopular changes would win back the crowds, but I think it's bigger than that. The world has moved on. eBay needs new verbs, and it needs them quick.

More items in the eBay bid basket:

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Stocks Mentioned

eBay Inc. Stock Quote
eBay Inc.
EBAY
$42.67 (0.05%) $0.02
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$260.26 (1.47%) $3.78
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$2,234.03 (-0.27%) $-6.12
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$108.92 (1.42%) $1.52
Overstock.com, Inc. Stock Quote
Overstock.com, Inc.
OSTK
$27.19 (-3.92%) $-1.11

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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