Why oh WHY is eBay’s traffic plummeting? According to a recent report in Alley Insider, eBay’s traffic is down by more than 10% in unique users, and 33% in page views year over year. The reasons are many, competition, higher prices, and a focus on “big stores” rather than individual users.

I think it might be simpler than that.

By and large, selling on eBay is a pain in the @@$$. Buying on eBay is now more expensive in most cases than walking into a store! This wasn’t always the case folks. Sit back and hear a tale of yore.

I sold a bunch of stuff on eBay recently.  In the end I paid $46.00 in fees on $420.00 worth of stuff.  When you count in the PayPal (also owned by eBay) fees, we’re up to $58.00 in fees!

By contrast I listed my iPaq on Kijiji (an eBay company), and sold it there for $80.00.  I paid no listing fees and paid no commission to eBay or to PayPal…just cold hard cashish.

On the other side of the coin, whenever I try to buy something on eBay, I’ve noticed two disturbing trends.  The majority of sellers on eBay these days are stores, mostly liquidation and refurbished warehouses.  You get dinged for the taxes (no big deal), and then ridonkulous shipping charges.  When I bought Guitar Hero 3 off of eBay a few months back I paid $40.00 for it (good deal), and then when shipping was levied from Toronto it came to an additonal $30.00.  This is something that could be shipped Canada Post expedited post for $11.00…but they mark it up to recover all of their fees.

The other disturbing trend is automated sniping.  You can’t bid on anything on eBay without watching the auction like a hawk, because invariably at the end of the transaction someone snipes in with a bid $1.00 above yours with 2 seconds to go.

eBay has done a lot to drive away the little guys.  They hiked their prices for most users and then went about dropping the prices for high volume users.  If they would have left their prices alone across the board they would still be raking in record profits, but as a result they’re slowly dying on the vine.

Tons of competitors have come along.  There are deal sites like RedFlagDeals.com, there’s Kijiji and CraigsList, there’s specialty sites like Etsy.com which cater to a market previously owned by eBay, and frankly the barriers to entry for starting your own online store are pretty much nill at this point (provided you have the know-how).

In short, eBay has become about as relevant as the Flea Markets and second hand shops that they originally disrupted.  Without a serious look at their own business practices, eBay likely won’t make it out of this decade in the same form that it entered it.

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