More Ebay Listings and Less Traffic - Not a Good Combination

Ina Steiner at Auctionbytes just posted two incredible stories - that Ebay's listings has risen a whopping 670% in the last 2 years, and Ebay's traffic has declined 13% during the same period.  The stories were so surprising, that I had to read them twice.

In the first article (posted 4/13 here), Ina points out that since January 2008, the average number of listings has increased a huge amount - and even more-so in specific categories, such as "Books" (2,222%).  My first response was that she must be counting individual items, and not individual listings.  I thought that for sure she was counting a fixed price listing for 50 widgets as "50" in her count.  Surprisingly, she was not.  I verified this by looking at the "gift certificates" category - which does, in fact., have 15,000+ listings - and many are multi-item.  I am not sure if the 2008 numbers were for "core" listings only (auctions and fixed price) and excluded store items, but even if they did, that would only account for a mere doubling of listings (45 million to 100 million) - certainly nothing like the six-fold rise being reported.

She goes on to give a series of reasons for this astounding rise in listings - 2 of which point the finger squarely at large retailers - those pesky Diamonds, and those importing SKU's with the new Large Merchant Services API.  I wish we could ferret out exactly how much of the rise is due to these sellers, because in many categories, they actually have a minimal impact.  Most of the bigger ebay retailers are in electronics (particularly refurbs and accessories), media (all kinds, including books), and more recently, clothing.  Are there any Diamonds in Art, Antiques, Collectibles, and Crafts?  I don't think so - yet these categories have grown by leaps and bounds (300-700%).

I believe a significant amount of this "growth" in the "non-big-seller-categories" was from the store-to-core move at the start of this month, as well as the introduction of the cheap fixed-price listing (one of Ina's listed reasons).  Many of these fixed priced listings are virtually "permanent".  The crafter that make custom mailboxes might have a fixed price listing for 50 boxes, which he continuously updates over time, and gladly pays .35/month (now probably only .05/month) to keep this listing up so he can sell dozens throughout the year.  "Sell through" rates no longer apply when a listing is really a fixed price item with virtually unlimited quantity and unlimited duration.


Her conclusion is straight-forward enough - there is a lot more competition for buyers on ebay - and is further supported by her 4/1/4/10 postings (which is here) that shows ebay's traffic has declined over the last two years.  Her point is well made, with the small caveat that traffic has actually risen since last year (by a scant hair-thin less-than 1%).  Even if we take account of the country's economic problems, it's hard to defend since Amazon's traffic has risen 17%, and ecommerce as a whole has been on the rise, even when general retail was at a loss.  According the the US Census, ecommerce as a percentage of total retail has also risen continuously since 2001.

So as ebay sellers must absorb the most recent changes, so must the buyers.  Ina says that if you sell clothes you were competing with 2.2 million listings in 2008 versus 16.5 million listings in 2010.  But is that actually a reflection of buyer behavior?  The buyer looking for an extra-large blue pollo shirt in 2008 was not lliterally searching through 2.2 million listings any more than they are searching through 16.5 million listings today.  The only thing a buyer really sees is the result of their keyword search, and we really don't know if there are that many more extra-large-blue-pollo-shirts in 2010 as there were in 2008, even though the total number of listings in the entire category has grown eight-fold. .

One of the items I regularly search for are compatible Canon ink cartridges.  I've been buying these things online since 2005, and I've bought them regularly from 3 or 4 different retailers.  I don't like waiting around, and fixed price options are very reasonably priced, so I've always gone to the "BIN" tab to start my searches.  The only "rise" I have noticed in my search results have been repeated listings from the same exact vendors.  My four preferred vendors have gone from listing perhaps two or three instances of the same "ink packs", to as many as 20.  Realize that all they really need is a single large quantity listing.  As an ebay seller myself, I've never completely understood this, but my guess is that they are willing to spend a lot more in listing fees so they can "saturate" the search results.  I also see a lot of this in the electronics's categories where one seller will have 50 almost identical multi-quantity listings for the same exact item.  For all that everyone complains about high listing fees, the fact is that ebay's listing fees for fixed priced items has gotten so low that they are encouraging this kind of listing behavior.   Cheap listing fees often result in poor buyer experience.  Just look at any of the ebay alternative sites filled with over-priced unpopular items that wouldn't sell on ebay.  When it's cheap to list, people will list anything and list in great quantity.

Some sellers have been begging for lower listings fees for years when, ironically, it's cheap listing fees - from large seller discounts to the current subscription packages - that have directly resulted in am explosion of duplicate listings.  Far as I can tell, there aren't more sellers.  In fact, based on my own categories that I list in, I think ebay's overall seller-base is falling.  There seem to be far fewer "small" sellers and a lot more "biggish" sellers - those with 500+listings.  This adds up to more listings, but less variety.

This situation also makes me wonder about the next couple of ebay quarters - how is all of this going to financially impact ebay's bottomline?  By drastically reducing upfront fees for core items, while simultaneously encouraging larger listers, ebay hopes that overall revenues will increase.  A larger pie should mean more money, right?  Not for most sellers.  The pie is surely bigger, but is it a better pie?  Unless sales rise in some proportion to the rise in listings, we have a big problem for ebay and it's sellers.  I know that I now have 3 or 4 times the number of listings in core than I have ever had in 10 years - but my sales since the change have been about the same as last year.  My fees are about the same too.  So my items are flooding buyer's searches (all unique items, by the way), with little result (so far).  For every seller reporting on the ebay powerseller forum of improved sales since the change, there seem to be 2 reporting the opposite. 

What about the buyers?  Did they even want a bigger pie?  Ebay's assumption here must be that to increase revenues, they needed to increase variety, and to increase variety, they needed to increase the number of listings.  This is where, I fear, ebay got it wrong.  Variety and quantity are not the same thing, and neither is quality.  The pie is bigger, but I fear it may be too bitter for many consumers.