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Et Tu EBay?

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EBay has to have the hardest working and, perhaps, most demoralized PR department in high tech these days. I'll enumerate all the ways the auction giant is coming under fire these days. But let's start with the big one.

The sellers' community has become pretty much unhinged recently following EBay's pact-with-the-devil deal with Buy.com. Buy.com is being allowed to sell products en masse at lower fees than the smaller sellers.

According to the NY Times, Buy.com now has as many as five million products listed on EBay at fixed prices. They are, of course, rock bottom discount prices that most sellers just can't compete against. Buy.com is also big enough to afford waiving shipping charges and other customer perks that boost sales and feedback ratings.

So much for a level playing field or that online auction business model. EBay is on the fast track into turning itself into Amazon.com.

The irony is Amazon was initially an online discount seller (starting with books and quickly expanding out to a gazillion different product lines) that added on secondary sellers. EBay's evolution is the backwards version of that; first the secondary little guy sellers and then adding on the big online discount seller.

How long will it be before the two are essentially the same thing?

More importantly, how will all those EBay entrepreneurs that have worked round the clock for years building an online business within EBay fair against the likes of a Buy.com. So much for a level playing field.

This is the online equivalent of Wal-Mart moving into small town America and decimating all those small, typically family-owned, downtown shops. It happened to my former home town of Marianna, Fla.

In the 70's, my mother operated her CPA practice right on the courthouse square in a thriving downtown that included department stores, an electronics store, restaurants, a pharmacy, furniture stores and even an athletic footware store that wasn't called FootLocker. It's all gone now and literally the children of former merchant families now work as Wal-Mart greeters for less than $10 a hour. Downtown,meanwhile, is a mere shadow of its former self.

EBay executives should take a driving tour through rural America and visit towns like Marianna, Fla. See what happens when the playing field is tilted in favor of the big guy. After awhile, that's all you have left; the big guy.

Buyers may enjoy the discounts in the short term. But don't count on them to stick around as much, either.

A recent MSN-Zogby poll estimates 31% of the American public will buy something off EBay this year. It was 40% last year. Even George Bush isn't seeing dramatic dips in his poll numbers like that in such a short amount of time!

Another reason you could see buyer flight; so many of those buyers are sellers too!

As for EBay's other PR Headaches:

1. Big luxury brand companies are getting really tired of their knock-offs being sold on EBay. EBay just won a case filed by Tiffany & Co. in the United States. They were not so lucky in France, where they just lost a case to companies such as Dior or Louis Vuitton and have been ordered to pay $66 million in damages.

2. Sellers are not happy that only buyers can post negative feedback without defending themselves and giving feedback on the buyer, as they used too.

For those of you wondering about the Et Tu reference. It's from Shakespeare's Julius Ceasar; the famous line (Et Tu Brute - and you, Brutus) uttered by Ceasar just before his assasination after learning his best friend, Brutus, was among his conspirators.


Last updated: Jul 15, 2008




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