There have been rumblings about eBay’s business strategy for quite a while. eBay came out of nowhere, just another start-up, and overnight became the vehicle for an entire industry. The concept was simplicity itself, join buyers to sellers, and do it in such a way that both sides viewed it as a win.

I have a TV that I no longer need, so I list it on eBay, potential buyers then bid on it. Highest bid wins, and eBay takes a very small amount of money for hosting the transaction. So successful was this plan that some people actually created small businesses dedicated to buying and selling online.

In a recent documentary about eBay it was mentioned that at any given time of the day or night eBay has over 16 million items for sale. I can attest to the wide choice, I have found all sorts of unique items on eBay, from aging Nintendo systems, to obsolete cell phone batteries, when I am stuck, I check eBay.

Of course this nirvana could not last for forever, the site started to change a few years ago. Cash rich eBay purchased PayPal. PayPal is a cute online money transfer system, an Internet bank, where every computer becomes a virtual ATM. Using PayPal you can send and receive money. Link it to your bank account, and you can convert the online dollars to something you can put in your wallet.

The start of the slide downhill came when eBay decided to offer the ‘Buy Now’ option. Instead of bidding on an item, you could simply buy it for the low low price. This sounded great. Unfortunately it was/is a feature that has been abused. You can buy the item for $1, but it costs you $100 for shipping and handling! Some bargain!

Clearly eBay was losing its luster. In fact eBay has been on a downward spiral for some time. Recently they announced a restructuring of their fees. The bottom line, the seller pays more, in some cases, much more.

The icing on the cake though, has to be the announcement from eBay in regards to their Australian customers. In an attempt to ‘prop up’ the falling building, they have imposed a new set of rules on the sellers. You can accept any sort of payment, as long as it is through PayPal! This is akin to the famous “You can have any color Model T Ford, as long as it is black”.

This likely will result in many small enterprises going broke. When you tag on the percentage that PayPal charges, many enterprises will likely be seeking a new way of selling online. As it is, the small company is taking a hit from Visa or Mastercard already, eBay is now going to make further inroads into profits.

The PayPal only rule has not hit the North American market yet, but you can bet your bottom dollar that it will. eBay needs to take a long hard look at what made them successful, and they need to return to those roots.

Simon Barrett

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