Will eBay Survive?

by | Dec 11, 2001 | POLITICS

With the death of Napster, eBay is the closest thing we have today to a broadband killer internet application. Since its inception, eBay has grown rapidly to its position of domination in the on-line auction market. It has been so successful that it’s stock has been immune from the bear market and still sports a […]

With the death of Napster, eBay is the closest thing we have today to a broadband killer internet application.

Since its inception, eBay has grown rapidly to its position of domination in the on-line auction market. It has been so successful that it’s stock has been immune from the bear market and still sports a nosebleed P/E ration of close to 200.

All of that may be about to change.

EBay is currently suffering from two interrelated diseases, either of which can be fatal. It’s like having cancer and heart disease at the same time. I’m referring, of course, to the dreaded AOL-itis and Microsoft-itis. Let’s take a look at the symptoms of both diseases.


Most readers will remember what happened to AOL several years ago when they introduced their flat rate plan that eliminated per hour charges and allowed users to be connected to AOL 7 by 24 for a fixed monthly fee. AOL couldn’t keep up with the demand. Users couldn’t log in, and AOL was eventually forced to refund millions of dollars to customers. The company almost went under. In short, AOL’s technology infrastructure was ill suited to provide even minimally acceptable levels of customer service.

And this is very much the situation that eBay finds itself in today. Cruise over to eBay’s community forums and message boards to find out what problems plague the company. Users complain bitterly about getting “page not found” errors whenever they try to list an item for auction or revise the item on eBay. EBay’s picture upload service, IPIX, is regularly down. EBay lacks realtime functionality — for example, if you revise an item’s title on an open auction, it takes eBay up to six hours to work the item back into its search engine so that prospective buyers can find the item searching on the title.

EBay does not provide any telephone support. They don’t even provide a phone number on their web site. Now here’s a company that wants to stay close to its customers. All questions / problems must be submitted to eBay via e-mail, and users on eBay forums complain regularly that their problems go unresolved, their complaints unanswered for days or weeks.

At the heart of eBay’s problems is a fundamental incompatibility of eBay’s web site with Microsoft’s Internet Explorer web browser.

The other day, I was trying to revise the title of an on an open auction. All I was trying to do was delete the letter “s” to change a word from plural to singular so that prospective buyers would be more likely to find my item when performing a title search. I tried in vain to modify the item title more than a dozen times, but each time I tried to submit the change, I received a “page not found” error. A fellow user on an eBay message board informed me that eBay’s site did not work well with Microsoft’s Internet Explorer web browser, and suggested that I try using Netscape Navigator instead. I did, and I was immediately successful in submitting the change.

EBay confirmed their site’s incompatibility with Internet Explorer in an e-mail response to another problem I was having. EBay’s response read as follows:

“If you are using Microsoft Internet Explorer as your browser, we’ve found that Internet Explorer tends to cause both listing and relisting problems when your description text is excessively long and has been typed without occasionally hitting the enter (return) key. This will not affect how your description appears and can help stop the errors from being received.”

Readers will recognize this as the Homer Simpson business model: design your web site to work well only with a web browser that has an infinitesimal market share. Doh!

How bad are eBay’s problems? The other day, it took me 12 hours to successfully resolve all of the issues I had and get one auction listed. And I am not a novice eBay user. And neither are many of the users who complain regularly and bitterly on eBay’s forums about eBay’s quality, reliability, and customer service problems.

Now these are growth problems, to be sure, but where there are problems, there is opportunity for the competition to move in for the kill. More on that later.


EBay also suffers from Microsoft-itis, a disease that afflicts businesses that add so many features to its product that the product becomes unwieldy, difficult to use, and unreliable.

When eBay first started, the process of submitting an item for auction was fast and simple. Today it is a slow, complex, and all too often, broken process. EBay, in an attempt to find more and more ways to extract listing related fees from sellers, has added so many features to its product that, the listing process has become extremely convoluted and prone to failure. The worst part of this is that when the multi-screen listing process fails, much of the user’s data is lost. That is to say, the seller has to re-enter some or all of his data. (Which is one of the reasons it took me 12 hours to list an item the other day.) The same is true if user merely attempts to back up to a previous page to change some of the information on the listing — much or all of the data is lost, forcing the user to begin the process anew.

Ebay’s listing problems are so bad that they have spawned a whole new industry of software products that — get this — submit auctions to eBay to take the hassle out of listing items! For example, check out Auction Submit.

Now to my way of thinking, things are pretty bad when the primary function of your business — putting things up for auction — is so complex and unreliable that third parties move in to provide the service for you.

What Should eBay Do?

EBay can salvage their current situation by doing the following six things:

  1. The smart thing for eBay to do would be to declare a moratorium on any new features until they have unraveled their spaghetti code and made the existing features work correctly. One gets the impression that the eBay web site is currently held together by chewing gum and spit — a fragile, unstable equilibrium.

  2. EBay should take a cue from Major League Baseball. Contraction, which in this case means the elimination of features and not ball clubs, would not be a bad idea. A simpler, less “feature rich” product that works is always better than a complex feature laden product that is difficult to use and doesn’t work.

  3. EBay needs to make sure that all of the features of their product work well with Microsoft Internet Explorer, the dominant web browser.

  4. EBay desperately needs to provide telephone support. Auctions are time-sensitive entities. Sellers can’t afford to wait for days or weeks to get answers to their problems, especially with regard to open auctions.

  5. For the same reason, eBay needs to make their systems “real time.” Auctions need to be searchable immediately upon listing or revision, not six hours later. EBay’s current technology reminds me of the old days of “shadow files” — systems that appeared to have real time update functionality, but in reality updated shadow files which in turn updated the real data base hours later.

  6. Finally, as a way of saying “we screwed up, we’re sorry, please forgive us”, eBay should waive listing fees for thirty days. (I’m not suggesting that eBay provide all services for free — the listing fee is just one of several sources of revenue for eBay.)

Moving in for the Kill

As dominant as eBay is in the industry, there has never been and will never be a better time for a competitor to come in and grab market share. EBay customers are so frustrated that they are ripe for the plucking.

How does a competitor move in to a market that is so thoroughly dominated by one player? Two words: vertical markets.

Here is how it will start. Some company will come up with an idea (and the necessary venture capital) to specialize in and dominate the auction market for a specific vertical market, for example, sports memorabilia. They will carve this vertical market away from eBay. Seeing their success, other companies will repeat the model, taking other verticals away from eBay until eBay becomes a repository for miscellany.

Sound far fetched? Perhaps. But I somehow get the sense that eBay is a company with an attitude. An attitude that says, “We’re eBay and you’re not. Sod off.” And companies with attitudes don’t last very long. If eBay doesn’t get its act together quickly, the vultures will move in.

It will be interesting, to say the very least.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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