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Auctions Fade in eBay's Bid for Growth
By Geoffrey A. Fowler
26 May 2009
The Wall Street Journal
SAN JOSE, Calif. -- EBay Inc. is remaking its e-commerce marketplace to combat declining sales. In the
process, it has pitted merchants such as Jack Sheng and Walt Kolenda against each other.
Mr. Sheng describes his company, eForCity Corp., as a "mini Wal-Mart." It buys electronics accessories
from China and sells 4.3 million of them each year to people looking for deals online. After eBay made it
cheaper and easier to list products in large quantities for sale last year, his eBay sales in April were up 46%
from a year before. The site's changes have "helped good sellers come out ahead," he says.
Not for Mr. Kolenda, a professional antiques auctioneer who runs his eBay business out of his house. He's
the model of the classic eBay sellers who drove the site's huge growth earlier in the decade. But last year
his listings fell to less than 10 items a week from a peak of 100, he says, because he grew frustrated with
the complexity and pace of changes at the site. Now he says eBay has become a casual interest, not a main
source of income.
The two sellers' clashing experiences show how eBay's turnaround strategy is generating an identity crisis
for the e-commerce giant. Its community of 25 million sellers is caught between two images of eBay: its early
identity as a quirky flea market known for online auctions, and a shift to being more of a bargain basement
offering fixed-price goods in bulk.
"EBay used to have a very distinct community culture," says Skip McGrath, who has sold grills and other
home-and-garden items on the site for a decade and has written nine books on how to make money on
eBay. "Now," he contends, "it's like eBay doesn't know who it is."
The eBay metamorphosis, spearheaded by Chief Executive John Donahoe, comes as the company
grapples with slower sales amid a broader shift in Internet shopping habits. EBay helped pioneer
e-commerce in the 1990s with its online auctions, but rivals such as Amazon.com Inc. have gained ground
with an ever-growing selection of fixed-price items and often with free shipping. Search engines and
comparison-shopping sites have also chipped away at eBay's auction system, by making bargain items
easier to find on other sites.
EBay has had sliding revenue and profit in the past two quarters, while Amazon has reported record
earnings. Over the past 12 months, while Amazon's stock is off 6%, eBay's is down 43%.
early last year. His plan to get the company growing again includes investing in its online-payment service,
PayPal, and shedding non-e-commerce businesses such as Internet phone service Skype. In October, eBay
announced layoffs of 10% of its 16,000 workers.
At the heart of his strategy are changes to eBay's online marketplace, which sold nearly $60 billion in