Virtuous Circle or Death Spiral?

[j.p.greenwood]

Anyone who's had to prepare a 'proper' business plan that potential external investors will use as a basis for making an investment decision, will likely have heard of the 'Virtuous Circle', in simple terms it's things in the plan that feed off each other to give 'double bubble' benefit.

A really simplified example would be, let's say you invented a new type of paint brush that didn't require white spirit to clean.  Offering the brush for sale would be great in itself, but by also offering a 'same branded' range of paints that you claimed were 'optimised' for the brush, you'd potentially generate more sales of both the brush and the extra sales of the paint, as customers would possibly be inclined to buy them together, this is a 'Virtuous Circle'.

The other side of the same thing is the 'Death Spiral', where one part of your offering gets broken, either from competition or self inflicted and as a result, this single break point leads to your whole model becoming weakened and unstable.

In the case of E-Bay I would suggest that by 'breaking' the existing selling model, by introducing too many changes in a compressed time frame, E-Bay may have inflicted a 'Death Spiral' on themselves. 

Specifically, as sales have dropped, for admittedly some macroeconomic reasons, but also, IMHO for pretty bad self inflicted own goals, less sales mean sellers now have less money to buy things on E-Bay (this WAS one of their 'Virtuous Circles'), E-Bay was a semi walled garden where sellers would have funds to spend and would do so on E-Bay partly from the convenience of already being 'on-site' to deal with sales, so if an item was needed easy enough to search for it while already here.

Many people here, myself included, will look at the upcoming quarterly numbers with interest, however, I also accept that the way E-Bay can choose to 'consolidate' their accounts and the 'notes' they attach, they can 'hide' problems from external scrutiny, however, 'Hollywood Accounting' can only last so long before it becomes too obvious to mask.

I'd be intrigued as to other members views, although I would ask people to perhaps minimise the outrage phraseology if they can, as I honestly don't think it adds much to the discussion and can make people just sound like they're venting in many instances.

[suelel1968]

I was surprised by the amount of money that eBay UK made in 2024. I would love (I'm a numbers nerd) to  see the break down of that by private, non vat rated business sellers and vat rated business sellers. Even go as far as uk and foreign sellers. Very unlikely to happen, but my point would be that no matter how small a percentage of revenue private sellers are, their offerings are largely what makes eBay unique, or at least distinct from Temu and Amazon etc.

Whilst everything you say is true, "death" is along way off. I also think the "outrage" here and on socials is representative of how much we really like eBay in the UK.  How little they listen and how much they change is representative of poor management, being scared of basically unfit new competitors. Copying others will never keep you ahead of the game. 

[vinylscot]

I do think people are reading too much into this, more particularly that they are seeing what they want to see.

SD (in particular its implementation) has, to date, been an abject disaster, and will have cost eBay some sellers in the short term. That loss will be easily wiped out by the increased profits SD gives them, and the missing sellers will soon be replaced with new sellers, and by many of those who left returning as they find the grass is not always greener.

I think the BPF is generally neutral, to those sellers who have worked with it and the free selling, which was introduced a few months earlier. If private sellers just ignored BPF and free selling, as many did, they may well have noticed a severe drop in their sales, and let's be honest, they deserve that. 

New users - buyers and sellers - will still come to eBay for it's "one-stop shop" convenience. The competitors are all limited in some way or another, whether that be in  lack of buyers or limited category availability.

Despite the claims of some of the contributors to the mega-thread, disgruntlement with eBay in general, and the recent changes in particular, is very low, a tiny percentage of overall users. I know folk will retort that most users don't know about these boards, but over time, unhappy users will find them. Also a good percentage of comments now are concerning workarounds no longer working, rather than around the changes themselves. In addition, there must be at least a couple of dozen posters who have posted pretty much the same thing at least a hundred times each, over a number of threads, doing nothing but skewing the figures. eBay isn't daft - as you suggest yourself, they'll ignore the permanently outraged.

eBay has got to fix SD. That's a given. I honestly feel that, if they do, it will retain its dominant position in the marketplace. I don't think the apparently never-ending "cost of living crisis" is given enough credit/blame for eBay's apparent downturn.  I don't believe they are anywhere near to a "death spiral"; eBay may not return to its dominant heyday, but it is nowhere near done for.

[moonlight-rhapsody]

I was given to understand that a successful business had to take care of 3 parties - staff, customers and investors/shareholders.  I think that balance has got very badly out of sync at ebay.  

I gather ebay made 1000 people redundant last year and I know that’s not a laughing matter, but I’m afraid I did have to laugh when I read this report:  

"Global online retailer eBay announced it would cut 1,000 jobs back in January, referencing how its overall headcount and expenses have “outpaced the growth” of the business."

Presumably that's management-speak for “the business hasn't done as well as expected”!

[honeymonster007]

Not really too bothered by ebays quarterly figures, but understand some may be due to owning some of their shares.

Would be interested in traffic numbers though, overall and by each category, and how many sales are made via the app verses a laptop ect 

Would be interesting to know which categories have the higher return/not as described rates as well.

[technthread]

eBay have too many sellers and not enough buyers. This is just my impression but it seems that they are willing to lose wavering sellers in droves if it means retaining the private sellers who will buy into SD / BPF and the business sellers who got the message and will play the game (ie promoted listings). They can also trial a policy on eBay.de, another one on eBay.co.uk and go another direction on .com so they can spread risk and maybe feel a death spiral could be reversed if they get something majorly wrong. 

[wyntersemporium]

200 also this year as well from closing down Israel’s eBay development hub

[laptopsparesrepairs]

I agree in part with eBay damaging the platform due to mass changes in a small time frame, that being said I think even an extended time frame would not have helped much. What I feel are many bad changes are just that, delaying them in frequency may dull the pain caused by the changes but it still happens regardless.

As clever as the people at the top think they are being, eBay ultimately rises and falls based on what the community decides.

For me the damage began when private sellers got free selling, as a business I looked on this badly, eBay reasoning was flawed. The private sellers getting free selling would have been took a lot better if business sellers also got something as well, however this didn't happen. All this change caused was a massive imbalance between private and business sellers. I'm also not talking the genuine private seller that sells a few random items now and then, I'm talking the businesses that went to private sellers to pay no fees and undercut other businesses. The base platforms needs to be balanced, without this you will have sectors of eBay that dislike each other, dislike how it is, its just bad business, ideal world to work somewhere you like and enjoy to work not have divisions which I think eBay is heavily divided at this time.

Going further eBay try to then backtrack and add additional changes to try to add some balance without removing the whole change, suppose so they don't have to admit they were wrong.

So we then got the buyer protection fee which private sellers went nuclear over although its way under what they paid in fees prior, businesses got a small glimmer of light of balancing but it was and still isn't enough.

This is an example of what started the downward views on eBay for me.

eBay for me has complicated the easiest of mechanics on eBay and as the saying goes 'keep it simple stupid'.

eBay in my opinion has lost its way, I would hope it can find it again however if they carry on with the over complicate everything to make a fee and rinse businesses even more in the process it's just going to deteriorate.

No internet entity is invincible, keep on kicking it's community and a tipping point of no return will come at some point.

[jonatjonatjonat]

The imbalance would go away if eBay’s model was same fees across the board but  reduce fees for items that are not new, even if that was only for private sellers.

no doubt the private business sellers would then list as Used but plaster the word NEW NEW NEW into the product titles but still.

[suelel1968]

Hi Jon @jonatjonatjonat  Not to stray to far off topic, but you cannot do the "new" on a used item. I'm sure there are plenty of examples of it happening, but last time i tried "as new" it would not let me list. 

But to your point about new and used and equal fees, that is why I would love to see the numbers for non vat registered businesses. It is very difficult to go from private to business on the current fee structure. It would be fairly easy to do fees for Vat registered and fees for non vat registered with no Private/Business distinction at all. They could even force PS to accept returns and business legalities as part of their T&Cs. 

Sellers can grow over time with no "Fee cliff " to drop off  if they turn pro. Incentivise organic growth, encourage preloved selling, allow lowest postage rates and job done, i think we've sorted it.

Ebay, you're welcome!

[j.p.greenwood]

One of the problems with introducing too many changes in a compressed timeframe is it becomes harder to identify which change may be responsible if it doesn't have the effect you thought, thus harder to tweak or unwind if needed.

In IT systems, you'll often have something called a 'change freeze' period, where you make absolutely no changes to anything (hardware, operating system update patches, application update patches, database changes, etc et al....), you'll let that 'stable' system run for a week or so, then introduce your specific intended changes, then closely monitor the consequences for at least a couple of weeks or even longer if it's a major change, so that any unexpected consequences can be identified and isolated quickly, allowing you to make a reasonably well informed decision about either tweaking the change, or in extreme cases rolling it back.

E-Bay, by the number of changes they've made in a short time, in my opinion, are no longer in a position to make an 'informed' decision as to what might have 'broken' (my choice of phrase) the existing sales model, is it SD, is it BPF, is it external macro economic conditions, is it the weather, is it a combination, is it something else? 

Once management start to deprive themselves of being able to make well informed decisions, they become 'carried along' by the current, rather then being able to still steer the boat.

[downsizingxs]

You are absolutely spot on and a very well crafted post. 

Individuals on here complain of lower sales since the two bombshells but I would love to know the actual effect on eBay in sales and purchases. In fact I'd love to know the exact numbers of Private Sellers v Business Sellers in order to assess how much of a dent to Private Sellers would really matter to them in the long run.

The backtrack on payments is welcome but unless they totally scrap SD and give sellers their autonomy back I feel the downslide will continue.

They must be inundated daily with problems reported e.g. because I had a failed RM Tracked 48 collection & buyer needed the item urgently I was forced to buy a Tracked 24 label off eBay @ £4.29 and to make matters worse the buyer, not me, will eventually receive the refund for the original £3.38 as he paid it. I used to always offer both 1st and 2nd class P&P which would have been great for this sale, but not able to now.