What does BEING COOL have to do with it?

Posted on July 16, 2009. Filed under: Amazon, eBay | Tags: , , , , , , , , |

Go to any public place, such as the post office or the local Starbucks, and ask all the adults over age 35 the  following questions:

1. Have you or anyone you know ever been “ripped off” on eBay?

2. Have you or anyone you know ever tried selling on eBay?  Are you selling on eBay now?

I would imagine you would come close to a 100% “yes” response rate to the first question as just about everybody who has ever bought on eBay has been ripped off at one time or another.  And most people have tried selling on eBay in the past or at least know someone who has tried but most people today would say that they no longer sell on eBay.

The adult population holds the perception that eBay is a risky place to buy and is no longer a place where the average person can successfully sell items.  But don’t take my word for it.  Strike up a conversation with the person next to you in line at the post office and you’ll get more than an earful about eBay’s poor reputation.

Now, while this should concern eBay management greatly I actually think there is something that should concern them more.  What do you suppose young adults think about eBay?  Well, it has been shown in consumer studies that children’s purchasing decision processes are shaped and influenced by their parents so all those disgruntled former eBay buyers and sellers are not only talking to their peers at work and their neighbors but to their children as well.  Computers are part of the American household today and children  in the home are often aware of their parents’ online purchasing destinations.  I know my kids ask me all the time what website I am currently on when they see me looking at retail items on the screen.   

Also, children in the home are comfortable on the computer and visit online shopping destinations themselves even if they don’t have the power to make the purchase themselves.  For example, my kids visit Amazon to check out the reviews on video games and skateboards and to see what is cool in new sporting gear.  They would never think to go to eBay for purchasing anything although they did ask me a few times if I thought they could sell their old Yugioh cards on eBay.   What do my kids think?  They think Amazon is “cool” and that eBay is for “losers”, a place where everbody goes to sell their unwanted junk. 

The  cool factor is powerful.  I remember when I first started selling on eBay with any kind of volume.  It was summer time 10 years ago.  I decided to pass on teaching university classes for the summer to take a few months off to stay home with my newborn son.  eBay helped fill the time especially since I could set my own hours.  And my neighbor had a teenage high school girl who I used as a babysitter a few hours a week so I could go out grocery shopping and run errands.  It was a great summer.

As the summer was ending, my babysitter mentionned that she didn’t know if she would be able to babysit for me after school started because her parents were making her get a part time job to pay for gas for her car.  And the lightbulb came on in my head.  I asked if she would be interested in working part time for me listing on eBay.  She was thrilled at the idea since her alternative was a counter job at Baskin Robbins or a fast food restaurant.

Ten years ago selling on eBay was so easy, my teenage neighbor could do it.  And, not only could a teenager do it successfully, selling on eBay was “cool” because not many people were doing it and it seemed fun to make money by shipping things to people all around the world.  This teenager was a bright, beautiful, popular high school volleyball player who told her friends about her new “cool” job and suddenly everybody wanted to work for me.  My teenage neighbor’s friends were popular high school football players (and in Texas, being a high school football player is the ultimate in “cool”) who begged me for jobs.  I started setting up at local shows on the weekends since I had “manpower” to carry my items in, stock, and to run the cash registers.  And, having cool kids around selling my hobby items made my items themselves seem cool which helped my sales.

Of course, as time went on my business had to “grow up” and I moved into warehouse space and could no longer have high schoolers working for me.  But that time taught me a very valuable lesson.  The cool factor is powerful.  And at that time, eBay was still a “mystery” unlike today when everybody knows somebody who has tried but failed to sell successfully on eBay.  There is nothing left to the imagination when it comes to eBay — we have all seen behind the curtain and we know what the Wizard truly looks like…. and we are not impressed.

However,  when I tell people that I sell on Amazon they are intrigued.  Selling on Amazon is not something that everybody does so it is kind of an elitist thing in people’s minds.  It is, in a word, a “cool” thing to be an Amazon seller.  And shopping on Amazon is also a popular thing to do since Amazon has the most “cool” items, like the Kindle, which by extension makes it seem that everything else sold on Amazon is also cool.        

I truly believe in the power of social media and I think eBay recognizes the value in social marketing.  However, I don’t think eBay will be successful in their social media efforts because the younger generation, now coming of age and ready to make their own purchasing decisions, do not think buying on eBay is the popular thing to do anymore.  To them, older folks still buy on eBay because that is all that these folks are comfortable with; older folks simply are not computer literate enough to figure out how to search the internet for better places to shop and to learn a new checkout system.   And it’s generally not the older folks who are the ones on Twitter and Facebook but rather it’s the younger generation who are influenced by social marketing campaigns. 

Ten years ago, eBay sellers did well because computer literate consumers who were generally more educated and had more disposable income bought items on eBay that they could not obtain in their local areas or could not purchase direct anywhere else on the internet.  As a result, sellers flocked to eBay to sell because they could make easy money.  eBay was never worried about losing sellers because there were always two more sellers to replace the one eBay lost.  Fast forward to today when just about everybody has access to a computer, most companies have a webstore, and anyone buying online has an abundance of choices.  And eBay is simply not the marketplace of first choice anymore for buyers…. or sellers.  

eBay has quite a few challenges ahead  in the future because they didn’t take care of their marketplace in the past.  eBay ignored the warning signs of trouble until they were hit upside the head with a ton of bricks and only then did they jump into action in a frenzy.  And, in a Wizard-of-Oz-like move, the folks at eBay began furiously pulling levers trying to make things work well again in their marketplace.  Unfortunately, eBay waited too long to begin pulling levers and they pulled the wrong levers and did so in such a herky jerky manner, and often without warning, that folks got turned upside down and thrown under the train that was at the same time running out of steam and veering out of control.  And when the lever-pulling did not produce results fast enough eBay began pulling even more levers in a panic.  For example, the 5 free auction listings idea (with a corresponding whopping increase in final value fees) sounds great to put out in a press release but it was an ill-conceived idea that was obviously rushed into action in a panic.   

Part of the “seller outrage” today is due to people who have lost their ability to make money on eBay.  Money, and the lack of money, are very powerful motivators.  The economy has obviously had an impact on eBay sellers but the changes eBay has made and are making have a huge effect on small sellers and some sellers are more impacted than others just because of the items they sell or because of their business model.  But it is more than that. 

Many people got themselves emotionally, as well as financially, invested in eBay because it was “cool”.  People like to be associated with winners and for many years eBay was considered to be a winner.  And now that it is no longer cool to buy and sell on eBay, I think some folks are angry at eBay because of eBay’s failure to maintain its status in the online marketplace.   It has become personal.  In the public’s mind, eBay is no longer the number one marketplace of choice and so anyone associating themselves with eBay is no longer considered to be a winner; they are no longer cool and popular.  And that makes people feel bad about themselves, which they don’t want to do.

And there is a whole generation of new consumers coming into the online marketplace who have never had much, if any, experience buying or selling on eBay even though perhaps their parents have had first-hand experiences with the eBay marketplace.  But this younger generation does know what “everybody else” thinks — and that is… everybody else thinks eBay is for losers.  

eBay should be worried about current buyers who are leaving eBay for other online shopping sites but I think they should be even more worried that these consumers will not readily be replaced with buyers who are new to online shopping.  And without an influx of new customers, eBay sellers will continue having to compete for the sales from an ever-dwindling group of eBay buyers.  The result: (1) more failures as more sellers close up shop on eBay which means even more stories being told about eBay being an unsuccessful marketplace and (2) more sellers seeking out alternatives where they can be successful which means even more stories being told about other places where eBay sellers can be successful. 

It is unfortunate that eBay is so focused on trying to fix problems in the short term when they really have a much bigger long-term problem looming overhead.  eBay has told analysts that soon eBay will experience growth at the same rate as the online marketplace and in just a few years the eBay growth will be greater than the overall increase in the online marketplace.  But I just don’t see it happening.  Perhaps eBay has information that they have not publicly shared that would lead them to believe that great growth is on the horizon.  And as much as I want to be convinced that I have a good future ahead of me as an eBay seller, I simply don’t see it happening.    And yet I don’t blame eBay.  My failure or my success in business, and in life, is the result of my own decisions and my actions.  And, for now at least, my kids think I am cool…. and it doesn’t get much better than that.

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8 Responses to “What does BEING COOL have to do with it?”

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This post is an OPUS & you have outdone yourself Brews.

I witnessed just such a conversation in a McDonalds 2 weeks back, and it was all I could do to keep my mouth shut. (The conversation concluded with mention of Craiglist!)

Also keep in mind that had ebay maintained themselves as a trading community, rather than focus on artificial growth curves, we within that walled garden would have continued to trade there for our incidental purchases.

All the bad feelings users now harbor toward management have seriously put the brakes on internal seller-to-seller purchases, public perception aside.

Because they knew ebay inside and out and fully understood it, sellers may well have made the best buyers.

I think you touched on some truth here.

eBay did have a public perception of the site where you sell the stuff sitting in your attic. I know that doesn’t sound sexy, but that WAS their niche. The bigger problem happened when they tried to shed that image and basically become Buy.com – while giving buy near free listings. Most of us knew this would not work because they were trying to change gears and be something they were not. Further, they signaled that they wanted to go head to head against AMZN, and that was sheer stupidity. Amazon had over a decade’s advantage on eBay in the retail market.

As eBay moved away from their niche, it alienated too many people. Sure, we’ve all been ripped off at one point or another on eBay, but most of us didn’t blame eBay – but a particular seller. We all complained and complained to eBay but they didn’t want to listen because they really only cared about making money and expanding. Soon their growth began to dry up, and they panicked. And that’s where we are today.

I want to thank you Brews, because your writings finally convinced me to go to AMZN, and as eBay sales continue to dwindle, AMZN is picking up. I now sell almost as much on the river as I do on the bay. That says a lot for both companies.

You’re absolutely right on the fact that success stories can drive people to a site, and eBay no longer has that advantage.

I mean, you know you’re in trouble when your biggest marketing campaign is Video Professor.

This is an analysis that I feel is based on lots more input from the real world than I can offer. All I can say is that I bought things on eBay for years, and I still have a great interest in the place because buying and sometimes selling on it constituted the first MAJOR FUN I had on the Internet.

So I’ll go ahead and put my 2 cents in and say,

1) Don’t forget the tremendous power a business gets by having been first in a field and having occupied it thoroughly for a while. Microsoft is the great example of that.

2) For at least one class of collectibles, old radios, there is no place on the Internet to go in order to see a tremendous selection of the item but eBay. I suspect that’s true of lots of other out-of-the-way antiques and other obscure things as well.

So if eBay deteriorates I suspect it will do it very slowly.

Nightman1, I don’t think eBay will ever truly go away but they are already deteriorating rapidly. And I agree that eBay is the place for obscure items but that only goes to prove my point — for many items, people buy on eBay only because they have no other choice. If they had someplace else (other than eBay) to shop then they most likely would make their purchases on a venue other than eBay.

Your other comment, about eBay being “first” is a point very well taken.

And, GerberDaisyLady, I am so very happy to hear that your Amazon sales are picking up. It seems to take awhile to get going on Amazon but, once established, the sales are nice and steady. I hope you continue to have great news to report about your sales, whatever venue your sales are coming from.

You are right that “cool” is important for eBay. eBay’s incorrect self perception has much to do with the loss of “cool”.

The MBA’s view eBay as a retail company, but it’s the wrong business model. When you’re dealing with “cool” and popular the business model is one of a Rock Star.

Consider, eBay prospered as it’s fan base grew. eBay kept belting out what the fans wanted, and the fans kept coming back for more. eBay Live! was the equivalent of an outdoor rock concert.

The eBay business model could have been the Gene Simmons model. KISS then and forever; stay the same.

eBay could have been the Paul McCartney model. Making changes that remained popular over time.

Both models adding new fans to the fan base.

But what does happen to a rock star that angers or loses favor with their fan base, and still manages to survive?

Remain in business forever make money releasing and re-releasing and re-re-releasing old stale hits. Buy other promising properties. Go on smaller and smaller tours.

Say their fans are legion and still love them, while “cool” popular media make fun of them.

.

“Do you um, know what Ebay is?”
“Ebay, no.” Adrian Monk
“Good.” Capt. Stottlemeyer
Monk, Mr. Monk and the Secret Santa (2005)

My eBay business model was one of “selling pickaxes to the prospectors”. Game over. Ebay sales are way down because small sellers can no longer make a buck.

My stand-alone site continues to increase. I should have been working on that site all along rather than leaving it dormant for years, but I was a true believer that eBay was going to re-surge in this down economy. My estimation was wrong and now I’m paying the price for a bad decision.

But eBay’s own predictions are also wrong. Yes, they realize Marketplace is tapped, but the prospect of Paypal usage exponentially growing off-site is unrealistic. Very, very few (>5%) use PP for payment on my off-ebay site. Its there and available to use in checkout, but underutilized.

Paypal is not cool. Ebay Live is dead.

I absolutely LOVE the rock star analogy. It was perfect!

And, Jeff, you made an important point – the vendors who sell a product (or service) to other eBay sellers are suffering as well. And I agree that PayPal is not and will not be the first choice of payment methods on non-eBay websites. I believe Google Checkout could really be a formidable competitor to PayPal in the near future.

Hey Brews!

Great piece, in fact, it is spot on. Like you, I’ve spent the last several months finally coming to pragmatic terms with ebay; my net profits are simply never going to return and it’s only going to get worse. There is no switch that ebay could flip that would return us to the days of yore; too much has been damaged by too many years of neglect. Ebay always chose short term growth over putting quality controls in place that would have
kept ebay, in effect, “cool”. Amazon took a different view for the long term, spent the money, and look where they are now vs. ebay.

I’m 43 and going to grad school. The world is changing fast and I have to accept it’s time to move on (again)!

Information technology and seller tools for all ecommerce have evolved to a place where ruinous competition have meant few can succeed (meaning, make a decent living, or even a reasonablle part-time return on your actual time)…

Ecommerce retail in the future will be left to those who can sell for pennies via “Costco style” scale or those relative few who have a dedicated niche
of rare unique goods or precious antiques/hobby items…

Dan


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