eBay Facing Serious Dropoff In Germany

    September 14, 2007
    WebProNews Staff

The online marketplace is in danger of losing out on the lucrative German market, and eBay has entered full panic mode in an effort to staunch the bleeding.

A 50 percent drop in listing fees, and the replacement of inexpensive email-based customer support with pricier telephone customer service, at eBay’s German division represents the company’s try at recovering from a downturn.

The Fear is in full effect at eBay.

Giving up revenue while adding costs shows this, as a new report from Classified Intelligence described eBay’s German woes:

The announcement came in the wake of signs that all was not well with the core business, which had prompted observers to ask whether the impressive growth phase of the 12-year-old marketplace might be drawing to a close.

In July, EBay Inc. said the number of products listed worldwide dropped 6 percent in the second quarter compared with the year-ago period. In Germany, the online publication iBusiness reported “a clear drop in the number of concurrent auctions running on EBay.de” in 2007. Axel Gronen, an EBay.de analyst, suggested the number of active new members might be declining from year to year.

With eBay Germany’s newly-rediscovered love for consumer-to-consumer business, Classified Intelligence suggested the growth potential on the professional seller side could be hitting a ceiling.

German sellers can place a listing, with photo, on eBay for about 67 cents. An earlier <a href=http://investing.reuters.co.uk/news/articleinvesting.aspx?type=media&storyID=nL04854337>Reuters</a> report about this said Germany and the US are eBay’s top two markets.

Profitability losses from their upgraded support, which lowered phone question costs to 14 cents from 59 cents per minute, and reduced listing fees will need to be offset with a larger volume of participants.

That will be the real trick for eBay.

Sellers should be eager to capitalize on the lower fees with more competitive pricing for buyers, and that could set up a nice cycle of growth for eBay to recoup these new costs.

eBay has been spending money on promotion on the US side of their business. Forbes cited one analyst who thinks the impact on margins will be offset by sellers using more auction features.

Listings have been rising since late August, after a year of declining, according to Forbes. eBay’s strategy looks like it’s working.