Final take on Holiday Online Sales and eBay to hold steady on fees

Amazon and Apple did great but it will be a while until we hear from eBay

Online sales held up better than the rest of the retail market during the dismal holiday period, but the season is still likely to go down as one of the worst on record for the traditionally booming eCommerce sector.

Online spending was down just 2% from Nov. 1 through Christmas Eve compared with the same period last year. Traditional offline retail dropped 8%. Ecommerce strength wasn’t widespread. Instead, several big-name Web sites such as Amazon, Apple and Wal-Mart had good online performance but many others struggled. Online sales were also fueled by discounts that aren’t likely to continue. Of course there is a difference between sales and profits.  When the numbers come in on fourth quarter performance it may turn out that although sales were down, profits were down more because of all the deep discounting.

This is one advantage that eBay has. eBay makes their money from fees from sales not markups on the products. so even if the sellers were not making good profit margins, eBay will see gains as long as the sales didn’t drop.

Given the state of the economy, I strongly believe eBay will not raise fees this January as they traditionally do. In simple terms eBay no longer has pricing power. In fact, eBay recently announced that the fee rebates and discounts they ran through the end of the year will be extended through the end of March.  In football parlance – eBay just punted.

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