Here is an image from an email my wife received from PayPal this morning:
eBay is already worried about the coming holiday season and I expect they will be offering more promotions like this in the coming weeks. Wall Street is fast losing patience with eBay and continue to shift their investments into Amazon and other online shopping sites. If eBay has a poor holiday season while their competitors do better, it may mark the beginning of the end for CEO John Donohoe.
Promotions like this are fine but what eBay really needs to do is return to media advertising. Under Meg Whitman eBay used to spend upwards of $50 million a year in Television advertising. although eBay is sitting on over $1 Billion in cash they seem to have lost faith in the power of the tube.
The heart of eBay’s problem is that they have just spent two years repositioning themselves in the marketplace but they have neglected to tell their customers. Walk into any coffee shop and ask a total stranger what eBay is and they will still tell you its an online garage sale or an online auction. But in reality over 60% of eBay’s sales are fixed price new merchandise and this figure will soon top 70%. The problem is that most folks don’t know this. It’s as if eBay had a baby and forgot to hand out cigars.