As a veteran of the online economy, Ebay has taught many people how buying and selling works online. But eBay couldn’t keep up with Amazon’s boom. Can the group turn around?
The online trading platform Ebay will make all private sales in Germany free of charge in the future. With the elimination of listing fees and sales commissions, the biggest hurdle that consumers have seen when selling via eBay.de has been eliminated, the company in Kleinmachnow near Berlin explained.
The regulation will apply from next Wednesday (March 1st). It is not limited in time, but limited to Germany. After the USA and Great Britain, Germany is the third largest sales region in the world. So far, sellers have had to cede around eleven percent of their proceeds to Ebay as a commission. In addition, there is a setting fee of 35 euro cents. The costs for commercial providers will not change.
Private sellers are more active buyers
The managing director of Ebay Germany, Oliver Klinck, said that the elimination of fees for private sales is an investment by eBay Germany in the entire marketplace business: the incentive of private sales is driving the business of private sales, expanding the variety of offers on Ebay Germany and thus increase the attractiveness of the marketplace.
The cancellation of fees should also pay off for the platform itself. “We see that the private sellers are also much more active as buyers. Those who sell on Ebay also shop twice as much as the buyers who only buy.”
Klinck said the initiative also fits in with the current economic environment: “We live in a time when many families don’t have money in their wallets.” A representative opinion poll commissioned by YouGov showed that due to the energy crisis, inflation and other adverse circumstances, families are missing an average of 180 euros a month. “Therefore there is a great need in Germany to generate additional income through private sales.”
Algorithms control credibility
The exemption from fees and commissions only applies to private sellers. On the one hand, Ebay relies on the information provided by the seller himself. In addition, the platform also uses algorithms to check whether the self-disclosure is credible. “If someone regularly sells 20 iPhones a day, then that is a very clear indication for us that this is not a private seller.”
Klinck said the private sale was of great importance. “Ebay has always been strong in private sales. The first product we sold was a used laser pointer. Private sellers were also very active on the platform before Corona. There was another boost during the pandemic.” Now the private sale is being boosted by the economic circumstances. The bottom line is that commercial trade is significantly larger and accounts for around 80 percent of the business. Around 20 percent is accounted for by private sales.
However, the Ebay management cannot be satisfied with the overall business development. A week ago, the trading platform reported weak numbers for the past Christmas quarter. Year-on-year revenue fell four percent to $2.5 billion. Adjusted income from continuing operations fell 10 percent to $581 million.
Way behind Amazon
In the long term, the balance sheet is even more sobering. In the past 25 years, Ebay has fallen far behind the largest online retailer, Amazon, with which it was neck and neck in the early years of the dot-com boom. For many years, Amazon gave up profits to fund rapid growth.
On Ebay, on the other hand, investors wanted to cash in earlier at the expense of growth. Ebay had to separate from PayPal in 2015, long before the payment service had become widely accepted. Amazon was able to build a stable second pillar with the AWS cloud business, while Ebay passed on divisions such as the video conferencing service Skype to Microsoft far too early in 2011.
In the summer of 2020, Ebay cashed in with the sale of its classifieds division, which in Germany includes the eBay classifieds and Mobile.de portals. While Ebay and the Ebay classifieds portal operated by the Norwegian online marketplace Adevinta have so far hardly gotten in each other’s way, this could quickly change with Ebay’s free initiative.
“Kleinwerbung.de” as its own brand
For consumers, this is all still quite confusing at the moment. The Ebay trading platform and the Ebay classifieds bargain portal are constantly being confused with one another. However, that will change in the coming year. By the year 2024, eBay classifieds will remove the eBay name and appear under the “Kleinwerbung.de” brand.
Those who type the new address into their browser no longer end up with an error message, but are instead redirected to the website www.ebay-kleinwerbung.de.
