A few research notes were released today with positive data about Ebay's (EBAY) third quarter listings. Here's a nice chart.
Over the past month, Ebay has unleashed a number of unprecedented promotions in an attempt to boost their sagging auction listings numbers. For the moment these promotions are working, but Ebay may be setting a dangerous path.
Years ago, Amazon held periodic Free Shipping promotions around the holidays. Personally, I accelerated and decelerated the pace of my orders in order to qualify for the free shipping. If there wasn't a free shipping promotion going on, I was less inclined to order and vice versa. Amazon started making it easier to qualify for free shipping by lowering the minimum order to $25 and eventually made the free shipping offer a permanent feature. Now I completely expect that my shipping will be free and it has no impact on my orders.
While the promotions might be giving Ebay a temporary boost, sellers may eventually take the free listings for granted and come to expect it. If Ebay stops the promotion, they can expect a steep drop in listings, which might be more punishing than the drop they were trying to avoid. If Ebay keeps the promotion going, the promotional effect will diminish and Ebay will start running out of ammo to boost other lackluster quarters.
Instead of trying to determine and address the real reasons behind their listings problem, Ebay has chosen to paper over sagging numbers with temporary promotions. It will be a slippery slope if they try to keep it up.
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