The latest court order followed a previous suit from Hermès while another, brought on by Tiffany’s, was resolved in eBay’s favour.
The auction site is helpless against unscrupulous vendors taking advantage of its services. It already spends $20 million annually to police its listings for counterfeit products or services being offered.
Beyond the money, the greatest concern will be the repercussions the latest court ruling has for its image, which is based on trust, and its business model, which is struggling for growth in its core business of online auctions.
At the end of last year, the number of active eBay users grew by just one per cent to 84 million.
New eBay CEO John Donahoe has set out to shake up the site. However, most of his policies so far have been criticised as being biased towards the site’s more prominent users, at the expense of alienating the smaller ones.
Users became angry with the site for hiking fee structures, imposing unpopular policy changes that limited sellers from rating buyers and forcing them to offer payment for their transactions via PayPal, a service owned by eBay.A protest and boycott by a group of users then sent its share price tumbling and its value has dropped by 18 per cent since, leading the online auctioneer to reverse some of its earlier decisions.
The site is also facing increasing competition from main rival Amazon.com, where some of eBay’s best buyers and sellers have migrated. Consumers are gradually opting to make their purchases immediate and direct rather than go through the hassle of an auction.
However, users appear to favour localised online auction sites, such as Taobao.com in China and Mocca or Yahoo Auctions in Singapore.
As a result, eBay has just launched in Vietnam through a co-branded tie-up with Vietnamese firm ChoDienTu, a strategy it has also used in Thailand.
Richard Bleasdale, CEO, iris Asia-Pacific
eBay’s problem is about trust.
It’s not entirely the site’s fault, but some of it is. Naked corporate greed (making Australian users use PayPal) certainly doesn’t help its image.
More fundamentally, eBay is outgrowing its original business model. The new boss says he wants eBay to behave less like a car boot sale and more like a shopping mall.
Or, to put it another way, it is shedding its long tail. Yes, that would be the long tail it built its business on. The change is probably necessary, but it is making heavy weather of it. Its highly vocal small sellers don’t think that eBay is being honest with them, and can get their point across to a huge audience. Not a good recipe for trust - especially in Asia, where eBay’s success has not been great. EBay’s strength as a long-tail facilitator lies in not getting too involved. But as eBay begins to act like a shopping mall it needs to take responsibility for what’s sold under its roof.
EBay must use its core strength - creating an environment in which trading can flourish. Maybe this is as simple as having auctions on the left of the page and shops on the right. But they need all their
little-guy honesty. I hope it succeeds as it has given too much satisfaction for it to go wrong now.
Jacob Wright, head of engagement planning, BBH Asia-Pacific
Does it really matter that eBay users are feeling disaffected and are protesting?
Looking at graphs of all eBay auctions, there doesn’t appear to be any significant long-term decline since January when the firm’s troubles began. There simply isn’t anywhere else for users to go.
The ‘emperor’s clothes 2.0’ rhetoric would suggest that, in an age of empowered and demanding consumers, brands must obey the will of the market.
This is a simplistic argument. Infrastructure and power in the marketplace also matter.
EBay can afford to deal with a little discontent because it is the sole superpower in the world of online auctions. Much like many governments, eBay ultimately doesn’t have to respond to protests if it doesn’t want to.
In the short term, the eBay brand has taken a knock because of circumstances beyond its control. But that doesn’t require drastic action or a change of strategy. EBay simply needs to reassert its unique selling position as the site where you can buy or sell anything.
In the long run, this approach should revive the brand. As for the long-term legal implications, well that’s a question for a lawyer, not an advertiser!
