As eBay tinkers with its e-commerce site, CEO John Donahoe has been making the case that the company is turning around. But as we’ve noted, while some of the changes look encouraging, it’s not clear whether enough buyers are returning to the site. Today, Citigroup analyst Mark Mahaney expressed similar concerns, noting that while he’s “incrementally more positive” about the company after meeting with executives, he sees “sustained declines in online traffic to the site as a clear negative.”
Traffic to eBay’s site is down 9 percent so far this quarter compared to a year ago, Mahaney said. Meanwhile, over at Amazon, traffic is up 9 percent. Mahaney is maintaining his “hold” rating on eBay as well as a $16 target price (at least check, shares of eBay were trading at $17.30).
Still, he says, eBay is making progress on buyer and seller initiatives. On the buyer side, eBay has been trying to improve customer service and promote daily deals through new channels like Twitter. It also plans to introduce a new, improved search engine in the fall.
According to Donahoe, eBay’s top sellers are happy with the new discounts, incentives for free shipping and high placement in search results. And according to Manahey, its integration of BillMeLater will also benefit larger sellers. Mahaney said that smaller sellers, who have been displeased with many of Donahoe’s changes, may respond positively to today’s news that eBay is letting sellers list five items for sale each month without paying the up-front listing fees.
Or maybe they won’t. As Dow Jones pointed out, items that are listed for free will face fixed commission fees of 8.75 percent (or $20, whichever is higher) — instead of commissions that vary according to the price of the item for sale. That means, in some cases, the waived listing fees will mean higher commissions than under the old system.
Some smaller buyers may be willing to accept the olive branch that eBay is offering by waiving listing fees on five items per month. Others will surely point out that the move doesn’t fix a fee system they feel is tilted in favor of top sellers. But the biggest issue facing eBay right now is buyers – why aren’t they returning to a bargain-oriented site in a recession?