- Stores in Search - tried and then reversed after 45 days.
- Punitive fee increases on Stores (Aug 2006)
- Official Launch of eBay Express [eBay Live 2006]
- Re-focus on CORE with Windorphins and "Shop Victoriously" (2007)
- Meg leaves Q1 2008
- New management and new Focus on Fixed Price (2008)
Sunday, September 14, 2008
The Network Effect Works in Both Directions!
According to Wikipedia: "In economics and business, a network effect (also called network externality) is the effect that one user of a good or service has on the value of that product to other users....
.... Over time, positive network effects can create a bandwagon effect as the network becomes more valuable and more people join, in a positive feedback loop."
We've seen real world examples of the "network effect" in the exponential growth of companies like MySpace, Facebook, Twitter and one of the first "network effectors," eBay.
During eBay's formative years, the site was dominated by sellers, or more accurately traders; as most users on the site, both bought and sold. As the site grew and became part of popular culture, the "network effect, began to have an impact and propelled the site to exponential growth. As the user base grew, the mix of users began to change; creating positive results for sellers. Soon there were more buyers than sellers and I can attest to the benefit this had for those of us making a living on eBay; as a seller, my business grew over 400% from 2002 through 2003, but as word spread, that sellers were "making millions," it began to also increase the number of sellers coming to the site.
At the beginning of 2004, I was projecting sales of $6 million by the end of the year, but when all was said and done we only reached $4.6 million, a 28% increase from the year before. My company began seeing problems in March of 2004, as a flood of new competition came to the site and I was slow to react, but that's another story. I believe the media category started to see problems before other categories.
Adam Nash, a former Director of eBay Express, explained this phenomenon in his A Eulogy for eBay Express; "It all started in Q4 2004, which was a real wake-up call for eBay. It was the first quarter where the metrics made it clear that there were significant issues with the way buyer demand was scaling on eBay.com."
So the issues we see on the site today, began almost 4 years ago and nothing eBay has tried since has been able to stem the tide:
Through all of these attempts at reversing the trend, we have seen no improvement. In fact the current problems on the site are greater than at any time in eBay's history; buyers have disengaged and sellers have moved to other venues.
Has the "network effect" worked its magic in the opposite direction? I think a case can be made for that. Buyers left first and are being followed by sellers, the exact opposite trending of the early years of eBay.
The fact is, it takes less time to unwind something then it does to wind it up. eBay grew from 1995 to 2004, to reach the top of the mountain, but it appears, once they go to the top of the mountain they they just rolled over the other side; that growth is unwinding and appears to be spinning out of control.
Just my 15%