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It’s November 25th, 2008 and eBay is going down in flames. Traffic has dropped off 20% this year alone with no hope in sight. What went wrong with the company besides those awful commercials? Here’s 10 Reasons why. Feel free to add to the list.

1. Overpopulated. Ebay got out of control 4 years ago with the whole ‘eBay Millionaires’ hype that spawned into ‘Sell Your Stuff On eBay’ brick and mortar stores and ultimately led to a massive influx of ubiquitous products.

2. Poorly Regulated. Counterfeit items and fake products flooded eBay all the way through 2006. Luxury brands have actually had to hire employees specifically to find people selling illegitimate items claiming to be ‘Real’. I prefer the term ‘Not Guaranteed Authentic’, but either way, it was detrimental to eBay.

3. Scams. Next we saw the Nigerian scandals popping up. For the last 2 years, it has been such a task to resell any technology item like a mobile phone or a laptop. Countless times I tried selling my Blackberry or Apple Macbook only to find the winning bidder is located in Nigeria and is trying to pull off some scam with a foreign bank account.

4. User Experience. Once eBay had it’s millionaires, along came the businesses that made their living off of it. New software was built for on-demand mass listings on eBay where eRetailers were clearing out their warehouses for decent margins. Now, when I search for a golf club or a pair of sneakers on eBay, I may as well be on Shopzilla, sifting through professional listed products. The whole ‘Auction’ experience on the users end has become entirely depleted. The original eBay users went there because it was an ‘event’ and if you were able to get the item, you actually felt like you won something. Now I feel the same budget guilt buying something on eBay as I would buying a Cinnabun. Sometime worse because I waited 7 days for an auction to end and found a better deal on another web site.

5. Speedy Purchases. Once Amazon rolled out ‘one-click’ purchases versus ‘3, 7 or 10 day auctions’ on eBay, I could never figure out a reason why I would ever go back to eBay to find items. When eBay was one of the first movers in the online shopping place, it felt alright to wait for an auction to end so long as I was getting a good deal on something I wanted. Now sifting through good deals versus bad deals, combined with the hassles of eBay makes me always want to go to a reliable online Amazon type site, where I can count of my item being slightly higher priced (which now is rarely the case), but I know I purchased it, I get a legitimate receipt and I can can count on it arriving to my doorstep 99.9% of the time. ‘Buy-It-Now’ just didn’t make the cut man.

6. Business Model. As eBay progressed, they constantly were trying to figure out how to scale the business beyond just it’s core, which is auctions. They made a mistake by taking the old Geo-Cities mentality of, if you aren’t on our site, then no one will find you. eBay wanted to become the premier destination for small-mid size businesses to be found and make sales online. This created a mass confusion for consumers who once went to eBay for a unique experience. It became the ’strip-mall’ of the Interent.

7. Paypal Hassles. When eBay was hot, PayPal grew hot with it and became a household name for buying things easily online. Every eBay merchant was signed up to use it, and in turn, every consumer had a PayPal account. Still one of the most profitable arms for eBay to this day, PayPal too has had its share of problems with both business and consumer headaches involving payment fraud, disputes and more. But even PayPal is beginning to slip. Let me ask you one question. Can you even remember your PayPal username and password? Didn’t think so Mr.1999

8. Skype Confusion. When eBay bought Skype, everyone expected a revolutionary integration into shopping, where sellers and buyers could talk instantly over the internet to recreate a somewhat realistic experience. Everyone thought it would come fast, but it dragged on and on, and when it finally debuted, no one cared anymore. Skype is finally making some money on its own, but the dream was sadly never realized for eBay.

9. High Seller Fees. eBay became so focused on businesses, that Listing Fees for the individuals who actually wanted to sell an item or two went through the roof. Suddenly eBay didn’t care about those who helped create the foundation for an early age user generated success story. Note to eBay: Business generated is not the same thing.

10. Competition. Even Craigslist does a better job of filtering out garbage than eBay does. These are two web 1.0 companies that have taken on lives of their own. Craig is surviving due to low costs, not selling out to the corporate slick and letting users continue to sell event tickets. It also still looks like crap, which still makes users believe they may find a deal. Craig never tried to grow up out of what he knew his business was. Other than Craigslist, we have seen the rise of many similar online storefront providers such as Amazon who take care of shipping fulfillment as well. Not to mention, many brands have been able to survive on their own outside of aggregators by working hard on their search engine optimization and other online marketing strategies.

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