Over the years, eBay (NASDAQ: EBAY) has overcome numerous adversaries, from customer fears about online purchasing to the very real threat of physical retailers. It has defeated or absorbed dozens of competitors, constantly morphing to offer fresh services to its users while continuing to draw a hefty profit. However, as Gary Sattler recently noted, eBay's unbelievable success may have begun to sow the seeds of its downfall. Once a counter-cultural answer to the monopoly (and monotony) of physical retailers, the online giant has become the dominant culture. Moreover, it's monopoly of online marketing and apparent lack of concern for its users have resulted in massively increased prices and fees, driving many of its sellers right out of the market. As if eBay's self-destructive tendencies weren't enough of a problem, France's courts have joined in on the march to disaster. In an attempt to protect the integrity of French luxury brands, a French court ruled that eBay must pay approximately $63 million to French companies whose products have been victimized by online sales. The plaintiff, LVMH, which represents several French luxury brands, argued that its businesses have been undermined by eBay. Ebay's first crime was permitting counterfeit copies of Vuitton and Dior bags to appear on the site. As if this wasn't enough, the company was cited for permitting actual bottles of Dior, Kenzo, Givenchy and Guerlain perfume to be sold, as these are only supposed to be sold in specialty stores. On the surface, this seems like a minor hiccup, but the promulgation of high-quality knockoffs and the availability of partially-used luxury brand items are central to a large portion of eBay's business. It seems like the loss of these two lucrative revenue streams could cost the company a great deal.
Between increased shipping rates, French courts, and its own excesses, it doesn't seem like a good time to be eBay!
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Reader Comments (Page 1 of 1)
6-30-2008 @ 7:01PM
Kate said...
eBay says, "we care about our buyers", then they say, "we care about our sellers". In truth, eBay only cares about eBay and what makes eBay money. Their final value fees are exorbant and now sellers are left at the mercy of their buyers, not being able to retaliate for underserved negative ratings. Without out sellers, eBay won't have to worry about pleasing buyers. eBay... time dated.
6-30-2008 @ 7:03PM
Bruce Watson said...
Kate-
I'm afraid you're right, which really saddens me. I love eBay, but it looks like it's definitely jumped the shark.
7-01-2008 @ 8:26AM
Buballoo said...
Why would a French court ruling hold over an American company. I love the French and all it just seems that suits like this could be drummed up all over the globe as ecommerce expands. Does this suit have teeth. Let's put on the lawyer pants and walk down that path.
7-01-2008 @ 8:38AM
Bruce Watson said...
Buballoo-
Actually, the lawsuit was against "eBay France," the French eBay franchise. I think the idea is that eBay will need to weigh the costs of settlement against the revenue loss if they have to fold up camp in France.
7-01-2008 @ 10:10AM
Ashley said...
I have been an eBay'er for 10 Years!.... I would recommend that Everyone find another Venue to Buy/Sell Your Goods...What You are seeing is the beginning of the "Decline and Fall" of eBay...Recent eBay Management Decisions have ruined the eBay Forum...They Forgot to take into account that most Sellers...are also Buyers!...The Negative impact of the new One Sided Feeedback Rule and 21 day Paypal Holding Period is destroying the all of the "FUN" and the momentum is disappearing FAST....If Management doesn't reverse these rules IMMEDIATELY...eBay will be DOOMED!!
You Probably need to stop wasting You time and "Money" listing on eBay and Try to Find another place to Sell while ebay Implodes!! If You Own any eBay Stock..Sell It Now!!... Before It's TOO LATE!!!
7-02-2008 @ 10:40AM
Mozelle said...
eBay has become a dirty word to buyers and sellers alike. Their stock is stagnant and has been for years. Another company that will bite the dust.
7-02-2008 @ 7:39PM
Hani Durzy said...
The French court ruling is terrible for anyone interested in protecting the rights of consumers and ensuring that ecommerce can continue to be a driver of innovation and economic growth. Fortunately, eBay is appealing it.
With the ruling in the Tiffany v. eBay case in the Federal District Court in NY imminent, there is the risk of the same anti-competitive behavior coming to our shores.
I work with NetChoice, the DC-based advocacy organization that fights for choice, competition, and innovation on the Net. Their take on the ruling and its implications for ecommerce are here: http://blog.netchoice.org/2008/07/french-court-er.html
7-03-2008 @ 1:41PM
Zaman said...
I strongly believe that eBay is home of Counterfeit goods and eBay is 100% supporter of fake and counterfeit seller, as much as 70% low value goods are either fraud or fake, there are no way they don't know about it as they claim, they are very unfair to both buyers and sellers, sorry to say eBay should be BANNED.
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