eBay began 2008 with major changes to fees, feedback, new seller standards and Best Match search visibility. Additional changes were announced during the year, including a ban on paper payments, a new listing format, and shipping limits in some categories. Executive turnover and layoffs rounded out the year. AuctionBytes' February 3rd article, A Seller's Guide to eBay's January 2008 Announcements, was a blueprint to the wrenching changes.

The article predicted, "One change that isn't getting much attention but may have far-reaching effects once it is rolled out is eBay's change to the default sort-order of search results. eBay is making Best Match the default sort order using an algorithm based on a number of factors. This may make it difficult for sellers to find their items in search results, and AuctionBytes is expecting some reaction from sellers - and buyers - once Best Match rolls out and its effects can be seen."

For those sellers who were barely managing to adjust and cope with all of the other changes eBay announced in 2008, Best Match may have been the straw that broke the camel's back. eBay sellers who had invested countless hours and resources into understanding how their listings would appear in search results were suddenly in the dark about how to optimize their titles, descriptions, categories, features and pricing. And worse, Best Match proved to be a moving target. The introduction of the Recent Sales algorithm into Best Match in September was yet another curve ball from eBay, one that favors high-volume sellers of commodity goods.

Implementation and Communication Issues
Implementation of new policies and features, always an Achilles' heel for eBay, was predictably poor. It banned sellers from accepting checks and money orders in October, but because it was so difficult for sellers to make bulk-edits to their listing descriptions, eBay delayed enforcement until mid-January. (Expect this to become a major issue soon, as sellers who've built up a Recent Sales history may see it disappear when they change their listing descriptions to comply with the policy.)

eBay's communication with sellers was also poor, as it first announced and then modified, delayed or reversed several changes during the year, including the no-links policy, as we described in this July article.

Challenges for Sellers
As shipping costs continued to increase, eBay exerted pressure on sellers to offer free shipping, adding strain on merchants to maintain their profit margins. Sellers hoped for a lift in the fall as the holiday-shopping season began, however, they were confronted with even more challenges: a dramatic downturn in the economy (a factor obviously outside of eBay's control), severe restrictions on selling branded items, and the prospect of dealing with high-volume Diamond PowerSellers on eBay as part of Operation Catalog. While we reported on rumors of the program in September, it wasn't until November that eBay publicly acknowledged its "Larger Merchant Services" API - yet another example of the company's shortcomings in communicating with its sellers.

An interview with Mercent's CEO shed light on how large companies view eBay as a selling platform. As large sellers moved on to the platform, small eBay sellers looked to expand to additional channels, and 2008 saw the emergence of the "eBay alternative."

Rise of the eBay Alternative Site
Two factors contributed to a shift in 2008 that helped alternative sites. The first factor was the sentiment from those small eBay sellers who felt they must look for additional or alternative selling venues due to the amount of change taking place on eBay. The second factor was Google Base. eBay alternative sites used Base to send feeds to Google to help their merchants' listings get found on Google searches. Suddenly sellers were finding success on sites like eCrater, Bonanzle and other sites, motivating them to invest more on these marketplaces and storefronts. New sites used the latest technology to make their sites easier to use and more visually appealing to shoppers.

Amazon.com, which for several years had cherry-picked eBay's best high-volume sellers, continued to open its platform to third-party merchants, but in a very controlled manner. While some sellers achieved higher selling prices with less customer interaction than on eBay, other sellers had similar complaints about Amazon's policies and enforcement as those of eBay.

eBay Management & Marketing Changes
In the spring, Meg Whitman stepped down as President and CEO of eBay, replaced by John Donahoe, and Bob Kagle resigned from the Board. Since it seemed Meg had already handed the reins to Donahoe last year, her formal departure was a blip on the radar screen. Meg's team disbanded: Bill Cobb, Rajiv Dutta, Simon Smith and others left, joining their colleagues who had left the company in 2007, including Rob Chesnut and Jordan Banks. Managers who left or are reported leaving include Jim Ambach, Matt Halprin, Rachel Makool and PR spokesperson Catherine England.

In the fall, eBay laid off 10 percent of its workforce and consolidated its international operations. It also phased out its live-auctions platform, brought its Blackthorne selling tool in-house to San Jose, and reduced its "community" resources, including the cancellation of its eBay Live conference in 2009. It also acquired some classified sites and Bill Me Later, which offers a method of payment that allows shoppers to finance their purchases without using a credit card.

eBay changed its marketing strategy, abandoning television advertising in favor of a coupon program and participation in Microsoft's Live Search cashback program. Earlier in the year it radically changed the eBay Partner Network, the affiliate program that drove buyers to the site, moving the program in-house and changing to a value-based pricing model. eBay was forced to conduct a third-party audit to address concerns from participants over earnings discrepancies after taking over the administration of the program.

Are the Changes Working?
With both buyers and sellers complaining about eBay's new search, eBay displaying ads for competitive retail sites, and traffic down year-over-year, many remain skeptical that eBay's move to become a more mainstream retailer is the right decision. While eBay blamed...

Motley Fool has reported that holiday spending at eBay this year is lower than last year, despite the fact that one would expect them to be a good source of lower priced gifts in these hard economic times.

Meanwhile Amazon has reported higher sales numbers over last year.

Are people forgoing secondhand for discounted new items? Or is there another reason eBay is being bypassed?

To truly see what is happening I would like to be able to track the number of sales being done through Craigslist. Given you have to generally pay for shipping when buying through eBay, is it possible people are going through Craigslist to save the shipping and increase the buying power of their total dollar spend?

If we had these numbers maybe they would give eBay a way to continue their growth potential.

Online spending did have a spurt for the last weekend before Christmas as we reported the other day.

Could eBay have another growth spurt if they made...