You would think they would be doing better...

Late last year ebay decided to change their pricing stratagy. The result is explained below. It also clearly demonstrates what happens to a product/service when they have an available subsititute such as Craig's List.

From the Wall Street Journal
-------------------------------------
EBay Inc. reported a 31% slump in fourth-quarter profit and the company's first quarterly revenue decline, as the online seller struggled with one of the worst environments for consumer demand in decades.

Revenue fell 6.7% as shoppers pared holiday budgets and shifted away from eBay's core online auctions. And eBay indicated that conditions remain uncertain in the current quarter, issuing ranges for revenue and profit that are below estimates on Wall Street.

While eBay said its online payment and communications units grew, revenue in its core marketplace business -- which accounts for 55% of revenue -- declined 16%. The company attributed the drop to the strengthening dollar given the company's large international exposure, and the global slowdown during a crucial shopping season.

But eBay, the largest online retailer by volume, also appeared to lose some ground to fixed-price sites such as Amazon.com Inc., some analysts said. "EBay is losing market share compared to other e-commerce players like Amazon," said J.P. Morgan analyst Imran Khan. "They still have a lot of work to do."

Shares of eBay fell 6.5% to $12.41 in after-hours trading, erasing gains made earlier in the day. The stock traded on the Nasdaq Stock Market at 4 p.m. at $13.28, up 73 cents.

EBay profit dropped 31% as CEO John Donahoe's turnaround skidded.
John Donahoe, who has been eBay's chief executive for a year, said he was pleased with the progress the company has made to turn around its flagging marketplace business. "The changes are not working fast enough, but we are on the right path," he said.

He also emphasized that the faster-growing nonauction portions of the business are becoming as significant as the traditional core eBay business. "In the future, if we connect the buyer and seller through an ad, that is as good as an auction," he said.

For the past year, Mr. Donahoe has pushed for eBay to sell more fixed-price goods and changed the company's fee structure. In the fall, eBay said it would lay off about 1,000 full-time employees, or 10% of its work force.

For the fourth quarter, eBay reported earnings of $367 million, or 29 cents a share, down from a $531 million, or 39 cents a share, a year earlier. For the fourth quarter, revenue was $2.04 billion, down from $2.18 billion.