The ‘eBay Effect’ is Destroying the United States Economy Says Terry Allison of Montres Allison
Published May 27th, 2007
How eBay Is Destroying The American Economy by Terry Allison
Ebay is a juggernaut. Ever forward. However, it has become very apparent that ebay is seriously damaging the economy of the United States of America.
Here’s how: ebay started out as a venue in which people were primarily buying and selling pre-owned items until shortly later, businesses were selling new items. Thousands of new businesses cropped up and many of those businesses were importing their wares from the far east. A few years later, many ebayers now hail from the far east. Many of these companies are the same companies that were once supplying the US based companies. But now the US based ebayers cannot compete with their far east rivals due to shipping and customs fees. The higher markups are gone. Prices have fallen. And many of the thousands of businesses have dropped the prices of their products to below cost in order to liquidate inventory. This process in and of itself has had a profoundly negative effect on the US economy.
Ebay also provides a medium in which a seller of (arbitrarily) a Rolex wristwatch can choose to use blurry photos and misspell many words or have a low feedback rating. This reduces the final price for which his item will sell, but also (very importantly) damages the final price a reputable competitor with professional photos, no misspellings, and a perfect track record. Ebay has a function in which members can browse closed items to see their final prices. If a seller sees a Montblanc pen that went for 20% of suggested retail, he may not take into account whether or not the seller was able to create sufficient value in the listing to ensure an appropriate price. It is the author’s opinion that the potential customer will look at the price and determine that he will not pay more than the pricing gathered in previously closed auctions. This function and process of ebay has categorically driven prices down in many cases to prices that do not allow a company that is holding inventory to sell its inventory for a profit. So companies liquidate, drive prices down more, and then go out of business.
It is the opinion of the seller that ebay has been a primary catalyst in many of the financial woes facing the US economy. The effects of going out of business can damage the housing market and can spread like a virus through our entire economy. I believe this is what has happened. It is the author’s opinion that the United States government should enact legislation to restrict certain practices and policies on ebay to ensure that “the ebay effect” doesn’t completely destroy the US economy.
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