Double blow for eBay

Online auction site eBay has had a bad couple of weeks: a banned advert and reports of falling profits.

The web marketplace’s poster campaign read: “Guess what? 25% cheaper than the High Street on brand new items.” But the Advertising Standards Authority ruled the advert was misleading because it was not clear the comparison only related to a few High Street stores, such as Debenhams and John Lewis. The ASA said consumers reading the poster would take its wording to mean eBay was cheaper than all main High Street stores for all new items, despite there not being enough evidence to support the claim.:

“Because an average had been taken of all the stores’ prices, it was possible that one store could have been regularly cheaper than eBay, or regularly much closer in price to eBay,” a spokesman said to reporters. The ASA also ruled that it had not been made clear enough that furniture, garden goods, luggage, desktop computers and toys and games had not been included in the comparison.

EBay are the victim of only one complaint having been made. “The single complaint received by the ASA regarding our Christmas 2008 ‘25% cheaper than the High Street’ advertising campaign stands in stark contrast to the 15 million shoppers who return to eBay.co.uk every month knowing they’ll get exactly those kind of deals,” they said.

Worse news is that eBay made a net profit of $357.1m (£247m) in the first three months of 2009, down from $460m in the same period a year before. Those of you following the Biz Quiz will already know that last week eBay acknowledged that Skype - the web telephone business for which it paid $2.6bn in 2005 - did not fit in with the rest of the company, and would be sold off.