IN A PESSIMISTIC annual report published on Friday, Ebay corp. admitted that it is having trouble getting customers to return to the site, not to mention the challenges it faces trying to attract new users.

The annual shareholder report was filed with the U.S. Securities and Exchange Commission, and in it, Ebay alluded to an assortment of new threats to its business, which, it reckons, reflect "changing customers demands."

Ebay's report comes hot on the heels of a sellers revolt, in which millions of traders boycotted the site after controversial changes were made to procedures and fees. Ebay accepted, in the report, that fee and policy changes made in January have been controversial with sellers. The changes significantly upped the cost of flogging stuff across the board. The week long boycott made a huge impact on Ebay's business, which, according to Tech Blorge, saw a 13 per cent drop in auctions.

With its auction business seeing significantly slowed growth, and the total value of goods and services sold on eBay, plummeting recently, Ebay's cuts from the transaction prices have taken a significant blow, it confessed. Ill-advised business decisions, an expected weakening of consumer spending, and the fact that both buyers and sellers now have a mixture of practical alternatives open to them from Ebay's competitors, mean that the company has good reason to worry about the year ahead.

In the report the San Jose, California-based company said, "We face challenges in the U.S., U.K. and Germany, which are our three largest markets, as growth of listings, active users and GMV on the ebay.com platform in those countries has slowed".

Ebay revenue has slowed significantly in recent years, down from rates of 30 per cent to 40 per cent, with rivals Amazon.com enjoying surging growth in their wake. But its not all doom and gloom for the internet auctioneer. According to Reuters, Wall Street analysts speculate that Ebay can expect revenues of $8.7 billion in 2008, a 14 per cent increase on 2007. µ