Some Positives, But Problems Persist at eBay 21 comments
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In a prior write-up on eBay (EBAY) (see eBay's Demand Problem Worsens), I quoted data from Jeffries & Co. analysts Youssef Squali that eBay's global listings were up close to 40% YoY, but that traffic to the site was down 11% YoY, suggesting that the demand problem had not been fixed
However, I have analyzed conversion rate data for the quarter and the data suggests a surprising improvement in auction conversion rates on a sequential basis. On the other hand, the fixed price conversion rates entered a tailspin in early September and never recovered in 4Q. Taken together, the overall company conversion rates remained steady from the third quarter.
Wall Street Analysts have suggested that company wide conversion rates have deteriorated in the quarter, so if my data is correct, then the increased listings with steady conversions would be a positive for eBay and would suggest a possible beat for the quarter.
However, it is too early to call a turnaround in the business because eBay's structural problems persist and the demand problem has not been corrected. Although eBay has been one of my favorite companies to watch over the years, I am staying on the sidelines as there are more attractive investments with better upside potential and with lower operational risks.
From A Recent Note By JPMorgan Analyst Imran Khan:
We are maintaining our Neutral rating on eBay. We believe weakness in usage and conversion, as well as a more competitive broader eCommerce market, present challenges that will make it difficult for eBay stock to outperform in the coming months. Our 12-month price target is $17.
• Marketplaces usage metrics point the wrong way. ComScore data indicates that the number of US users coming to eBay’s sites declined 17% Y/Y in the three months ended 10/08. We believe the decreased usage and difficulties in optimizing the search algorithm have resulted in significant weakening of conversion for eBay listings. These factors are offsetting the gains from revitalized listings growth on the platform.
• Are online auctions a mature market? Auctions traffic has been anemic, as we believe a more mature eCommerce market is increasingly driving buyers to expect a top-flight user experience and an ability to order items, especially new items, immediately. We think this shift presents a challenge to eBay: auctions are a near-monopoly for the company, whereas consumers seeking immediate purchases have a wealth of options, of which eBay is only one.
• PayPal unit remains a prize asset. Payments revenue was up 32% Y/Y through 9M’08, and we are projecting 22% growth in F’09 as the off-eBay side of PayPal remains a key growth contributor; additionally, we expect a slight benefit as the impact of the Bill Me Later acquisition is folded in.
• 2009 drivers. In our view, the following factors will drive shares in 2009: (1) changes in Marketplaces conversion driven by better search, (2) corporate structure changes such as a sale of Skype, and (3) the impact of any credit market developments on the receivables book at Bill Me Later.
• Maintaining 4Q’08, F’09 estimates. We are maintaining our 4Q’08 and F’09 revenue, EBITDA and EPS estimates; we are introducing new F’10 estimates.
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This article has 21 comments:
Instead try this:
Look around your house for unwanted items. Take some pictures, and try listing them on eBay.
When you see the hoops to be jumped through, high fees, lack of item views, faulty seller rating system, no customer support, etc, you will get the Big Picture.
Plus check out the discussion boards to see how p*ssed-off almost every member has become.
So put away your calculators and get your feet wet!
You can't make a trusted 4-wheeled Chevy into an expensive, high-flying Concorde without losing your bank roll.
Donahoe= dead company walking!
PS
Bob C is right on. Calculators won't show the problems at eBay; only a hands-on user will fully understand the growing malignancy there. The only fix is to cut out the new CEO and all his changes, and go back to what made eBay what it was.
Heck, no! In this recession, auctions should be booming as buyers (the ones that are left) need to 'buy down'. Ebay should be doing better than ever, but they are trying to morph into something they're not.
Sellers have left by the thousands, or are just not dancing to ebay's lousy music. Ebay ignores the fact that sellers are buyers too, and if you make the seller MAD, why would he continue to be a buyer?!
FORCING Paypal down both the buyers & sellers throats, and no longer allowing paper payments have removed a huge group of transactions on both ends.
All the 2008 seller policy changes are what is the problem with eBay! And no calculator will compute that.
I have realized that the only people that can afford to sell on eBay are the diamond PowerSellers that eBay has been bringing on-board and catering to. Replacing honest hard-working sellers in the process - the only ones struggling to keep their business afloat. These "diamond PowerSellers" pay little or no listings fees and significantly decreased Final Value Fees.
These automated Mega-giants are nothing more than robots designed to pump out product with no customer service - just like eBay! They are replacing long time honest sellers that made eBay a once great site, leaving in their wake scammers, dishonest sellers and more imported garbage. eBay doesn't care where or how they get your money, as long as they get it.
These non-customer oriented diamond PowerSeller mega-giants can survive with hundreds of negative feedback's per month, off-set only by the shear number of total feedbacks received. Have you noticed negative feedback mysteriously being removed from some of these diamond PowerSellers?
This makes it "appear" that the new mega-giants have good service and a good reputation. Very much like ALL BUYERS NOW HAVE A PERFECT POSITIVE FEEDBACK SCORE. They don't. eBay wants you believe (along with the shareholders) that the site is nothing less than angelic.
Do you see a pattern arising from the evil ashes? eBay kicks back and gobbles up your hard-earned profits, while the small seller continues to struggle and hand over the cash monthly while constantly trying to compete with eBay's new pets - the diamond PowerSellers.
eBay is nothing more than an out-sourced wanna-be Amazon, with draconian policies and nothing unique to offer. Just the same old over-seas garbage.
And don't forget... PayPal is the only life preserver keeping eBay afloat. Another idea "acquired and assimilated" by eBay from someone else who thought of it.
Be Free from the Fee! www.Bonanzle.com
The above is my opinion, of course.
Less than 1% of users go to the boards. And most of the time it's bitter ex-users that couldn't keep their DSRs up because of shotty service! The people that do go to the boards to talk positive about their ebay store get attacked by those bitter ex-ebayers.
The fact is, many good sellers are reaping the benefits of the crappy sellers leaving.
> When you see the hoops to be jumped through, high fees, lack of item
> views, faulty seller rating system, no customer support, etc, you
> will get the Big Picture.
Yes, the unfortunate truth is that eBay has imploded with it's own bad policies
as the time bomb.
Etsy released December 2008 sales numbers that show just how much traction the online marketplace for homemade and vintage goods has gained in the past year. The value of goods sold on the site was $12.9 million - a 20 percent increase over the previous month, and a 153 percent increase from December 2007. Etsy merchants sold 815,327 items in December 2008, a 13.4 percent increase from November and a 140 percent increase year over year.
Additional statistics for December 2008 include: 1,098,644 new items were listed (down from 1,143,942 items in November); 164,789 new members joined the Etsy community, including 19,481 new sellers; and 410,365,372 page views were recorded on the site, essentially the same number as November.
Ioffer.com's sales and growth stats are just as impressive, and many other smaller sites like bonanzle, ecrater, atomicmall and ebids are experiencing massive growth registering as many as a 1000s new sellers daily many of who are attracting many of their ebay customers to follow.
It amazes me that Analyst devote so much time crunching numbers, yet spend so little time LISTENING to Ebay's ONCE most loyal customer as to the REAL reasons for many of Ebay's shortcomings like GMV, user stats etc....
In Ebay's quest to concentrate solely on catering to a very small percentage of it's userbase while completely screwing over the masses....The sellers Donahoe refers to as "NOISE" are not only taking their business elsewhere, but taking their customers with them to.
Now that the holidays are over....investors can expect another large exodus of ebay sellers of all businesses sizes establishing storefronts on the net and conacting their entire ebay customer base about their new online storefront location.
Ebay's greed and lack of respect for it most avid/loyal user base with be the downfall of Ebay marketplace in 2009.
Trouble is, after a while, Meg started to believe her own PR, seeing herself and her hand picked lieutenant as a divine entities. So they thought they could lie to the media, their customers, their employees and Wall Street. Like the much promoted line from Nixon, "If the President does it, it's not a crime." With Meg & Donohoe it's, "If we do it, it's genius!"
Meg, Inc. thought they could abuse and insult their customers forever. Turns out that judgment was just as poor as their judgments about expansion and acquisitions. I could name 2 dozen sellers who have given up on Ebay in the last 2 months -- not because of the sluggish market but because they're offended by Ebay management's treatment. If you analyst folks had any idea how screwed up Ebay really is you would laugh and laugh that such a company is still traded. When you think about Ebay, think about Enron, except that instead of Jeff Skilling and Ken Lay, Ebay is run by Bubblecut Barbie & Ken. If anyone on Wall Street wants to see Ebay returned to its glory days, the fix is simple: put the customers back in charge of steering the boat. We built Ebay in the first place and we can fix it, if Ebay management would get the hell out of the way.
iOffer.com reported record dollar sales, units sold, new items listed, and new memberships over the past six weeks from November 1, 2008 to December 15, 2008. The "trading community" marketplace encourages negotiation between buyers and sellers and reported key metrics for the holiday shopping season (November 1 to December 15). Data from 2007 is listed first, followed by the same period in 2008.
Dollar Sales: $5.5 million vs. $15.1 million (175% growth)
Unit Sales: 121,323 vs. 275,813 (127% growth)
New Item Listings: 470,846 vs. 1,213,476 (158% growth)
Traffic: 3 million visits vs. 9 million visits (198% growth)
Page Views: 31 million vs. 80 million (158% growth)
New Member Registration: 44,192 vs. 126,175 (186% growth)
That's a whole lot of product that once used to be listed on ebay, that ebay made money on regardless of whether it sold or not. The colmination of ebay user traffic continuing to migrate to other sales venues obviously is impacting ebay's bottom line more than there care to admit. I'd venture to say at least 700,000 sellers have either stopped selling and BUYING on ebay this year, or greatly reduced both. Not only has ebay lost all the revenues from sellers fees from all these sellers, but MANY of the sellers that left Ebay this year pissed off were some of the most frequent shoppers on ebay so Ebay lost the collective buying power of a massive number of once frequent ebay shoppers.
The 800 LB gorilla is now the 700 LB gorilla and shedding weight quickly.
A brand new site just started is www.iwoohoo.net
I feel it could be the start of something big!
In a slumped economy eBay should naturally be the best alternative for shoppers wanting to get the biggest bang for their buck.
However, this is not the case anymore. WalMart has had significantly higher conversions and has fared the recession better than eBay.
Why?
Because wise shoppers (buyers) have realized eBay is nothing more than an over-bloated greedy pig with outrageous prices!!! And it is NOT the sellers fault.
When sellers have to increase the price of their products in excess of 15%, plus 2.9% PayPal fees (an eBay company - how convenient since sellers can no longer accept Money orders, only PayPal), plus listing fees, plus store fees, plus conversion fees, and no protection, this is a recipe for complete and total destruction. In fact the only zero in this equation is eBay's customer service. That part comes easy to them.
Follow the trail:
An original item cost of $49.99 with $13.99 shipping (modest shipping costs considering UPS and USPS have raised their costs yet again), will actually translate to a minimum selling price of: $73.91 and up! AND this is without adding your own profit!!! This figure is only to pay off the greed monsters.
Here's the breakdown:
*Original item cost to seller refers to what it will cost the seller to purchase this item from a distributor or manufacturer and then to re-sell it:
Original Cost: $49.99 x 15% (eBay FVF Fees)
eBay FVF fees: $7.50 (sub-total + $57.48)
Listing fees: $.35 (sub-total + $57.84)
Shipping: $13.99 (sub-toal + $71.82) x 2.9% PayPal Fees
PayPal Fees: $2.08 (sub-total + $73.91)
GRAND TOTAL: $73.91 Without any profit!!!
Now let's add some profit to this figure - I mean.... this is why we are in business right? Remember, your profit should never be less than what you pay to the monsters to sell an item. So let's add a profit of $10.00.
Now we have a whole new ball game! Different tiers and percentages that even an veteran accountant would have trouble understanding. I'll try to break it down for you:
Original Cost: $49.99 + 10.00 profit (sub-total $59.99)
x 15% eBay FVF Fees (Tricky, so watch carefully)
15% x the first $50.00 = $7.50 plus 5% over $50.00 which would be on $9.99 x 5% = $0.50
eBay FVF Fees are now $8.00 (sub-total $67.99)
Listing fees: $.35 (sub-total + $68.34)
Shipping: $13.99 (sub-total + $82.83) x 2.9% PayPal Fees
PayPal Fees: $2.40 (sub-total + $85.23)
GRAND TOTAL: $85.23
OH MY GOSH!! $83.23 for a $49.99 item!!!
This is why eBay IS failing! WalMart definitely has better prices. Buying on eBay is not a deal anymore. Not now, not tomorrow, not ever.
There you have it. The recipe for complete and utter destruction of a once great place to sell. Rest in peace you greedy monster.
www.Bonanzle.com
Great show of restraint, it had to be hard to not use the B word, LOL
Your post is dead on!
My first sale came after only 3 days on Bonanzle, with just 6 items listed, and no items link, yet, to the Google base feed.
It was a much happier moment than my first sale on eBay, 11 years ago!
There is a seller on Bonanzle that is selling new 20, 50, and 100 dollar bills, you just have to pay with pre 1965 silver US coins.
Can you imagine trying that on eBay?
Best of luck to all the sellers seeking alternatives, no matter the venues that you choose.
Believe me, the "B" word was itching to be posted! lol!
That's great! I'm so happy for you making sales at www.Bonanzle.com.
I remember congratulating you from the seekingalpha.com/artic... article. I knew you'd make fast sales after taking the plunge away from FeeBay.
I found it comical that eBay promoted their free shipping BS to the sheeple BEFORE the holiday season was even over - trying to hook them until March. LOL! Talk about desperation!! And they still haven't beat Amazon yet.
eBay should get rid of the "IT" slogan and replace it with: "When I grow up - I wanna be Amazon!"
In fact, here's a great article on their continuing attempts at being Amazon:
eBay Payment Changes Move It Closer to Amazon Model
www.auctionbytes.com/c...
Like I said before, eBay has never come up with ANY original ideas. They simply acquire and assimilate ideas (like the Borg) from the real thinkers.
Keep on selling and making REAL profits on www.Bonanzle.com, Bob C!
Good Luck!
I was part of the beta testing and WOW! Have they got their site made easy and almost every possible extra you can think of.
For those of you have used Auctiva (a third party eBay listing tool) throughout the years, they too have decided to spread their wings and break free from the greed. (IMO)
They have an unbelievable amount of followers, so gaining traction will most likely not be a problem at all. Check it out!