eBay: Mapping Where It Went Wrong

Sometimes all you need is a map to see where a company is going, or where it got on the wrong track. Take a look at the eBay (EBAY) acquisitions above plotted as a subway map created by the folks at MeetTheBoss. Click on it for a larger, clearer map. (They also did the same thing for Amazon acquisitions).

The map is color-coded, with different subway lines representing different categories of acquisitions. As long as eBay sticks to central lines close to its main business, its acquisitions have done pretty well. For instance, the yellow line is online auctions (iBazaar, Internet Auction Co., GMarket), orange is retail (Half.com, Shopping.com), and violet is e-commerce (PayPal, Bill Me Later, StubHub).

It’s when eBay has veered off far away from its core business that it’s gotten into trouble. You can see that here by the darker orange VOIP line (Skype), the red Social line (StumbleUpon), and brown Auction House line (remember Butterfield & Butterfield?). Even the pink Classifieds line has been a mixed bag. eBay’s investment in Craigslist certainly didn’t help it much, and it is still struggling to make a splash in the U.S.

Fortunately, eBay’s current management is getting back on the right track by selling Skype and getting rid of distractions such as StumbleUpon.

(Hat tip to reader Ciaran Duffy).

Original post

Comments

[jay dee:]

Sounds like "we" (all you financial guru's) have forgotten what ebay used to be about.
It sounds like ebay is just another company to invest in, all you guys care about is whether it can make money (for you).
Sounds like what ebay was, has been forgotten / is a thing of the past.
Pity because ebay is synonymous with being a venue for people to buy and sell unique items online - a world wide flea market.
All the people who participated in that activity (and were instrumental) in creating that giant the world knows as ebay have been simply discarded and thrown away as no longer useful to ebay the money making machine.
Can the originators of ebay please step forth - the time is ripe, the opportunity is here - all the faithful are just praying for an alternate to materialize.

Sep 04 10:16 PM

[PastTense:]

"It’s when eBay has veered off far away from its core business that it’s gotten into trouble."

No! eBay's problems are not caused by bad acquisitions. eBay's problems are caused by mismanagement of it's core business.

Sep 05 12:10 AM

[john s. gordon:]

will somebody pls tell ebay to get rid of 'best match'.
who pays ebay to move their lot to the top of the 'best match' list?
the criteria for best match have never been explained by anybody. it really is worst match.
> jack

Sep 05 08:47 AM

[Philip Cohen:]

eBay started to die with its public listing, then "Noise" Donahoe thought that because eBay's position was so strong, he could do whatever he liked in an attempt to keep growing the company 50% every year; well, he was wrong; just about everything this guy has done has been wrong; so much for the delusions and arrogance that an MBA brings.

I have my alarm clock set to wake me up again on 21 October; I don't want to miss the fun and games of seeing the Don spin till he's giddy trying to explan the further reduction in revenue and the consequential further disasterous reduction in profits from the eBay marketplaces.

Surely, not even the sale of Skype can enable this turkey to survive another Xmas?

Sep 05 08:50 AM

[a. palmer jr.:]

If anybody would listen to the comments on SA about eBay they would quickly understand what went wrong. Some of the people commenting here are (were) their customers and clearly they are not happy with what eBay has become. The main problem most have are increasingly higher fees. I had a few items that I had practically nothing invested in and sold them on eBay. After the fees and postage I still had close to nothing left. Might as well have sold it in a yard sale. Another problem, which hasn't been solved yet is criminal activity on ebay, such as purchasing a product and not receiving it or not receiving what you ordered, etc. With the sellers you have bidders who don't pay once they win the bid, wasting the sellers time and sometimes money. Sometimes there are honest mistakes on ebay and sometimes it's just fraud.

Sep 05 08:51 AM

[arlin:]

eBay's small sellers have been destroyed by the "current management"..........so how does eBay get back on track without them?What do they become this month?

Sep 05 03:17 PM

[aja8888:]

The eBay "experience" has been infected by allowing every retailer in the modern world (Sears, etc, etc) to sell their goods there. Even GM is selling cars on eBay. When I try to search for an item, I get retailers ads by the dozens shoved in my face. And, I can usually find the same stuff cheaper elsewhere.

It's no longer a place for the average guy or gal to try to find a bargain.

Sep 05 06:54 PM

[Delcamper:]

When you look at the numbers it seems pretty obvious that Paypal is being nurtured as the long term future of eBay.

It costs fortunes in time, effort, staff and cash to keep buyer traffic on marketplace websites like eBay. This is the most obvious weakness of most "eBay alternatives" as they have neither the resources or cash to attract serious buyer traffic. Amazon has the benefit of combining their marketplace activities with a very strong, price led retailing operation.

But every time someone comes on Seeking Alpha to rant about eBay and, of course, drop the name of the site they are currently cheerleading for, eBay wont be overly concerned. Whether it is eBid, Bonanzle, Atomic Mall or any other eBay Wannabee site getting pumped, the vast majority of transactions those sites ever generate will still contribute to Paypal's earnings.

The more professional and capable sellers that have left eBay in the past couple of years (and not gone to Amazon) have mostly built their own website presence. Guess what payment service most of these websites are using?

Take a look at eBay's annual reports for the last few years and see how much they spend on marketplace traffic generation. Now project forward a reduction of this massive overhead as Paypal grows and earns ever more from other marketplace and ecommerce sites.

Now, going back to eBay's own marketplace activities, can't you see why "classifieds" is an important direction for them now? Like the recently extended 30 day instant purchase listings, long term sales content is far more likely to benefit from cheap natural search traffic and remain likely to create a significant level of Paypal transactions.

StubHub, a lucrative niche that's very focused and more efficient to market, also generates Paypal transactions. And they can do it a lot cheaper when compared to the cumbersome "sell anything to anyone" model.

eBay was the internet's first real social network. It's model still works but the rest of the internet has caught up with Omidyar's vision and it's obviously becoming harder to milk the earnings now.

So please keep pumping the sites that want to occupy the increasingly less fertile space that eBay will gradually vacate. All the time these short sighted visionaries keep trying to grow they will be producing eBay profit while they cover their costs at best.

The genuine competitor to eBay will be the combined effort of the properly focused niche sites that can establish themselves on smaller patches of still very fertile ground which are unlikely to ever attract competition from the Walmarts or Amazons of this world.

It's not all rosey at eBay of course and they have made many mistakes (especially during the second half of Meg Whitman's time in charge). But the recently announced deal on Skype, offloading StumbleUpon and investment in ePN I'd say the future looks promising. But I'm speaking about eBay, of course, and not the little sellers that can't accept they don't own and control eBay for their own benefit.

Sep 06 03:37 AM

[aja8888:]

Sounds like from the post above (and a very good analysis, BTW), that eBay is leaning toward PayPal to be the big "breadwinner". I did not consider that. I have been a PayPal member from near day one (ouch), and an eBay registered user since 1998. I still remember the days when you could leave feedback to anyone without being involved in their auction! Looks like eBay has changed a lot in 10 years.

I still use PayPal for various purchases but more so on other sites than eBay anymore.

Sep 06 01:38 PM

[Buckoux:]

Amen! I restore old motorcycles and eBay is (was) an excellent source for some very rare parts. But since the inception of the "New eBay Motors", it has been time consuming to find particular parts and some vendors have disappeared. Whoever came up with the "best match" idea should be dowsed in gas and set on fire.


On Sep 05 08:47 AM john s. gordon wrote:

> will somebody pls tell ebay to get rid of 'best match'.
> who pays ebay to move their lot to the top of the 'best match' list?
>
> the criteria for best match have never been explained by anybody.
> it really is worst match.

Sep 06 03:18 PM

[Buckoux:]

eBay purchased Skype for internal commercial espionage. Just as eBay has its own email system that it uses to monitor communications between both buyers and sellors, it is still possible to put a phone number on an auction listing and buyer/seller communicate outside eBay and thereby circumvent the auction, during or after, the auction time frame and cut eBay out of the deal by transacting privately (ex-eBay?).

eBay viewed Skype as a way to "wire tap", legally (?), on both buyers and sellers by eventually mandating that one or both parties use Skype in communications regarding auctions. Just as eBay now forces sellers to accept PayPal payments.

But, eBay did not get all it needed in their original Skype deal from the Joltid Company, Skype's original developers , and so were sued by Joltid over rights that they did NOT sell to eBay. eBay has a case of buyers remorse only because it bought the hardware, with some software, but without the complete software and legal rights to all Skype technology. Without which, eBay could not spy on their customers.

"Buyer Beware"!

Sep 06 03:51 PM

[Jim Beniak:]

I agree. I have never been interested in anything that shows up under best match. It seems to be items picked at random. Jim Beniak


On Sep 05 08:47 AM john s. gordon wrote:

> will somebody pls tell ebay to get rid of 'best match'.
> who pays ebay to move their lot to the top of the 'best match' list?
>
> the criteria for best match have never been explained by anybody.
> it really is worst match.

Sep 06 10:47 PM

[jay dee:]

Well delcamper a real nice shot at the little guys who made ebay .
To you all it's about is growing the enterprise named ebay.
Duh, it's pretty obvious that Pay Pal is being groomed to be the major income producer for ebay - they have killed the original ebay concept.
Personally I loath Pay pAL - it's just another hand reaching into my pocket - simple usury.
Pay Pal is simply Ebay extortion to increase their income - all the balony about making things safer, etc etc is a load of crap.
I don't live in the USA so Pay Pal is quite cumbersome to use ; imaginary funds in a fictitious account.
I would sell for less than take pay pal - at least with MO's I know the transaction has been completed and I have cash in my pocket !

Sep 07 01:22 PM

[eBay +++:]

jay dee, I don't get what you mean by "imaginary funds in a fictitious account". Also, Paypal cumbersome? How so? It's the fastest easiest way to pay on-line. Just make your purchase, log into Paypal and your done. No entering a CC# or Billing and Shipping Addresses, it's all done automatically. How is that cumbersome?
Don't get stuck in the Stone Age while time passes you by....

Sep 09 04:30 PM

[jay dee:]

I don't mean completing the transaction is cumbersome - it's accessing your Pay Pal money that is cumbersome and INSECURE ! as ebay can claw back money from your Pay Pal account on any whim (buyer didn't like the colour of your item yada yada) !!

Is there a bricks and mortar Pay Pal bank ?
How do you access your pay pal money ?? You transfer it to a bank account ?
Beyond the center of the universe - the USA , not many banks offer US $ accounts.

Anybody that doesn't like the financial community usury is stuck in the stone age - yeah right !

I don't buy dung on ebay - I like to see in person what it is I'm buying, so have no use for Pay Pal.
I have (secure) credit cards for my non-cash transactions


On Sep 09 04:30 PM eBay +++ wrote:

> jay dee, I don't get what you mean by "imaginary funds in a fictitious
> account". Also, Paypal cumbersome? How so? It's the fastest
> easiest way to pay on-line. Just make your purchase, log into
> Paypal and your done. No entering a CC# or Billing and Shipping
> Addresses, it's all done automatically. How is that cumbersome?
>
> Don't get stuck in the Stone Age while time passes you by....

Sep 09 09:58 PM

[eBay +++:]

Your stuck in the Stone Age, I rarely carry cash, use a Debit Card for most purchases Off-line. I don't need to hold my Money to know I have it. On-line I use Paypal, transfers are quick and easy to my Account, nothing like standing in line at a Bank to make a deposit. I'm rarely ever in actually in my Bank, maybe 2-3 times a year.

When I purchase On-line I do my research 1st. I know what I'm buying before I buy, if I don't like it, I send it back. Love the ease and convenience of buying On-line. Don't know what you mean by "Dung" on eBay, but obviously your doing something wrong, maybe a little due diligence before making a purchase would help you out...

Sep 10 04:01 AM

[a. palmer jr.:]

If I were purchasing something I would prefer to use PayPal. Not so with selling and using PayPal. They charge you fees to put money in and if you want your money in a check they charge you a fee to get it out of PayPal. I also understand they can freeze your account so you can't get your money sometimes. I'd hate to have a bunch of money in PayPal like the "power sellers" do and have them do that to me.

Sep 10 03:20 PM