eBay: A Countercyclical Opportunity 16 comments
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A prolonged and deep recession seems to be more likely with every week that goes by. As painful as this would be to earnings growth across the board, eBay (EBAY) is particularly well placed to resist, if not benefit from, a downturn to the economy. One could argue that each of eBay's three main businesses (Marketplaces, Payments and Communications) has a significant counter cyclical component. A recession could even unlock new sources of growth for each.
Marketplaces. We have already seen how eBay will probably see renewed growth from casual sellers, which currently account for 50% of revenue. Not only that, this could be accompanied by renewed growth in casual buyers that are suddenly more focused on value for money than they have been the past 5 years.
Payments. We have already seen how PayPal is charging ahead in 2008. For online merchants, a recession will increase their need to provide alternative payment options to maximize customer satisfaction and sales. In PayPal's own words, "consumer discretionary income is declining and online retailers need to get more savvy about how to grow their business in a slowing economy."
Communication. We have already seen Skype going through a growth spurt in 2008 YTD. There is nothing quite like free, and I suspect a recession combined with new access to Skype on mobile devices will play right into the hands of the worldwide VOIP leader. Not only will we see new subscribers, but usage per existing subscriber will also benefit.
Bear Stearns analyst Robert Peck summarizes it well. He says:
... [It] would be foolish to think that any online marketplace or retailer could be immune to a recession or cutback in consumer spending. However, as consumers tighten their wallets, they look for the best bargains (cheapest prices, used items) - this is eBay's sweetspot. Hence, we think eBay can be, to a degree, a countercyclical play for investors."
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Payments: More and more ebay sellers are becoming wary of using Paypal as a payment method , especially by being forced by feebay to use their payment system and Paypal having the capability to hold sellers payments for at least 21 days AND ask the seller to send the item(s) before receiving the payment from May 2008 . Check new feedback rules regarding Sellers not being to leave Neutral or negative fedback for scammers !
Stock prices are going down not because of any "recession, more of the way greedbay is harming and systematically getting rid of the very folks who have built this business up , the small sellers , mom's and pop's.
Watch the gigantic May 1st Sellers (and a growing number of buyers) Worldwide Boycott .
How could BOTH of you missed Donahue's pledge/desire/goal to rid ebay of it's flea market/garage sale environment?
Donahue proves over and over he is ill equipped for the task at hand - and you guys need to research better before suggesting investors invent in a company whose leadership is is driving a once thriving corporation into the ground.
ebay is handing casual sellers AND buyers to its various competitors.
Shopping sites like Ecrater have drawn my business and that of many others. There are no listing or final value fees. They have secure shopping carts like Google Checkout, Paypal, and credit card options, checks and money order payments.
So, in a recession, when people need to save every penny - it would be a wise decision to use sites like this. Once the shoppers become aware of sites like Ecrater they'll also like them better because the prices are generally lower since we merchants are saving money on fees.
Ebay, on the other hand, seems to be seeing a refugee-like departure of their core sellers in categories like antiques, hand-made items, collectibles, sports cards, etc. This is likely to increase once sellers start seeing the increased final value fees in black and white on their ebay invoices while facing the threat of having their money tied up in Paypal for 21 days.
Ebay alternatives have been marketing a lot to sellers, but there is a shift - and now they're marketing to shoppers. It may not be long before shoppers learn that they'll have to look off-ebay for the hard to find items they long for.
Calling your sellers "other than honest", is not, in my opinion, the way to build a strong platform for sellers to want to participate in, especially since there are so many more outlets that can be utilized on the net...
Ebay has sabatoged their own market place by setting unrealistic goals for their sellers to possibly see a decrease in their ending fees...
They have used terminology that isn't compatable with the dictionary and which is deceiving to say the least...
They are using a scoring system which is an out and out lie and completely contradictory depending on whom the person is that is using it...
If a buyer is using the star system, which goes from 1 star to 5 stars, he is told that a 1 is low and a 5 is the highest... So a 4 is above average... So in rating a seller at a 4, the buyer is saying that he had a great experience with the seller...
When it comes to the seller, and the discount at the end of the sale, he is rated according to the star system... The only way to get the discount is to have an overall rating of 4.5 or higher... When your shipment score goes below 4.5, then the buyer is warned in RED LETTERS that the seller has a slower than average shipping record... Ebay then suggests that you look at other sellers items before making this purchase with the seller...
Now, we've already learned when scoring a seller that a 4 is above average and then later learn that they lied to the buyer??!!
They have taken the word "neutral" and changed the meaning to mean "negative" because it's not "positive"... What's with that??? How can this be legal???
Personally, I have been lied to enough by ebay to look at other sites and to pull all of my merchandise from their site... I have paid them plenty through the years and leave them with my 100% positive feedback rating and will not allow them to damage my reputation as a seller just so that they can gouge me in the end with their deceptive practises...
LISTEN UP EBAY!!
WE WILL BOYCOTT FOREVER AND EXPOSE YOUR DISHONEST PRACTISES UNTIL YOU CHANGE OR ARE PUSHED OUT OF THE MARKET!!
BOYCOTT VICTORIOUSLY!!
Calling your sellers "other than honest", is not, in my opinion, the way to build a strong platform for sellers to want to participate in, especially since there are so many more outlets that can be utilized on the net...
Ebay has sabatoged their own market place by setting unrealistic goals for their sellers to possibly see a decrease in their ending fees...
They have used terminology that isn't compatable with the dictionary and which is deceiving to say the least...
They are using a scoring system which is an out and out lie and completely contradictory depending on whom the person is that is using it...
If a buyer is using the star system, which goes from 1 star to 5 stars, he is told that a 1 is low and a 5 is the highest... So a 4 is above average... So in rating a seller at a 4, the buyer is saying that he had a great experience with the seller...
When it comes to the seller, and the discount at the end of the sale, he is rated according to the star system... The only way to get the discount is to have an overall rating of 4.5 or higher... When your shipment score goes below 4.5, then the buyer is warned in RED LETTERS that the seller has a slower than average shipping record... Ebay then suggests that you look at other sellers items before making this purchase with the seller...
Now, we've already learned when scoring a seller that a 4 is above average and then later learn that they lied to the buyer??!!
They have taken the word "neutral" and changed the meaning to mean "negative" because it's not "positive"... What's with that??? How can this be legal???
Personally, I have been lied to enough by ebay to look at other sites and to pull all of my merchandise from their site... I have paid them plenty through the years and leave them with my 100% positive feedback rating and will not allow them to damage my reputation as a seller just so that they can gouge me in the end with their deceptive practises...
LISTEN UP EBAY!!
WE WILL BOYCOTT FOREVER AND EXPOSE YOUR DISHONEST PRACTISES UNTIL YOU CHANGE OR ARE PUSHED OUT OF THE MARKET!!
BOYCOTT VICTORIOUSLY!!
Virtually every comment you made, is the complete opposite of what is happening in the real world.
May I suggest, that if you decide on doing a follow up article, you actually do some research before you write it.
1. Ebay just raised seller's fees higher than they have ever been. Though the back end of the sale. The only sellers who MIGHT be able to get a small reduction will be the FULL TIME POWER SELLERS, who rate 4.8 and up with no complaints or negative feedback. Part time sellers cannot meet the same final sales figures as powersellers.
How would I know that? DUHHH I'm a part time seller on ebay! I get my primary income and health benefits from a real job as a health professional. I'm also an investor. I understand a little bit about cost/ benefit ratios.
2. Sales have gone down, because prices have been raised by most sellers due to the huge increase in seller's fees. In other words, there are very FEW bargains left on ebay because the sellers are passing along their increased costs to the buyer. Couple that with ebay's incentive to push sellers into offering free shipping, and the starting auction prices have skyrocketed even more due to the "shipping cost padding" the starting bids. Who would want to bid on items that appear to be more expensive than the nearest retail establishment?
3. Sellers now can find new places to sell and link their new sites to their old ebay feedback and keep a few little overpriced token auctions on ebay, so why pay all those fees on ebay when you can link your customers over to your site somewhere else. where there are NO fees? Ebay is getting involved in the social media sites that are responsible for assisting these sellers being able to "link out". Duhhhh again!
4. Prices for food and gas are going up, government freezes on hiring, and the dollar value going down are not going to encourage people to spend more time on a computer bidding. Instead they will be walking to their nearest park or attending the nearest LIVE flea markets, thrift stores, antique malls, and consignment stores so they won't be wasting money on shipping or ebay shipping-padded prices.
5.Lots of sellers are going back to the LIVE methods of selling in auctions and discount venues.Check out the other markets and you'll see. Especially the purchases of gold and silver. As a part time jewelry seller, I don't even need to pay ebay fees for my jewelry, my 2 booths are doing a great job all by themselves now! I can offer more Nursing hours to my regular job now!LOL!
6. "In PayPal's own words, "consumer discretionary income is declining and online retailers need to get more savvy about how to grow their business in a slowing economy.""
Savvy ways of growing your business would include cutting back on your overhead. That being the way over inflated fees for ebay and paypal, then being savvy enough to import your business feeds to a place(or places) where the new customers are going now for better prices, you know, the ones that are NOT padded by the excessive fees from listing!
7. with gas prices on the rise we will probably be seeing a higher USPS shipping fee schedule. In that case, online business will decrease due to this in a big way. neighborhood flea markets and yard sales will be back in business very soon!
8.This is not all of Mr Donahue's doing. He's just a sock monkey who follows the advice of the lead shareholders board of directors. And they could care less about the auction business, they are primarily obsessed with investing in other social media businesses right now, auctions are on the bottom of their list. Besides, what better way of saving money, just eliminate 50% of your auction community and you can eliminate 50% of the employees, saving tons of money, time, and legal costs!
9. Ebay has no idea what the part time seller community is made of. They never ONCE surveyed them to find out. NO RESEARCH has ever been compiled on part time vs full time ebay sellers! if there is, feel free to publish it somewhere here so we can all see it!LOL!
10. I wouldn't invest in ebay as an investor now, I would invest in mortgage banking and real estate!LMAO!! (and I am doing so!)
Har, Har, Hardy, Har Har
Have you even read the new policy changes.
After hearing of the new policy changes- we knew that we did the right thing in abandonning Ebay- as the changes are only going to exacerbate the very problems which caused us to leave in the first place.
Between the three of us, we generated over $36K a year in Ebay and PayPal fees....and we know of many other bigger sellers who have already left Ebay- so the idea that it is only the mom & Pop sellers who are leaving, is erroneous. If anything, the M&P sellers would be more likely to stay- since they are more likely to be the ones who don't realize how the new changes and fee increases are affecting them, until long after the fact; and they are also the ones least likely to put effort into cultivating other markets- because they do not depend on selling for a living.
Another reason for our disdain for Ebay lately, is because Ebay has ceased being merely a venue on which to trade- but has instead become very intrusive in our business. We pay Ebay essentially for advertising our wares and attracting serious buyers- and as a service provider, they have no right to dictate the terms of our business or to interfere with our funds, etc. Such conduct is outrageous, and no sane businessman would tolerate it.
Marketplaces. "We have already seen how eBay will probably see..."
Who's that 'we' and just what have you 'seen'? Nevermind... you had me at that "will probably". That is Certainty at its best and then you back it up with that, "Not only that, this could be ..."
Probably, Could Be... coulda, shoulda, woulda. Yep, I'm sold. Gonna pull all my 401(k) out on Monday and sink it all into ebay.
"Bear Stearns analyst Robert Peck summarizes it well."
Ah, is this the same Bear Stearns that taxpayer dollars just prevented from going down the tirdtube? And this Mr. Peck, is he one of their Expert Opinion analysts? What's his current take on Sub-Prime Lending? Still thinks it should rebound? Yeah, sub-prime and ebay are looking Good.
If you seriously think eBay is going to see new or returned customer growth this year, you're being foolish. Even the Motley Fool is encouraging people to drop their eBay stock and invest in other auction venues. The only way eBay is a good investment is if the economy reverses, Donahoe manages to somehow pull his head out of his ass and see what's really going on, and the current policies are reversed.
Make no mistake about this. The site has needed a good cleaning out for a while now, but the way Donahoe has gone about it is to punish one sect of the market and give the other sect full right to run roughshod over them. I'm not sticking around for bloodbath in May, when buyer realize that they can get substantial reductions on items after the sale simply by holding negative feedback over the seller's head. I'm not shipping anything I sell for free, and I'm not going to pad the price of the item to cover my shipping because that gives eBay a cut of that as well. It's bad enough that PayPal takes a percentage of my shipping and handling as it is.
Welcome to the new FleeBay. Probably not the marketplace Donahoe had in mind.
Where ???? Probably is a very open ended term in this misleading article. The truth would be "probably not" or more likely "definitely not".
What a totally biased piece of propaganda for extortionbay. They are trying to manipulate every one , sellers, buyers , media for their totally selfish intrusive corporate greed.
BOYCOTTVICTORIOUSLY May1st