eBay: Bottom Is a Few Months Away 48 comments
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In my August post here I suggested and predicted eBay's (EBAY) John Donahoe:
Give the bloated 16,000 staff count a crew cut. Take the GE (GE) approach and just take 20% off for starters and get the existing people aligned against things that will grow the business. See above on what that is – ahem, not Skype. Of these, lose the public relations, investor relations and marketing teams. They've all failed to convince Wall Street that this stock has legs so just start over. If not, Carl Icahn may start it over for you.
I was a few percentage points off as the company announced just 10% layoffs on Monday, but perhaps that may be why Wall Street gave what you yanks like to call the Bronx cheer for its multi-headed announcement with a nice trim to the stock to the tune of 7% -- pushing it down to its all time low at the close of trading. But I was pretty accurate about the communications organization as ValleyWag noted yesterday with senior vice president of PR Alan Marks (formerly director of media relations at Nike) has cut his staff only to add more VP's.
Not sure from what rock that thinking comes from considering how poorly he manages his underlings who feel free to send his memos to the free bloggers like Owen. ValleyWag tells me he actually snapped at his team saying they sit and wait for permission instead of doing their jobs. Wonder if they asked for his permission to send his War and Peace-like missive out? Or if he said, "Just Do It?!"
Enough Silicon Valley blathering. Here's my next gem of wisdom for the future of eBay:
- Q3 numbers will be a non-event, but I suspect Q4 guidance to be lowered. [Insert Wall Street boo here.] The company more or less foreshadowed that saying this is a very "tough retail climate" going into the holiday season.
- StumbleUpon will be sold at a loss probably by the end of this year. No need for searching on eBay if user traffic is flat.
- Skype will be on the selling block for early 2009 as Donahoe focuses on all things eBay. The dial tone business is not for the tone deaf.
- The stock will remain on the "cheap as hell" list looking up at being a "value" for the next 18 months as Donahoe toils with what clearly is a turnaround story now.
Bringing my armchair MBA back out, I believe Donahoe is doing the right things to right the ship. Focusing on the things he and the management team know best, cutting costs associated with headcount that doesn't drive sales, and slowly breaking up the 3-legged conglomerate Meg Whitman whittled. Wall Street doesn't buy the story, so do the tough things that unlock shareholder value. It's not a popularity contest running a public company, and by the level of negativity around eBay now I'd say Donahoe is taking the right steps.
For investors looking for a cheap stock this holiday season, eBay is certainly that. But the bottom is still a few months away. Skype needs to be sold and more jobs need to be cut before Wall Street props this dog up again. Hold on to your cash in this credit crunched economy.
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This article has 48 comments:
Do you get paid to write this crap??
Donahoe tried to make eBay's customers, the sellers, walk the plank. Instead they have been, and still are, abandoning the the rat infested ship in record numbers.
You Are right about its shares not being at the bottom yet, but Enron shares will look good by the time Donahoe floats off in his golden lifeboat.
I just checked your Bio, and see that you don't have a full time job.
Try selling on eBay part time for one month, and then report back to us about your warm and fuzzy feeling about John Donahoe.
The right ship, nay lad your history should remind you of the Titanic!
BTW, I was a 10+ year seller who helped make Ebay the great auction site it USED to be. Now it's a mountain of B.S. I don't foresee it ever becoming viable again. They have flipped the finger to us all and we will not forgive and forget. I hope the ship sinks with all the management freaks onboard.
Yeah - he's righting the ship SO much its in danger of turning completely upside down!
Tell you what I foresee...I foresee a healthy company that merely needed tweaking mismanaged to the point where it self destructs. I foresee John Donahoe gone by the end of Quarter One 2009! Let's just see which one of us are right ;-)
I Rule My World : nymarts.com
Classes would improve Mr MBA Dan's writing skills, but what do you suggest for his thinking, research, and common sense skills?
Least I forget, his math skills. He suggested a 20 percent employee cut for eBay back in August, and after a 10 percent cut claims he was just a few percentage points off.
Dan would fit right in with eBay's upper 'no clue' management.
If disgruntled Ebay sellers who either garnered extra money by selling part-time on Ebay or it was their entire livelihood were able to claim unemployment and would count in the unemployment numbers...who can judge how much it would spike the numbers.
Analysts: Look at ANY blog comments surrounding the current state of Ebay in ANY forum and see how many [sellers] are in favor of the "ebay platform" vs how many are angry and disgusted. When you get that ratio, delete the positive ones that have obviously been planted by Ebay employees and relook at the ratio again.
THEN you will see why the US market for Ebay is tanking. With Ebay's old business model, it would have been PROSPERING from the economic downturn because MORE SELLERS would have been putting MORE ITEMS on Ebay for sale to make ends meet.
Oh...when you are looking at number of listings, make sure to discount the MAJOR LISTING SALES currently going on vs last year AS WELL AS the corporate sellers who don't have to pay listing fees [where there weren't any last year]. Ebay used to run 3, maybe 4 ONE DAY listing sales...now they have fire sale listing sales lasting the rest of the year.
Where else can A+ be a "passing grade" and A be a failing grade"? According to ebay with their new rating system where buyers can rate sellers, "ships quickly" is a 4 grade [an A] and ships VERY quickly is a 5 [an A+]. an average of 4.3 will get you to not be able to list for 30 days. And they don't tell the buyer what differentiates "quickly" from "very quickly". I ship the same day paid communicate that I do, and send a confirmation tracking number that same day yet I get 4.6 on shipping time, That's a lot of 4's. How can I do better than ship the same day paid? I have free shipping yet I get 4.7 on shipping and handling charges DSRs. How can I do better than free? That's the frustration of good sellers that are trying.
In its heyday Ebay used to tout three things: 1) That a winning bid is a CONTRACT between buyer and seller that BOTH had to honor. 2) Whenever there was an issue or a challenge, Ebay would say we are only a venue and have no control over the transaction between buyer and seller. 3) That the Ebay site was a level playing field between buyers and sellers and between Mom/Pop small sellers and behemoth corporate sellers. All played by the same rules.
Now: A winning bid is a contract that ONLY THE SELLER has to honor. The buyers can demand [and get] any number of concessions from the seller by threatening to leave bad DSRs...all they have to do is call the seller so there is no MY MESSAGES or email record. Ebay will do nothing. Also we sellers get to LIE about the buyers all we can leave is POSITIVE FEEDBACK even if they are unreasonable, even if they ignore payment terms and pay 30 days later when the auction states payment due in 10 days. What's the point of leaving coddling feedback? We sellers dont even know from other sellers when the bidder never pays but leaves negative feedback!
The we are only a venue thing HA! Ebay now controls HOW something is listed, HOW it can be paid for, WHERE the items show up in search, HOW MANY items can be listed [regardless of how many are paid for to be listed}, and that buyers can only rate sellers.
Think of it this way...WHAT LANDLORD of a bricks and mortar retailer tells a retailer what credit cards to accept, what items to sell, that you have to coddle buyers regardless of how they act ion your store or how they treat your inventory. And tells the retailer how much they can charge for shipping and handling. How long before that bricks and mortar retailer moves to a more resonable siteor goes out of business.
In essence, this is what Ebay is doing as a landlord to sellers with these changes.
An example of the land mine field Ebay is throwing at sellers?
1) As of this month sellers are ONLY allowed to accept Paypal.
2) Paypal rules/regs require that you accept ALL APPROVED FORMS OF PAYMENT offered through Paypal
3) Echecks are a form of payment Paypal offers that must be accepted by sellers if bidders pay with that form of payment.
4) Paypal requires a seller to HOLD SHIPMENT until PAYPAL SAYS the echeck has cleared
5) Ebay has a "Shipping Time" DSR with no parameters set for buyers to rate sellers
6) When you HOLD SHIPMENT buyers will lower your DSR on shipping time
7) DSRs are rated on a 1-5 system, whole numbers only
8) 4 is "Ships Fast" 5 is "Ships very fast"
9) According to Ebay rules, ANY DSR under 4.3 will cause you to no be able to list for 30 days
10) So all you need is to follow the rules, hold shipment until cleared by Paypal and get a couple of 3's on DSRs on shipping time and you won't be able to list for 30 days. Or as an alternative, you can ship immediately and if the payment bounces, Paypal will tell you you're not covered because you didn't wait to ship until cleared to do so by Paypal. In which case the seller will have lost the cost of the item, profit and shipping totally.
11) Even if you manage to avoid being thrown off the site for 30 days thing, your future listings will be buried in BEST MATCH because your DSR's will be under the Ebay average...which is boosted by all the heavy hitters such as BUY.COM that Ebay is wooing.
Untenable Catch 22 for Sellers...Sorta makes you want to stay with Ebay and sell doesn't it?
It is no longer a level playing field: a) Buyers can leave negative and neutral feedback for sellers but sellers cannot inform other sellers by feedback when a buyer cheats them or doesn't honor their committment to the ebay contract when making the purchase. Buyers can leave subjective and anonymous DSRs about sellers with impunity sometimes causing sellers to NOT BE ABLE TO LIST FOR 30 DAYS and the buyers can just MAKE UP A REASON to do so. [Ebay gives buyers no parameters [or ultra weak ones] for what the DSR levels mean and how to rate sellers. Getting slammed unfairly by buyers can also make listings unfindable by other buyers through BEST MATCH EVEN THOUGH sellers PAY THE SAME FEES to list their items. b) Small sellers now have different rules and fees from corporate sellers so the corporate sellers can undercut the Mom and Pops because their fee structure is enhanced.
So the Mom & Pops sellers can no longer compete and are getting slammed by unscrupulous buyers in DSRs so they are leaving taking with them the unique cutesy items that made Ebay a fun place to shop for buyers. Without the unique cutesy items, the good buyers are leaving too. And as mentioned above the positive word of mouth has been replaced by decidedly negative word of mouth from these disenfranchised sellers.
Sellers will leave and wont buy either. As they go and the Ebay broken and draconian search engine keeps the buyers left from finding their unique treasuresI hope the new management can sleep at night with their handiwork.
And yet Ebay, who cannot field a decent customer service department that CARES that could rid the site of bad sellers AND buyers, spends tons of money changing ITEM pages and MY EBAY 4-5 times a year WHEN IT DOES NOT NEED TO BE CHANGED. And I betcha the 1000 layoffs announced this week are in Customer Service! BTW when is the last time Amazon changed its pages? Putting lipstick on a pig with these superficial changes doesnt change the fact that its a pig.
You think LAST YEARS Ebay Live, which used to be a cult-like positive cheerleading event, was a disasterwait until THIS YEAR! Ebay may have to PAY sellers to show up to a venue that people were once treating like a Yankees/Red Sox World Series event.
And with all of the above enhancements sellers are asked to pay fee increases up to 43% to 100% and are now required to use Paypal only thus eliminating the 20% of buyers who ONLY pay by money order or check. Oh! and as punishment for Ebays not accepting Google Checkout, EBAYS searches have been lowered in GOOGLES BEST MATCH further hurting sellers AND buyers! Hah!
Ebay will implode.
And the only winner will be Donohoe and his Golden Parachute.
Ebay is a great brand. To all the sellers - if you leave, where will you go? You need Ebay more than Ebay needs any one of you. Sad but true.
It is now a holding company but all of its businesses virtually print money.
Right now, you strip the cash out and the company is selling for $16B. It will make about $2.4B of cash this year. More next year. That is a 15% yield.
Sellers are either going to other sites, starting their own websites or doing other things. Between Ebay and Paypal fees I used to pay upwards of 22% of my sales...$12K a year. Ebay will probably get $2K in fees from me this year. I've moved on. I've replaced the income and now work less hours. I used to ENJOY the Ebay experience. I probably made less than minimum wage for the number of hours I put in...but I met great people [my customers] and had 100% positive feedback through 40000 customers worldwide over 9 years.
I recommended people to do Ebaying [either buying or selling] as I was recommended by my friends originally. Not anymore.
I disagree.
Ebay WAS a great brand.
Based on the stock price, it looks like Ebay DOES NEED its disenfranchised small/medium volume sellers. The 800 lb gorilla is finding that as the sellers go so do the buyers. And all the tweaking done by Ebay won't bring them back.
i'm using craig's list to sell my stuff now.
i miss what Ebay used to be.
I've been selling on ebay since 1998, Ebay has totally lost it with all the new changes and especially the DRS ratings system, ebay is trying to model itself after walmart, they have given all power to the buyers, which may sound good if your a buyer but as a seller it's ridiculous, 1) because most of the items sellers are selling are used, they are not already boxed up and ready to ship out the next day so the customer can recieve in within 3 days, and if they are unhappy they want their buyers to be able to just send it back and get a full refund, well most items are or were auction format, and used items are used, and they are not boxed and ready to ship out, some items like we sell, heavy machinery, tooling etc etc, require arrange truck shipping, motorfreight, or UPS, many require special one off packaging or crating, this cannot be accomplished in just one day. Example, I had one buyer purchase an item for me, I informed them the post office would out of the blue print mailer box that this would ship in, we ordered the boxes, 10 days still no boxes, re ordered the boxes, 10 days later we got them, then we shipped the item out, communicated with the customer via email the whole time as to why the delay, customer said no problem wasn't in a hurry, then after the customer gets the item they leave us very poor shipping time remarks, kills my discount at the end of the month. Ebay woud do nothing as always, another customer we shipped 10 wire crimping pliers he bought in a USPS flat rate box for 15 bucks, plus I through in an extra pair or crimping tools, we charged 4 dollars more for handling packaging all 11 crimpers, as stated in our listing the total shipping price with handling, then the customer leaves us with bad shipping cost marks, I'm like you gotta be kidding me?, if they would have went UPS or regular US mail it would have cost him 28 bucks shipping. I could go on and on with examples, check my ebay feedback under boulevardbikes, the author of this article is out to lunch. Ebay is going down the tubes, don't belive me, check their stock on yahoo finace today, check the insider transactions too, you'll see Meg Whitman dumping tons and tons of her stock in the last 16 months to the tune of about 500 million dollars, what does that tell you?, also look at the key statistics and you'll see ebay stock is being shorted considerably, I would bet their stock goes to 10 bucks or less here soon, or junk status, really a shame how they have run a great company into the ground and ruined a lot of sellers lively hood that made ebay what it is, myself included, were moving our stuff to our own website and off ebay, we have a near perfect record too but the headaches are just no longer worth it, support from ebay??, that's always been a joke, powerseller status?, another joke, now I understand under some of the new rules they are gonna make manditory Paypal payments, wouldn't that be illegal?, again don't believe me, check out what their stock is doing and what the insiders at ebay are doing, they are selling their stock big time, what does that tell you?. Boulevard Bikes
Is that simple enough to understand? No MBA needed. The sellers operate on common sense and integrity, not what pleases the Street or silly analysts that have never been a long term seller on ebay.
Then again, most of us understand that.
However, I write about the nuts and bolts of the stock that is represented by EBAY INCORPORATED, not the auction format.
Cheers,
Dan Buchannon
Can any seller on here specifically, with numbers (not emotions), describe why Ebay is no longer a good place to sell? Can you please quantify what actually changed and why it costs you more, or whatever, to do what you used to? I've the comments on here but they seem frivolous; OK so you have to take paypal and you have to accept all forms of payment-what is the big deal? I just don't see what Ebay did that is so bad. Again, please quantify, no emotions.
Sellers, please convince me that you're right and I'm wrong.
Since Donahue has done virtually everything in his power to rid the site of auctions, casual sellers and small businesses as well as all the really unique, one of a kind type sellers favoring large volume sellers exclusively, fixed prices and free shipping only....it will be very interesting to see the massive decrease of buyer traffic going to ebay over the holidays and upcoming year.
Heck, in the 6 years I sold on ebay, I generated roughly 9000 sales, and at least 1/4 of those sales were from part time ebay sellers most of whom no longer buy or sell on ebay since J. Donahue has purposely undermined any and all small volume sellers.
Heck, even the large volume sellers are leaving at an alarming rate. According to sellerdome.com 35 out of the TOP 100 ebay sellers either no longer do business on ebay or at least have NOTHING listing on the site now. Pretty sad when just on a few short months Donahue and his posse of diruptive innovators have managed to drive off 35 percent of the largest sellers on the site. Based on my research studying sellerdome.com and poking through many of the individual sellers/businesses in top 100k nearly 45 percent of the top 100k sellers no longer have anything listed on ebay.
Ole J Donahue fails to realize that many of the 10s of 1000s of small businesses and the millions of casual sellers he's purpposely trying to drive off in tiers are also the same loyal community members that ONCE did a susbstantial ammount of shopping on ebay...many of whom are now doing their shopping at other sales venues or choosing to shop locally rather than feed the 800 lb greed monster. Not only have many community members CHOSEN to stop buy on ebay since J Donahue radically disputed the site, but those same folks are going back into their local communities speaking ill of ebay detering alot more folks from buying and selling on ebay.
As long as Donahue is in charge of ebay marketplace, I anticipate active memberships.
I think the average analyst doesnt even consider just how many of the large mass merchandisers on ebay merely use ebay as a platform to drive more and more ebay buyers to their websites once they've made the intial sale on ebay...so that they can avoid having to pay hefty ebay commisions and can use their own merchant account check out that more often than not is less costly than using paypal for every payment transaction. Heck, Our company was a small scale bronze power seller only doing about $4,500 worth of business on ebay monthly. But, now that we have our own website and storefronts on several lesser known auction sites, we've contacted been gradually contacting our 9000+ ebay customer base (at least 400 steady repeat customers) informing them of our new website and storefronts offering a 10% coupon any any purchases...our new store sales are steadily growing.
Multiply that out by the literally 1000 of other small businesses that are setting up a storefront off ebay and contacting all their previous ebay customers about their new online store...and that has and will continue to equate to a significant percentage of ebay's previous shopper base no longer shoping on ebay.
Ebay anticipated a small percentage of us small businesses would stop doing business on site. I dont think they ever envisioned just how many 1000s of small businesses would actually leave ebay and TAKE their customers with them.
Auctions arent a dying breed....Ebay is!
1) Ebay used to have a 1% discount on ALL FEES not just Final Value Fees if you had their monthly fees taken directly from your bank account. I had the 1% for 7 years. 6 months ago they announced that within 24 hours the fees would be gone. My costs then went up $100 a year
2) Within the last 18 months, the Post Office has raised IT'S costs to sellers...an average of 20%. My postage costs went up $2400 a year. Ebay has just instituted maximum fixed costs on my category, If I left my starting price where it was I would lost $7000 a year based on their maximum costs I would be allowed to charge. Instead I have to raise by start prices which cost me an additional $3000 a year in initial listing fees.
3) I have been selling on Ebay 7 years. For the first 5.5 years, I could count on like clockwork, my sell thru percentage. I did my research, had my starting prices competitive with other sellers and along with what the item had been selling for on Ebay. I COULD COUNT ON SELLING 33% OF THE NUMBER OF ITEMS LISTED. My wife and I would marvel on how that would happen EVERY TIME even though the titles changed. Now, through "Best Match" and DSR's my sell-thru at best is 17% and averages about 12%. Example...I used to list 500 items for a week. I would sell 170. List 100? I would sell 35. Now I list 200 and sell 25. All because of "Best Match" and DSR's and Corporate Customers being placed first. And that's when I had LEGITIMATE S/H charges in the listings and 100% feedback!
4) When there was two way feedback, I would have 2 non-paying bidders maybe a month...and I could block bidders who obviously were troublemakers as seen in feedback they received from others. Now I have 5-10 a month and they threaten me with bad DSR's unless I allow them to pay on THEIR TERMS. It's not so much the money lost [$50-$150 more a month lost] but the TIME it takes to chase these poeple, communicate and file reports with Ebay. So I am getting MORE NPB's on LESS LISTINGS.
5) I have projected that my TOTAL FEE COSTS as a procentage of sales and including listing costs for items that don't sell will rise 20% this year. And that is totally due to Ebay fee changes, S/H caps and sell-thru deterioration based mainly on BEST MATCH search engine. And my customer service is impeccable...but my DSR's and therefore Powerseller discounts don't reflect that.
I could go on and on. But I've spent enough time. Ebay wants the big corporate sellers. Donohoe does NOT want a "flea market" platform that had been the success of Ebay over the years. He wants what Amazon has. When a marketplace leader starts emulating the competition instead of staying ahead of it like they had in the past, they are doomed to failure. When they don't LISTEN to their customers [the sellers] they are doomed to failure.
The buyers are leaving [as Donohoe naively or egotistically states] not because of the potential of retaliatory negative feedback by sellers but because the small sellers with the unique items are being forced out. So Donohoe's tact is to lambast the sellers and make them impotent with higher costs to make the platform more "buyer-friendly". Except who knows that? Are they advertising that? The angle is all wrong. You attract more buyers by having more sellers selling items buyers want. With more sellers prices stay more competitive. Ebay should spend their resources creating a Customer Service department that GETS RID OF the scam sellers AS WELL AS the scam buyers.
I am not saying by any means that all buyers are bad. Quite the contrary. But neither are all sellers bad.
Ebay was once unique and at the top of their game. No longer. Pretty soon they will have just a bunch of selling conglomerates selling same-o items that can be found anywhere.
They are on a downward spiral and I am saying that without emotion.
I lost a 10% discount last month because ONE BUYER decided to give me the lowest mark on communication. I sent an email within 1 HOUR of his winning bid to thank him for his business and give him payment details. I sent an email within 1 HOUR of his payment beinf received thanking him for the payment and providing him a tracking number for his shipment. I shipped his item [actually took it to the post office] within 1/2 hour of his payment and confirmed shipment. And yet he gave me the lowest score on communication. Why? Because I didn't leave him [positive] feedback IMMEDIATELY upon receipt of his payment! [Note: leaving feedback immediately or at all is NOT a requirement under Ebay rules and the buyer never communicated with me that leaving immediate feedback was an issue for him].
So I sold him an item costing $10, shipped immediately and his DSR's cost me $20 in lost discounts against Ebay fees. Net profit on this transaction? Minus $10 + shipping.
It's this kind of stuff that gets sellers emotional.
Try selling on eBay for one month, and then report back to us 'emotional sellers'. Your interest seems to be only in the share price. Repeat over and over to yourself:
THE SELLERS ARE EBAY'S CUSTOMERS, THE SELLERS ARE EBAY'S CUSTOMERS.
Donahoe has turned eBay's wine into vinegar.
I appreciate your thesis. But you don't get it.
You say: " My analysis is based on management's management of that business, not specific experiences or offerings to sellers." and "my story. It has nothing to do fees, seller ratings and the like which I am sure are truly providing you with angst that is reflected in slowing growth in marketplaces organisation."
It has EVERYTHING TO DO WITH "fees, seller ratings and the like" and "Management's management of the business".
As mentioned above from others in their comments, Ebay has no inventory and sells nothing. They are a PLATFORM. If unique sellers all leave, then buyers will leave. If buyers leave, then there is no one on the platform. Then Ebay collects no fees from their core business ...Paypal, Ebay's cash cow..Paypal's performance declines because they are not getting fees off of Ebay sales. [Yet I admit Paypal has expanded their base to other sources of income such as virtual cashier and other websites].
The outcome may never be 100% but the DIRECTION caused by management changes at Ebay is NOT helping the future outlook for the core business. And it's NOT about auction vs fixed price either.
And THAT won't help the stock price because year over year performance of the EBAY PLATFORM will decline.
Ebay has destroyed the positive word of mouth cheerleading that once was their biggest asset. You can't BUY that.
If Ebay had not ticked off its customers, the sellers, and they had instead embarked on a path to ENHANCE THE SMALL SELLER EXPERIENCE instead of treating them like the plague, and trying to attract more buyers directly, Ebay would be thriving now and wouldn't have needed to cut costs [so drastically] and lay off 10% of its workforce. Conversely to my last comment...more small sellers with their unique items, more positive word of mouth...more positive word of mouth, even more small sellers...more small sellers...more buyers...UPWARD SPIRAL, Better year over year results, higher stock price. DUH!
Suppose URBAN OUTFITTERS, a current retail darling, decided to shun their base...the hip young crowd and moreso would start to knock them in their advertising, customer service and assortment...because in management's mind, these hip crowd's PARENTS had more disposable income. So they aimed all their promotions to the PARENTS, patted down every young hipster that came into the store and charged them more.
What do you think would happen to their business?
Lest you think that it's not the same comparison...suppose all the changes in direction were dictated BY THE LANDLORD of the mall where Urban Outfitters was located??????????
NOW DO YOU UNDERSTAND?
Stock Performance:
1 month -31.2%
3 month -43%
6 month -49.7%
1 Year -59.9%
What does that tell you????
1) Shareholders...some are sellers and are fed up?
2) Shareholders who are NOT sellers are reading Ebay blogs and threads and are mortified?
3) Many many disenfranchised sellers ARE ALSO BUYERS AS WELL....GONE!
There has to be a reason that forces are burying a stock of a company with such a great balance sheet. And it isn't just the current financial meltdown doing it...it has been happening for a long while now.
I am no professional analyst [and (disclosure) I don't own any Ebay stock nor am I shorting it] but if Wall Street looks 12-18 months out and this battering is what's happening to the stock isn't there a problem here?
123, Mr Buchannon and other analysts...CAN YOU HEAR ME NOW?
You are absolute correct when you argue it from your small seller point of view, but the market and business have moved away from that. My perspective is from the macro -- to be inclusive of every potential piece of revenue and income stream that this entire business that EBAY stock is represented by. Sorry if that pains you but that is why I write for stock oriented blogs, not seller or buyer community blogs.
Get on the stick !!
99% of new sellers cannot sell and wait 21 days to see if they get their money from Paypal = 0 New Sellers.
Current policies and changes = significant decrease in Current Sellers.
I agree Ebay doesn't feel they need these sellers, but why in the world would I buy from buy.com using Ebay/Paypal when I can go to the buy.com website and retain all of my credit card consumer bill of rights = You do the math.
Only time will tell
rctman 10/10 - 8:01PM-unintelligible post;
patricia 10/10/3:14PM-unintelli... post; what is best match/diamond sellers/sell thru?
powerseller 10/10 10:55AM:
1) Ebay doesn't have to give you a 1% discount. Does anyone else give you a 1% discount?
2) How are increased postage fees Ebay's fault? OK I see that you have to raise prices to make up for increased postage, but that's the case anywhere, not just Ebay, I presume;
3) I don't understand 3 because (i) I don't know the terminology; (ii) I don't see how you can blame best match, etc. for this and not that maybe people just aren't as interested in your items. How do you know that it's the new listing format?
4) I don't see how this is a change; is it just that the existing system is less effective than it used to be?
5) Again, OK your fees will go up but why? I just don't see any hard evidence that it's because of any changes that Ebay has made.
I for instance enjoy Ebay sites and services. I am not a heavy user of Ebay but I have sold things on there I wouldn't have been able to sell anywhere else, i.e. my used laptop, because I just don't trust any other site like Ebay. I know if I buy/sell there, I will be safe. And I don't care how much stuff costs elsewhere (i.e. some no name site) if I don't know the company. I also really like half.com and that site has saved me some cash on textbooks and DVD's. I have never had a problem with Ebay and they have always had great customer service.
It's funny because I think it's in vogue right now to trash Ebay without having any real evidence or proof anything tangible that they're doing differently or wrong (at least not that I can understand from these posts). The stock is down 50% in the year but the business is not down 50% on the year; in fact the business has grown over the last year. I don't care, I hope the stock goes down another 50%, if the underlying business is sound, that is what's important. Whitman has been selling but Ebay has bought back about $2B of stock in the last year, and at these levels I presume that they are buying more hand over fist.
Most of you also fail to mention how competing sites are any better than Ebay, thus darting the question: WHERE WILL YOU GO IF NOT EBAY or an affiliate of Ebay, i.e. Craig's list/half.com/etc etc?
Please keep trashing it. The stock will hopefully go down even more and that is probably a net good thing for me. I also hope that management will implement changes to make your experience more pleasant. I think everyone can and should win here. If the management really is making mistakes with the auction format, I presume they will eventually listen to you and make the changes that you request. I don't think they want to lose business.
I admit I may be a clueless nerd but I was hoping to make some sense of the posts, even though these complaints are probably not that significant to Ebay the company, not Ebay the the auction site. Looks from here like that might be difficult.
New Paypal 21 day hold policy on funds for new sellers=0 New Sellers.
New policies on current sellers regarding DSR's and suspension of same etc...= significant loss of curent sellers
The new first ever partnership between Ebay and buy.com, whom has a megasite called buy.com. Using Ebay w/payment via Paypal is hit and miss on either Seller or Buyer Protection. Read the fine print ! You wait 30 days, try to resolve with either for 60 days and exceed the time limit for CC chargeback. Paypal represents themselves....do a Google search and you will see. Why would anyone keep Ebay/Paypal as a middleman, when you can buy direct. Would you ? Only if you have Ebay stock...right ?
How can a company establish growth by listing a competitor's inventory ? And listing it at the same price ? Ebay buyers are supposed to be savvy and will peg it down and figure out it is easier to go to buy.com.
So....SKIP EBAY AND GO TO buy.com !!!!! Save a step.
I will address only the numbered points you made.
1) You are correct. In the ebay user agreement it says in essence, "We can do or not do anything we want to you at any time and by using the site you agree to that". [Note: I am being kind in the terminology]. ALL websites, because they are unregulated, say something similar.
However, when Ebay was young and wanted to attract sellers, they offered a program that was "we will offer you a 1% discount on ALL fees payable on a monthly basis...provided you link our invoices to your bank accounts and ONLY have your payments paid by withdrawal ACH's. This program will contiinue as long as 1) you ONLY pay by reverse ACH or 2) there are never insufficient funds when our ACH is created." [paraphrased]. I signed up and held my end of the bargain...fulfilling 1) and 2). Once the fee increases and other changes took effect on Ebay..they "slipped in" the elimination of that program with 5 days notice. In other words...my fees increased up to 43% while my discount that I signed up for was taken away...and was replaced by discounts available on PART of the fees if untrained buyers rated me well.
It doesn't matter if anyone else offers me a 1% discount. It was part of my cost structure and I made a committment...so MY costs as a 7 year Ebay seller went up 1% MORE than shorter tenured sellers by the elimination of the discount. The AMOUNT won't hurt me much...it's the THOUGHT added to all the other THOUGHTS that distrubs me.
2) How much you don't understand. I NEVER SAID increased postage costs were Ebay's fault.
The issue is this.
a) Ebay charges a listing fee based on your initial listing price
b) The listing fee is ONLY on the listing price...not the S/H charge applicable to the listing
c) Previously, sellers could charge their estimated shipping costs PLUS a REASONABLE shipping and handling charge to include packing materials, labels, trips to ship etc. These shipping and handling charges were shown in the auctions and bidders were told what the charges represented.
d) When the postal service would raise rates previously, fair sellers would raise their S/H charges to cover the increases
e) The Postal Service raised their rates 20% or more with their last two increases. In addition, gas prices doubled costing more to mail shipments
f) AT THE SAME TIME Ebay rolled out DSR's [on shipping time] which caused more frequent trips to the Post Office with the higher gas prices to maximize your potential DSR. Normally S/H charges would be increased to compensate.
g) ON TOP OF THAT and AT THE SAME TIME Ebay reduced the maximum I can charge for shipping and handling by 50% over what I was charging...and made it MANDATORY or my listings would be blocked.
h) The ONLY way I can minimize the effect of this change is to RAISE MY STARTING PRICE of each auction [or institute a higher reserve].
i) Since Ebay listing fees are bracketed, when I raise my starting price I increase the amount I have to pay in each auction for listing fees.
So No...Postal rate increases are not Ebay's fault...but the changes and restrictions forcing me to pay higher listing fees as a result ON TOP OF their listing fee increases ARE Ebay's fault.
3) I don't know what terminology you don't understand. How I know Best Match and not the economy caused my unit sellthru to fall from 33% on average to 12-17%? Because it didn't happen gradually. I sold worldwide. If I had sales percents drop or fluctuate gradually over 8-10 weeks or more I would chalk it up to the economy. When my sell thru drops from a CONSISTENT [over 7 years] 33% or so to 17% THE SAME WEEK Best Match is instituted and has REMAINED at 12-17% since BEST MATCH'S introduction when nothing else in my selling practices or items has changed...I can only believe BEST MATCH is the cause.
If you want to know what BEST MATCH IS...it is a default in search that rewards those Ebay wants to reward and punishes those Ebay wants to punish. IT USED TO BE that the default in search was TIME ENDING SOONEST. Now the default is BEST MATCH. If you are a diamond seller [highest volume seller] your listings would appear at the top of the list when a bidder searches for an item. If you have lower DSR's, your listings can be 10 pages from the front...no matter WHEN the ending time is. Therefore your sales will suffer EVEN THOUGH you pay the same or MORE than the high volume seller to list.
4) Shortage or shrink is a term you may understand from Retail parlance. You factor shortage into your business model. Obviously if you are listing 75- items a month and have 2 non-paying bidders it is a nominal hit on your bottom line. But if you NOW list 150 items a month and have 10 non-paying bidders..it is a major impact. Buyers have been emboldened by Ebay because they can never be given negative feedback. Used to be that a few negative feedbacks in a short period of time would get bad buyers kicked off Ebay. No longer. Now buyers can break the Ebay contract [by not paying for instance] AND ALSO trash sellers by leaving NEGATIVE FEEDBACK for the SELLER for reporting the non-payment to Ebay. Some buyers bid for the heck of it with no intention of paying like it's a game. Now there is no downside to doing that and it shows.
5) My fees will go up BECAUSE
1) EBAY RAISED ITS FEES 25-40% and more [printed fact]
2) My sellthru has declined 16-21% as stated above. Translation, I will pay TWICE as much in listing fees [unlike Amazon, you have to pay listing fees whether your item will sell or not] because instead of a 33& sell-thru I will have 12-17%. That means I am paying listing fees on 16-21% of the items that last year sold through [and therefore you recouped those fees as part of your shipping and handling charges] and this year you will not.
I am not so naive that NONE of the sales decline is as a result of the economic turmoil. That's why I am jsut LEAVING EBAY as my primary source of income [and only listing 20% as much as last year] and have moved on to doing something else to earn income. So I don't need to REPLACE Ebay because I'm not doing similar selling somewhere else.
Other good small sellers [I previously sold $60-100K a year] are leaving for many of the same reasons I outlined in the many entries I left above.
If you can conceive of the Mall of America in Minnesota [2nd largest mall in North America with 5 levels and 500 stores] telling all sellers under a certain size to go away...and there are 6 anchors and 100 other stores left after that edict. and the hundred stores left have their rent increased by 20% while the biggest don't pay any rent at all.
1) Will the remaining stores be happy? 2) With the store selection reduced and the prices in the smaller stores increased to cover the higher costs, will the 12,500 parking spaces ever be full? As less customers come into the mall how long until some of the 100 stores left shut down or move?
Number 4 line 2 where it says 75- it should be 750. Typo.
123 said he didn't understand the term sellthru...
If you list 100 items for 7 days and you sell 33 of them during that time you have a 33% sellthru...33% of the items you listed sold.
If you list 500 items and 166 sell you also have a 33% sellthru.
Sellthru=the number of items sold divided by the number of items listed.
You are correct...Ebay management doesn't view small sellers as viable any longer. What makes that the correct decision? Could that be the REASON driving the tanking of the stock?
Business 101 says what will make a business successful is 1) a successful business model and 2) Being DIFFERENT/UNIQUE as much as possible for as long as possible from your competition.
Ebay HAD a successful business model. And it WAS different from other [online] retailers as it was a worldwide flea market. And try as they might, no other entity could match Ebay's traffic or infrastructure [at least the platform they presented on the web].
Now it seems that Ebay wants to dismiss what made them successful and grasp what Amazon has made successful.
As my experience has shown...once you start chasing your competition and chucking your core business you are doomed to fail.
If you EVOLVE...building on your base and adding on and enhancing what you do best, you have the opportunity to succeed.
I once worked for a successful multibillion dollar retailer. It OWNED the business in the markets they were in and their customers were more than enthusiastic. None of the competitors could grab even a slice of their customer base.
Their business was 75% female oriented categories and 25% male oriented categories. And the two businesses had a symbiotic relationship.
Like Ebay...a new CEO replaced the one who built the biz and retired.
He came in and decided that the male oriented businesses did not generate the margin percents that the female businesses generated.
So he threw out all the male oriented businesses and expanded all the female oriented businesses.
Within 4 years the business was gone..the new CEO got his Golden Parachute. What he didn't figure on...by eliminating the 25% male oriented businesses, he would have to INCREASE the remaining businesses 33% JUST TO ACHIEVE THE PREVIOUS SUCCESS. [100% less 25%=75%. 75%+ [33%X75%]= 100%]. There is NO WAY to guarantee a 33% basic business increase through same store basic sales.
To wake up one day and decide: "Amazon is printing money so they must be doing something right"...let's do what Amazon is doing and maybe we will revitalize the business....is VERY shortsighted. And throwing out [or deemphasizing] the auction business is deadly. EVERY online retailer has fixed pricing. ONLY ONE had a successful auction business. Ebay is a late entry into online retailing...even as they are NOT an online retailer. They have no warehouses. No inventory. But they have convinced the analysts that "auction is passe...fixed price is the way to go." And so now that that is fact...let's get there. As in the example I gave above, They are deemphasizing the auction business and expanding the fixed price business. In the process they are driving small sellers away in favor of megalith retailers who in many cases, also have their own websites. How is that keeping them different????
So you cannot expand the auction business any more and the shareholders want GROWTH? Then MAINTAIN the auction business and ENHANCE the seller experience on the auction side while growing the Fixed price business and making further acquisitions that make sense a la Paypal.
What would have happened in its day if Ford, having established success with its brand...added the Mercury and Lincoln brands. And at the same time tossed the Ford Brand????
And that helps explain why Ebay stock has a 52 week high of over $40 and a low of $15 THIS WEEK [in spite of literally printing money] and Amazon has a high on $101 and a low of $51. Or better...Ebay is currently down 60% over a year and Amazon is down 45%.
How many new 52 week lows does it take to have ebay and the analysts realize they are on the WRONG TRACK?
Oh and sir..I am not pained by the Ebay changes. I marvel at what I have seen. How very short sighted some people are. I have seen it time and time again. Because bonuses and golden parachutes often have NO BEARING on actual company performance, some execs move from company to company, marking their territories with non-sensical changes and collecting their booty only to move on and repeat the process. If those bonuses and parachutes were RESULTS oriented...you can best these CEO's would do a lot more LISTENING to their customers before they act.
First, I did notice that you are from the UK. I'm not the one critical of your spelling.
Second:
Sorry if you thought my 'working part time' statement sounded insipid. You probably make more money in a day than I did in a week, before I retired. My point was: You should have some free time to try selling on eBay to get a better feel for it's business restricting nature. It's hard to judge, by looking, what the food will taste like without sampling it first.
My eBay bio:
I happened upon eBay in 1997. It was love at first sight. I have been a member now for 11 years, both buying and selling. My 1200+ all positive feedbacks are from both buying and selling. Finding and selling rare or hard to find items, while having fun doing it, was always my goal.
It's clear that eBay wants to lose the small sellers. But it makes about as much sense as Wal-Mart saying it will only sell items over $50. Lower priced items do add up. Plus, many small part-time sellers sell high ticket items. My hard to find collectibles often bring over $100 each. Why throw away fees (profit) by making it so damn hard and expensive for the little guy?
In my opinion, eBay would be smart if it broke the site into sections, auction/buy it now, new/used, and generic/unique.
A few months ago I purchased, via buy it now, a new sealed dvd set of "John Adams" for $28. After viewing it, I placed it on auction, stating 'used condition' for $1, with no buy it now. It sold for $32 even though there were many new copies listed for less. Two fees recieved by eBay for the same item. I must add that I researched the seller first. I only buy items from the smaller reputable selllers. No doubt my buyer looked for the same qualities.
As others have stated, eBay's site was spread by word of mouth. Walk around a garage/estate sale, antique mall, etc, and one would often hear the word eBay mentioned. Not so these days.
pwrsellr has presented the 'new policies' problems very well.
I have not heard of an author's name being spelled incorrectly in two different articles or a person spelling his OWN name [as shown in the responses below the article] incorrectly 3 times?
Just wondering.
The correct spelling is Donahoe.
Actually you're wrong -it is a popularity contest - ask car manufacturers.
How can you write everything that's wrong with ebay - all caused by J. Donahoe, and then say he's doing the right thing. It's like saying the powers that be are doing the right thing about the economy - now that they've messed it up.
I have already decreased our ebay sales to 10% of what I once sold due to their changed imposing a nonprofitability curve for many collectibles. That's OK, I opened my own online mall and am doing just fine selling there. The only reason we even list on ebay is for the crossover sales to our other site.
The day I'm forced to send someone an item and then sit around with crossed fingers waiting for them to maybe pay me is the day it's down to 1%. In fact, I'm rethinking it already. If someone can't pay for something then they shouldn't buy it. I
f the seller wants to accept lay-a-way or some sort of payment on those lines - I could see that, but mailing an item without payment is just sheer nonsense. Nobody is going to do it, probably including Buy.com, Sears and all the other huge retailers that eBay's been catering to of late.
So, when nobody does it - I guess eBay will have nothing to sell. Which is good for me, more antiques and collectibles sellers will come on over and get a store in my mall - 3 month free trial and as low as $5.50 a month after that. 6 different forms of payment processing - No extra charges.
See - it is a popularity contest!
1. Ebay isn't an online retailer - They don't sell anything but a service
2. That service has changed so much that most of the seller/buyers have left
3.There is no "great" brand name anymore on ebay, it was on the top of the most hated websites poll of newsweek until almost the end of the poll. I run ebay down to everybody I meet now. I tell them it is no longer safe to sell or buy there.
4. It may be a fraudulent/criminal buyer's paradise now, but only the scamming sellers are staying too.
5. The competition is growing by huge percentages. Ioffer, eCrater, and Ola are becoming what ebay was. Ebay is replaceable.
6. They aren't making any money at Ebay any more as almost all listings are from buy.com etc and they are free listings with abysmal sell through rates. Real auctions from small sellers are declining every day.
7. Even if Donoahoe is replaced, I won't go back. I think from my perspective that there is more to gain from building 2 or 3 sites so that there is always competition and no site can become what ebay was. Ebay though they could get away with any psycho changes and people would stay, but they are leaving every day, they want to stay, but they can't keep getting scammed out of their money and items through the new paypal rules.
8. Ebay is dead. It isn't broke, but it is DEAD. Analysts think that because it is a corpse with money that it is still a good stock buy. Nope.
You bring up a really valid point when you mentioned going directly to buy's website rather than purchasing something from them off ebay.
In my opinion the most significant reason buyer traffic has fallen off so drastically this year isnt so much the economy as it is the large companies ebay now is courting almost all have their own websites, and once they've made the intial sale on ebay...the vast majority of these big companies start emailing the buyer promoting their webstore...NOT their ebay store which is slowly eroding the number of shoppers going to ebay to shop.
I know from my own buying experiences on ebay that many of the large jewelry, gemstone, apparel & footwear, and electronic sellers immediately start emailing their ebay customers after the intial ebay sale and promote their websites often times offering special discounts to shop their website rather than their ebay store.
In my opinion, many of these big companies on ebay using ebay as a platform to drive online shoppers to their website is one of the biggest reasons buyer traffic has been steadily deteriorating on ebay in recent years.
Even the small businesses and grassroots casual sellers that have left ebay in large numbers and have either setup their own website or established roots on one or more lesser known sales venues are having an impact on ebay's existing buyer traffic. Let's face it, virtually all the alternative sites out there are growing rapidly....ie ecrater, ebid, Ioffer, OLA, bonanzle etc......and all the business minded sellers are contacting all their previous ebay customers encouraging them to check out their new storefront which has and will continue to further erode ebay's existing buyer traffic. Buyer traffic has been steadily rising on some of these sites in recent months while ebay's buyer traffic has been gradually weakening month after month.
Only time will tell if Donahoe's new business model for ebay will pay off, but I highly suspect that buyer traffic, GMV and overall loyalty of its members will continue to be eroded over both the short term and the long term especially since overall price of most merchandise on ebay is rising, the product selection off unique items is declining, and there is a ton of lame store inventory being listed in core now that most sellers would never put in core if they had to pay full price to list those items.
In my opinion, many of ebay's most loyal customer base are the same folks they are purposely driving off the site. And I feel someday ebay will regret forcing so many long time loyal advocates of ebay off the seller platform if for no other reason the the tremendous purchasng power the masses of small sellers have always brought to ebay collectively.
This wasn't "Funny Money". It was Life's Blood. I'm saddened that THE NATIONAL MEDIA would Blackout This HORRENDOUS CHAPTER in American History. This Story is BIGGER than the Home Mortgage Crisis ! ! ! This Story is Part of the Reason FOR the Home Mortgage Crisis !
In the Very NEAR Future, Ebay's Lifeless Carcass will be left for some New Energy to Resurect. The Sooner This Process begins, the Sooner The AGONY comes to an end.
Mr. Pickins, Mr. Trump, Mr. Forbes, Mr. Gates, Mr. Buffett, Ms. Bettencourt, Mr. Allen,........
Please Consider for just a Moment...
nymarts.com