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Tony P.
38 Comments
eBay Watch: True P/E Ratio, Listings Update, Business/Casual Seller Mix
Should read... "The revenue from that one sale ($180-M) would look very good
eBay Watch: True P/E Ratio, Listings Update, Business/Casual Seller Mix
That statement would be true if there was an actual correlation between listing numbers and revenue, but there is no direct relationship between the two indices.
To illustrate, 1000 listings that end as sold (converted) will provide ebay with a revenue equal to $190, or it could provide $22,000 or more. It all depends upon the starting price and the ending price. This also illustrates just how truly meaningless the listing count numbers convey.
If ebay had 1-Million DVD listings that start at $0.99 and end at that price, the revenue produced would be $190,000. If, on the other hand, they were listings for high-quality goods started at $79 and all sold at that price, the revenue would be over $6,000,000. That is a difference in revenue-generation by a factor of 32. This also illustrates the concept of Quality versus Quantity.
Let's say that ebay has only one listing for an entire month and it is for all of the Trump holdings. The starting price is $12-Billion, and it sells! The revenue from that one sale ($180-B) would look very good, but would the fact that ebay shows a listing number of ONLY 1 cause the Analysts to jump from windows?
The recent glitch/test placed Shopping.Com listings on the ebay auction site, from the last few days of February to the first of March. Depending on which ebay spokesperson' statement you believe, it was either a glitch or a test. (it was a test - watch for it). That placed upwards of 2 million 'extra' listings on the site.
eBay Tales of Surveys and Sellers
By 2005, the fraudsters were running rampant and the Good sellers were screaming at ebay to stop the FRAUD. They didn't stop it. What they did do, is, they let the China market into the USA site. For free- the Chinese sellers paid nothing for their store or their listings. But, man-o-man, did those listing numbers look good to The Street!
Finally, in 2007 ebay started to address the fraud problem, but it was too late. The Bad Reputation was well established by that time and the public's perception of ebay was sealed. Ask any good business-person about the value of Reputation and how one must act quickly if it is being tarnished... but ebay was too busy with acquisitions and fee adjustments to be bothered.
We told them. We were ignored. How in the world can I think that any ebay user/seller, may know more than ebay? Keep reading. Hey, Scot... you're the CEO of a company (CA/MW) that has online sellers as clients, right? You started as Auction Rover, which was ebay-centric, right? You're well versed in all things ebay, right?
Those clients of CA/MW are all uber-sellers on ebay and depend upon you to be abreast of all the latest changes at ebay, right? In this blog, you write about the Directly Competing Ads appearing upon a seller's ad page. You mention it in regards to a survey, yet it has already been seen on the ebay site.
You don't know about that? You didn't hear about the "New Look" that's coming to the auction page? It is a hybrid of EE and a regular listing page, complete with a panel of thumbnail pics of "related items" from other sellers - right on a seller's listing page! Nice, huh?
Some of us that do this as a business pay attention to All Of The Details. It's those pesky details that come back to bite ya in the butt. Like a little detail called, Reputation.
How Does the Boycott Impact eBay?
Meg, is that you?
Seriously folks, such sentiment is precisely what sellers feel is ebay's Mission Statement. Seriously.
The 'whiny' sellers are not *pleading* for some superhero to come rescue them from the 'cold, callous monster named ebay'. No, it's not that, at all. Sellers understand Business and Profits.
With the combination of ebay's business ethics and the actual cost of doing business with them, that superhero already exists in many forms. Amazon is one.
Mainly, the sellers would like for the Financial World to understand: that ebay's ethics are deplorable; that sellers are capable of forming the most basic of intelligent thought; that said sellers have been aware of ebay's ethics for quite some time; that those same sellers have taken about as much as they can withstand, financially as well as the servile "squeeze" mentality.
The only reason that all of this Client Base (the seller) hostility has not forced ebay's hand, to date, is due to their 800-pound gorilla status. It shouldn't take a rocket scientist to figure that out. But, you can't count on that status to last forever, especially as other gorillas are being made daily. There's also another status-killer, but it doesn't make financial sense, so it may be difficult to understand.
A person will take only so much, before they scream, ENOUGH - IT just ain't worth IT! When a large enough segment does that, your Squeezing Gorilla will shed weight, quickly. Consider this a warning.
eBay 'Boycott' Shows Lack of Trust Between Buyers and Sellers
1. My own website is #1, followed by other small auction/store venues. None have the traffic of ebay; that is ebay's only trump card, at present.
2. I can't. I check out the buyers *after* the fact (name, address, phone #, etc). Most buyers pay immediately; the potential scam comes later, after delivery. With the new feedback system, I will be prevented from leaving a factual warning to any other sellers, if I encounter a scamming buyer.
3. Yes, the ROI is better, but the Traffic generation still falls short of what ebay provides.
4. I point potential buyers towards my 9 years' worth of Feedbacks, where they can read my customers' praises. Against deadbeats, I have no real defence. My goods have few scammers; if they buy it, they typically really want it.
5. The low-volume seller cannot beat the new system. It is geared towards the Power Sellers, which are mainly mass-listers of commodities. My items are fairly unique, so in their categories they have little competition.
6. Not applicable to my selling business. But, I suggest you do look on all the various sites, you might find that treasure you never knew existed. Spend small amounts and find reliable sellers.
7. Absolutely not. The stock may be doing just fine, but there's a fire brewing.
8. MS actually attempts to improve its products, even if they are misguided at times, by listening to their customers (some would disagree with this, but it's true). Ebay is guided 100% by profit, manipulation of their metrics, and the impression that the stock is a Growth one (they cannot afford to disappoint The Street).
9. It isn't meant to actually have an impact upon ebay's revenue; it is meant to get attention (like your article). Several smaller 'strikes' have been successful, but are overlooked/forgotten. The IS Fiasco of 2004 - sellers stopped listing and ebay recinded the category rollups. One in 2002 (2001?) ebay reversed a fee increase for Stores.
10. To stop the Bleed of seller and buyers? YES.
11. Reduce or eliminate ALL insertion fees; impliment a minimum that is category-specifis (keeps out junk); apply more English-Speaking people to true Customer Service and get rid of the Bad Sellers. The bad/scam sellers contribute heavily to ebay's bottom line, so Yes, it will affect their revenue. This piecemeal cleaning effort won't work, not effectively, and it will severely damage many good sellers. Which will lessen the attraction of buyers.
12. You mean the news of the boycott? Ebay could probably care less - Donahoe already termed the sellers just "noise". You need to consider such an attitude from a (future) CEO - just Stop and think about that level of animosity.
Donald, Thank You for the article.
eBay's Death by a Thousand Cuts
Six months later, after Paypal business and stock was soaring, ebay decided the time had come. Besides, they just couldn't get the ebay buyers to accept Billpoint and the sellers certainly didn't accept it (no pun intended... well, maybe). That's when ebay made their greatest move to date, paying $1.5B for Paypal. Only TEN TIMES as much, if they hadn't drug their feet.
Just one more thing about those companies, Butterfields & Butterfields, Kruse International and Billpoint. They were all viable companies before ebay purchased them. By the time they were sold-off or abandoned, countless people had lost their jobs and/or their economic well-being, not to mention that the reputation of the two sold companies were damaged. But, who cares about them, right? Certainly not any yawning, insensitive person that comes across as a member of the self-imagined gentry.
Now, let's talk about ebay's phenomenal Growth. It is truly something, isn't IT? Absolutely, no doubt about IT, ebay is one spectacular example of growth. And it is all owed to the brilliant minds that so expertly guided IT for these last ten years. Yes?
No. The people made IT. Some people offered goods and other people bought those goods. It is that simple. The business thrived *in spite of* all the blunders made by the powers-that-be. The original concept, just like A-1 Sauce, was That Good.
If I were to open a whore house on the docks at Norfolk, it would be a spectacular success. I could take some of the credit, but I certainly couldn't pretend like I had invented sex. Pierre didn't invent eCommerce, but he did invent a method for it; Meg and Bill manipulated that Method, every-which-way, but they added very little that advanced the actual commerce. They did raise the fees every year, but those sailors... er, sellers are eager to "ply their wares".
eBay's Death by a Thousand Cuts
However, the people at the top of the ebay food-chain are drastically removed from this sort of low-level interaction. Their focus is on the Aggregate. They basically represent the Opposite of that old adage:
They can't see the Trees, for the Forest. They are custodians of the forest and that is their only concern. The death of a tree, or two/three/thousands, is not their focus. Now, we can scream at them that the death of a tree is due to disease that will grow and consume us all, but their experience/education tells them different.
Therein lies the problem - the *disconnect* that they have with their true customers, the Sellers. The ebay-elite are not sellers; they are not business people in the sense of an ebay seller. In light of their past actions in regards to any form of commerce, they barely qualify as sensible Business People.
Take a week sometime and look at the acquisitions they have made. Butterfields & Butterfields, Kruse International, Billpoint - all bought in 1999 for (various reported figures) $260M to $325 combined. All were sold for *undisclosed* amounts or abandoned. The year they sold the two auction operations, ebay reported $49M is non-revenue income. I'll leave that to the detectives to figure-out if that is all they got.
Oh, and what about Billpoint? A massive success! umm... no, that was the abandoned project. It actually beat Paypal to the market by 6 months, but ebay Tinkered and Fiddled for another year before releasing it. Then they bought Paypal and threw Billpoint into the trash. That was $100M of the original $260M-$325M expense - thrown away. Their actions with Skype are nothing new; they simply have worked their way up to the $Billion dollar range.
How Donahoe Broke eBay
Simple. The increased revenue from eBay.com is due to increased fees from previous fee hikes. There is Little to No actual growth in any of the key metrics concerning what WE are talking about here (those other revenue streams are not part of this discussion). Everyone knows that, including the traders that don't care, as long as they make a buck.
Well written article, Dinah - Thank you for that. Most of the traders that read it won't care about any of these points (just make that buck!), but some institutional investors might actually have a clearer vision. Most certainly, Jeetil Patel has 20/20 vision.
Scot Wingo has linked this article to his statement, "There is a HUGE amount of misinformation about the changes coming to eBay". That is to be expected and has been evident for quite some time. Comments sent to his blog that didn't "find the silver lining" in any ebay change, were not given clearance to appear on the blog. He practices censorship of any critical comments towards ebay. Those lips are now firmly attached.