monkeyman

Microsoft and eBay Team Up: Desperate or Brilliant?

I said "I would think PayPal and the financial sector would have been their most obvious expansion, but this has been going slow and only accelerated a bit when Google started Google Checkout." Most of the growth in Paypal and Skype only started / was scene early-mid 2007.

How fast has Google Checkout grown and how fast did the PayPal shopping cart grow? When auction sales slump on eBay, so does the stock price and revenue, ( how much of PayPal's revenue is tied into payments for ebay purchases? ). My argument is that eBay could have grown without raising auction/listing fees or PayPal fees, but that is the route they chose.

I didn't bother mentioning Skype because of its initial reason for being purchased, to integrate with eBay and provide sellers a communications infrastructure.

My point has to do more with the how eBay started out and the mantra behind the company to make it an equal market place for both the big and little guys, and this is no longer the case because the auctions are still what define eBay (as a stock), i.e. if there is data showing eBay listings are down and sales are down, the stock is significantly affected.


On Dec 03 12:20 AM Dan Buchannon wrote:

> Monkeyman - How can you say that the company lacks diversification?
> Please do your homework. PayPal is a $2+ Billion company. With revenue
> coming from merchant services business greater than what is being
> derived from eBay.com. Skype is a $500+million company. More than
> 54% of revenue comes from outside the U.S.

Microsoft and eBay Team Up: Desperate or Brilliant?

Nice article. I agree with the comment "But I think eBay would do better if it stayed true to its roots". That's how they came to be, equalizing the marketplace; however, their missteps/mistakes will open up a void for another player to come in. For a while, I thought Google was going to do that ( when the first rumors started about Google Wallet ).

eBay is in a very sticky situation. The problem is they went public. As a public company, eBay needs to constantly show growth and cater to the share holders. Based on their business model, my father and I knew the only way they could show growth is raise their fees, and that's what they have been doing since going public. The acquisition of PayPal was extremely brilliant and they integrated it very well, but what eBay has been lacking is diversification. As a private company, eBay would be fine, as a public company, there's no easy way to show growth except raise fees or promote more sales. They could issue a dividend, but they refuse to do this.

eBay should be investing in other areas or other companies. I would think PayPal and the financial sector would have been their most obvious expansion, but this has been going slow and only accelerated a bit when Google started Google Checkout. This current cashback deal is a way to increase revenue (more sales, higher listing and final value fees for the buy-it-now items [prices have also been inflated because of the offers, where sellers are pocketing some of the cashback], collect interest on the cashback [up to 60 day waiting period for cashback], more PayPal fees collected, and not all cashback is being honored [read the horror stories on forums]) and to temporarily, or possibly perpetually, cook the earnings books so to speak (because cashback rewards may take up to 60 days to be granted).

As a consumer, these rewards are great (as long as they're granted)! Just make sure that you collect the cashback and not the seller, I know of examples where people are paying a 20-30% premium on their purchases on eBay because they're going to get 20-30% cashback...