Marty

eBay Is a Winning Bid - Barron's

Thanks Paticia, I know so many people that feel the same as us. As long as we are still around, Ebay still has a shot, but as the last of the last lose interest, the driving force disappears.

My email is [e-mail] keep in touch!

Marty

eBay Is a Winning Bid - Barron's

Patricia you are right about multiple user accounts. This makes the problem of Ebay's "active users" even more pronounced as many of those active accounts are just duplicate user accounts set up after Ebay introduced the stores product.

This sort of user meltdown was apparent and the main cause for the demise of AOL which was once thought never to lose their lead just as Ebay was.

It becomes more and more expensive to grab new users when existing users become less active or leave the site.

It is critical that Ebay realize this and stop pissing into the wind.

They need to capture the buying community in ways only they can and let people know through creative marketing and ads what they can buy on eBay.

Sellers need to have a place which excel in service but also in opportunity.

Back in 2006, Bill Cobb then President of Ebay North America, announced "store inventory would be going into Core search, in Jan of that year" . That quarter, which was awesome for sellers, saw and increase in Gross merchandise volume (sales of all sellers) and it even beat the holiday quarter that preceeded it. Sales exploded and new inventory was swamping the site. More hits for items newly searcable was pulling millions of store item up through google rankings and it was feeding on itself

A few months later, Ebay citing non-existant (in my view) "buyer confusion" realized that if it sold too much too quickly ,they would lose tons of money from people listing items over and over that DID NOT SELL. Yes, revenue from items that do not sell was declining as people could list cheaply and get found and sell. Our sales shot up from $1500 a month to $4500 like nothing.

Ebay reversed their "experiment" then slammed their own sellers by saying "store inventory was "slower , less desirable" etc etc.

Combined with fee increases, this change started the process of a migration to Amazon. New Amazon sellers took root, found success and then more followed. Ebay handed them this business.

Within a few years of its Start, Ebay Stores grew to be the largest web based merchant mall in the world, perhaps the biggest internet web success story ever.

But within months, they were talking about it like an old shoe, because the revenue model was such that the relisting of items that didnt sell over and over was so profitable that they couldnt forgo the revenue.

I begged for them to keep the system and change the fee structure as things were firing on all cylinders then. Instead they kept marching down that path, angering many of their best users, reversing a major decision then belittling their items.

Now they see GMV in decline, a user base went from 41% active to 18% active. Non-existant advertising and marketing campaigns, a 10% cut in their workforce (mainly good community orientated people), and despite plowing 4 billion into stock buybacks at prices way above where the stock is today the stock is still down 50%.

People who really know Ebay know what is going wrong. No one will listen though. It isnt that its a bad company, its that its losing the interest of the buying public and unwinding in much the same fashion as it wound up, and much like AOL unwound. The tipping point may have been reached but I am an eternal optimist and hopeful that sensability will return to management.

The employees at Ebay , when energized would return like horses to water in the desert. They are thirsty for a business model that reinvigorates this company just as users like I am . I have spoken to manhy of them and they feel the same but sometimes differ in their approach.

I wish them luck of course, but right now the same people that cash out on companies (BAIN CAPITAL) are running the show and Id look carefully at how they do things to see Ebay's future.

Marty

eBay Is a Winning Bid - Barron's

Oh and I met Meg Whitman! LOL I liked Meg!

I havent med John Donahoe so I cant comment on him. Id love to meet him and combine what he is doing with what needs to be done for the community. JD can reach me at [e-mail] LOL

Marty

eBay Is a Winning Bid - Barron's

Ebay is a great company with lots of potential. However their current course over the last few years as been one that alienated their users and one which was in direct conflict with what brought them success.

If you really want to know what is going on with eBay just carefully reviews the total registered users and active registered users.

In 2006 41% of their users were actively trading (buying,selling listing items on the site in a 12 month period. Now that number is like 18%. There is incredible user churn. When I noticed active user growth was going to turn negative they actually took the numbers you needed to see this churn OUT of the quarterly reports. They just returned this quarter.

This company can do extremely well once they get a course which does the following..

1- Actively addresses the "Local" markets which can be a whole new reason to "Ebay" .

2- Really opens the global marketplace not hides items from country to country

3- Brings its users (buyers and sellers) into wanting to trade here as opposed to elsewhere through effective advertising auto-affiliating active users to have them participate in the growth of the site.

4- Stop tinkering with trying to show people what they want to buy and ruining the broad nature of the "find everything" marketplace they created.

One example, on a local site for Ebay all Ebays properties could benefit, rent.com, tickets through ebay tickets or stubhub, real estate , new service areas, restaurant certificates etc AND whole new areas of trading like larger harder to ship items like furniture and other heavy things.

Also by auto-affiliation here is what I mean. Many users are turned off by ads plastered all over the site, even on users own listings. Make sellers part of the team by cutting them in an ad revenue for ads on their listings, on content they create to showcase their items and on cross-sales of other customers items found through their items AND on new users that sign up from seeing their item.

This would make Ebay the only place where sellers could benefit from sales of items, content ads, cross-sales, and new users. It would make each item placed on the site more valuable.

There are amazing people working at Ebay. There are great people active in the ebay community. But most people I know with a good understanding of the site feel the same way I do. And its not an "Ebay hater" thing, its a concern for a great place going in the wrong direction.

Experience...

Seller on Ebay since 2004
Trading assistant on Ebay (sell for others)
Owned Ebay store since 2005
Wife was an Ebay Teacher (Educational specialist)
Member of focus group for Ebay
Sold over 7,000 items on the site, feedback over 5000 100% positive.
Leader of one of the best seller groups on Ebay
Featured in a few books on Ebay
Winner of 2007 Ebay Hall of Fame Award
Bought hundreds of items on the site.
Introduced hundreds of people to ebay through classes and friendship

Marty

What Will Become of eBay?

Well , there are many reasons I like Ebay but the author has the 39% listing growth WRONG. Ebay created a new format 30 day fixed price listings. As a result many listing that would have expired in 7 days now last 30 days making the numbers look higher. Also many of those listings are transfers from Store format due to the new longer format and cheaper prices. You guys really need to work your numbers with people that understand the different formats and pricing.

For example a year or so ago CORE format (auction/fixed price) was once about 70 cents (35 cents to insert it 35 cents for a gallery picture) for a 7 day listing. NOW , they eliminated the gallery picture fee so the fee is 35 Cents for as long as 30 days. Of course listing numbers are going to be different.

The decline in traffic and slower unique visitor build is really the guts of the problem and one Ebay can correct. This is the most poorly marketed brand name on the planet. They squandered goodwill, hurt their base, advertised poorly ,never appealed to the second generation internet people and youth and gummed lots of things up.

I can say the people that work for Ebay for the most part are awesome (both past employees and current ones). Some have a feel for what must be done and what has gone wrong. Some changes have been made and more will come.

This stock should be humming with a downturn like this as it creates tons of supply of low cost stuff to buy and buyers are seeking low cost stuff in a downturn as well.

Incredible collections of collectibles are coming on to the market for the first time in a long time and if Ebay could get on track it could use this downturn to it advantage.

I hope for the best for the people at Ebay and their shareholders.

Marty

Amazon Checkout: Stiff Competition for PayPal?

Scott, excellent post, great job with the pros and cons. I do not always agree with your analysis on things but you did an excellent job here. :) - Marty

PS Are you seeing any trends with the economy from your end? Less high end buying? More emphasis on free shipping? Any movement to the Walmart/Ace hardware shop online pick up in person? Thanks! [e-mail]

Amazon Toying with Vertical Integration

Very well done article, thank you! Whatever Bezos is up to it is always interesting. I have always enjoyed shopping on Amazon and keep an eye on what they are doing since I am a seller on Ebay. The info on Booksurge is intersting and makes a lot of sense.

One risk I see though is that much of Amazon's recent success came from a few mistakes Ebay made by allowing millions of items to transition off the site when it raised fees and made some comments about its own stores product that left some bewildered.

However, Ebay has lowered fees, attracted many of the larger sellers back and also is working on numerous trials which seem to imply lower fees are coming (from blog posts I have read). It is not so much the people that had moved but the line of people that follow when people have success (as they have on Amazon). When this process reverses ,Amazon will lose that surge to the growth profile.

Marty

e-Commerce Set to Soar in 2008

Scott , one of your best posts yet with some excellent info! Question for you! Whenever I look at the breakout of the online retail growth I see computers, electronics, Gaming and games etc making up for a large chunk of the growth. When I last saw this breakdown I think Apparel was the only one other than these that broke the top 5 with most having much lower growth if any. Since the big players have such a large role in computer , electronics and gaming do you figure that other online retailers will see a somewhat slower level of growth? Its hard to extrapolate exact data of course but if I see for example Gaming growing 34% and it is already near the top showing huge numbers that growth alone is skewing the numbers.

I think most people see 17% and think health growth across the board when in fact its 30-40% on the already massive electronic, iphones, computers, gaming and much less in other places.

Thoughts on that?

Thanks for all the info you provide. I love the charts above!

Marty