Don't give up on eBay yet
Don't give up on eBay yet. Despite posting a second quarter drop in earnings for the second quarter, the company beat analyst estimates. Merrill Lynch and Bank of America upgraded it to neutral on the news, while Goldman Sachs and Credit Suisse raised their earnings targets. Since the announcement yesterday evening, eBay’s stock has jumped over 10% to $21.52.
eBay (EBAY) CEO John Donahoe helped explain that show of faith today at Fortune's Brainstorm Tech conference.
But to do so required clarifying an important point: eBay is no longer just an online auctioneer. In fact auctions are only a quarter of its revenue today. Instead eBay has shifted its focus to broader ecommerce and most important, to growing PayPal, the leading online payment provider.
PayPal now accounts for 35% of revenue, but Donahoe predicts that in four to six years, it will eclipse the entire eBay business. The nascent ecommerce industry is still only 5% of offline retail. Donahoe believes the sector could grow as large as 20%, and the opportunity for processing those payments is enormous.
"Payments is a winner take all business," he said.
Today eBay announced that it's opening PayPal up to third-party developers, enabling them to more easily build the payment service into their applications. For example, Twitter users can now use the service to transfer money between PayPal accounts using a third-party application called TwitPay.
Donahoe believes PayPal is well positioned to defend its leadership in payments since it already has assets like foreign banking licenses and risk detection programs. "Evidence would say that you have to be part financial services company and part Internet company — you need both," he said. Anyone seeking that evidence need look only as far as Google's failure to gain traction with Google Checkout.
Still Donahoe acknowledged there is work to be done in the marketplace business, the unit responsible for eBay's fixed-price and auction sales.
“We’re still the most trafficked Web site with most active users in the world,” but he said the company is going through a “growth inflection point.” Reinvention will be required to get “marketplace back to the growth rates we’d like to see.”
How did eBay get here? While it succeeded in scaling around the world, Donahoe explained that "you can get so focused on expanding current business models that innovation slows down." As a result the user experience didn't keep pace.
"We thought fun could overcome less than optimal user experience," Donahoe admitted. "Now we're restoring trust and layering fun on top." This includes hiring more senior software architects and including them in product design.
The evolution also includes transitioning away from auctions toward ecommerce. Over half of what’s sold on eBay now is brand new, but not the latest generation. “We’re focused on a wider selection of inventory than anyone else can offer,” said Donahoe.
As for Skype, the Internet telephony service eBay acquired in 2006 and intends to sell, Donahoe resisted calling it a fumble. Rather, he emphasized that it was growing but simply “doesn’t have synergies with the other businesses.”
Checkout LootSlinger.com. It hasn't launched yet, 9/09/09, but it does have a Facebook page. LootSlinger is looking to hear from sellers about how their experience selling online can made better.
These analysts haven't got a clue what's going on at ebay because they are not buyers and sellers on the site. All they do is believe all the propaganda that Donahoe feeds them. eBay was popular because of small sellers who were also buyers, dealers would be buying from another dealer then selling the item back on ebay at a later date. In my area of antiques I've seen the same items being sold and resold up to 7 or 8 times in just a few years. The fact that any mom and pop could start up a small business meant that the site was growing all the time, but Donahoe has not only killed that growth but initiated it's steep decline by eliminating these small sellers in favour of "Diamonds" who pay no listing fees, get top placement in "Best match" and have their feedback scores manipulated. These "Diamonds" have poor customer care and sell items that can be bought in any high street, why would anyone bother buying from them. People went to ebay to get unique items that could not be found on the high street. Not to mention that a lot of big name brands do not want to be associated with ebay because of it's reputation with fakes, ebay are having a hard time getting any reputable "Diamond" on board.
As for Paypal that doesn't fight chargeback claims on behalf of sellers and refunds buyers with no questions asked and holds sellers funds for months at a time, they are any online seller's worst nightmare.
And so much for Skype, they don't even own the patents that run the Skype engine, so it's effectively worthless when they go and try to sell it. These are just some of the reasons that their income and share price have plummeted, how can people believe it's "the economy" when Amazon has been on the up, well I've news for you, it's not the economy it's because Donahoe's plans are failing miserably.
WOW! HERE'S A STRAW THAT CAN BREAK THE CAMELS BACK!!! A MAJOR DECISION IS NOW BEING SERIOUSLY CONSIDERED BY THE EUOPEAN COMMISSION TO *REQUIRE* ALL ON-LINE SELLERS (INCLUDING EBAY & it's sellers.) TO HAVE A VIABLE BRICK & MORTER BUSINESS TO SELL. If this passes EBAY's On-line Business literally collapses in Europe because very few sellers will qualify with these new rules. Most of EBAY's european sellers will be forced to shut down which will make the site useless to most consumers who currently use the site. No valuable sellers & no buyers means no European EBAY.
ewBay's biggest single problem is the fact that sellers have lost all trust and confidence in eBay and the policies implemented by it's CEO. Following sellers lack of confidence are buyers, hundreds of thousands of buyers who are sellers that have been negatively impacted by eBay's polciy and system changes.
John Donahoe knows he needs to restore buyer’s confidence in eBay. After all, it is policies and systems that have been implemented since he joined eBay that are the reason so many buyers continue to lose trust and confidence in eBay.
How does one go about trusting a company that advertises free listings that allegedly save sellers money, but neglect to advertise that those "free" listings carry a substantial increase in the Final Value Fee costing sellers more?
How does one go about trusting a company, which cajoles sellers to roll, shipping costs into the retail price of an item in order to offer "free" shipping? Everyone knows that eBay is heavily promoting this listing method in order to maximize the Final Value Fee assessed and enable them to collect that fee on the value of shipping included in the selling price.
How does one go about trusting a company that manipulates search results to favor listings of one class of buyers over others?
How does one go about trusting a company that announces a major retailer would begin listing on eBay but, after having tested the marketplace the same company decided it was in their best interests to align themselves with Amazon instead? (Apparently Zappos decided it was better to be owned by Amazon than to be a seller on eBay. Now that's trust and confidence.)
Seems to me, a company must be worthy of being trusted before people will give their trust.
EBay’s current CEO is enacting policies and system changes that are not trustworthy, but instead are down right unfair and dishonest.
Charging some sellers and not others to place listings is unfair. Turning around and giving preferred visibility to the items listed by sellers whom pay no fees is dishonest.
Perhaps with a change in leadership it would be possible to once again trust eBay as a retailer, but until such change takes place, trust is not something that eBay is worthy of receiving.
As a former Power Seller (I lost my status due to 1 negative feedback! and "policy violations" that made no sense! I have been hit hard by all the new fees, the requirement that I HAVE to accept Paypal and all the restictions that have been placed on me. As a result of the bad business practices of Mr.Donahue, I have went from selling a min of $1000 a week to about $300 in the last 3 months. After selling on ebay for almost 9 yrs this Sept, I will now be foreced to both try and sell on other sites of which I am not familiar and get a job, right, like that's going to be easy! I am thoroughly disgusted with both eBay and Paypal and as soon as I find another online marketplace to sell on, will be gone forever!
Ebay is totally lost. New Ebay = Sucks. New "My Ebay" page = Sucks. New Ebay Motors = Sucks. New Ebay Search = Sucks. They are ignoring the users input and they have created a monster. Ebay's salvation is not to hire more programmers and make things constantly more complex, but just the opposite. They need to FIRE 2/3'rds of their programmers and simplify everything. Get back to the way it was in the beginning. Global search, etc. Fast and Cheap. If they don't, someone else will mop the floor with them sooner or later. But I'd say they have lost the vision and they are just flopping around, waiting for some fresh company to come along and put them out of our misery (hint hint Microsoft or Amazon or Apple or Yahoo..). Time to bail on this stock and look at the up and comers.
Ebay is now a joke. I just had a buyer scam me out of a $600 handbag…stating there were black marks on it. Paypay gave her the money back even though I sent pictures proving when the bag left my hands it was in perfect condition. I am about thru with them. I was doing over $50k in sales, and now it just isn't worth it anymore. I have 100% feedback….well until this scammer leaves here negative. What a joke.
Ebay lost sellers (and buyers as a result) because of their ridiculous fees. Not to fear. Lootslinger will soon come along to steal even more sellers & buyers away. Ebay will be a monopoly no more & will be forced to face the competition!
I'm a seller with a green star (5000+) feedback. I've gone from selling 100s of items every week to just selling the odd handful of items. Over the last 10 years ebay has lost so many people who have become disenchanted with it. And no doubt there will be a time after real competition comes in play in both online auctions and online micropayments, in which ebay will be trying to win people back. Ebay have trashed their brand and this latest move will no doubt be done in such a way as to trash it further.
Just a response to Rob Phillips in Cincinnati, I am a person who buys a lot on eBay and often have become the victim of fraudulent individuals, sellers in this case, who grossly overstate their merchandise. There is a case to be made for the fact that PayPal does not require the buyer to send goods back when there are problems. Because in many cases, the received merchandise simply isn’t worth the return shipping cost. As an example, I bought an item from a guy on the other side of the pond which was not at all as it was described in the auction, it basically was junk. The return shipping cost would have been the same as what I paid for the actual item (about 100 dollars). For me to return the item, I would have to spend my $100 that was refunded to me by PayPal in it’s entirely. Of course if the seller would have been willing to pay for the return shipping cost I would have happily done so, but sellers don’t want to do THAT either. Conclusion: As with so many cases, the truth of the matter lies in between.
It is clear Donahoe is not the kind of leader eBay is in need of. His statement and actions are reminiscent of the old-style executive, only focused on short-term results, showing the shareholders he's a hero when he leaves the company in two years with undoubtedly a huge payout, after which the company will start to deteriorate rapidly into a mess for his successor to clean up. Exactly the kind of behavior and short-term thinking that has brought our economy to its knees at the end of 2008. Ebay is a concept that has become successful by empowering individuals, nothing else. To undermine this now with "e-commerce", something we have too much of already, is basically killing-off the goose with the golden eggs. Also, the notion that a successful business always needs to "grow" might be misplaced in the case of eBay. EBay’s future lays in improving upon the user experience by means of making things easier and even more appealing for the little guy, not to promise huge pies in the sky for greedy shareholders and executives who hope to check out wit lots of payouts in their pockets. That kind of thinking should be passé in the modern American business world. Maybe Donahoe could be sent into early retirement before he creates a train wreck that cannot be undone any more.
Another point that needs to be made here is the fact that the INVENTOR of EBAY is Pierre Omidyar & he never intended to create a strictly Ecomerce site. Pierre's genius was from the start meant to be a marketplace for the sale & auction of goods and services for individuals by individuals. Essencially creating a easy to use, cost effective service to auction items off to the highest bidder. The Genius of this idea was it's ability to provide the little guy [Small business or indiviual.] with the power to reach the larger consumer market by using easy to use tools to create auctions to auction/sell items with very limited costs involved. EBAY auctions gave both those looking to sell at a fair value & those looking to buy at a fair value a new powerful service to utilize & profit from without having to deal with dishonest antique dealers, crooked pawn brokers or excessively expensive auction houses. Mom & pops & the little guy fell in love with this GREAT NEW auction site which allowed them the ability to auction items off at fair value & create a profitable little business for themselves & hundreds of thousands of others who never had the means or finances to accomplish this in the past. The EBAY auction site also created a highly new, creative & fun internet experience to millions of users & consumers who enjoyed bidding on the huge inventory of items available. The hugh inventory & item bidding histories also gave the consumer a new resource to review the TRUE value of items that were getting bids from both amatuer & experts alike.
That said Donahoe's objective appears to be to basically eliminate the AUCTION aspect of the site & just make it an ECOMERCE site. Doing this distroys the Genius in the idea of giving the little guy the power to get fair value on the items they'd like to auction/sell.
GREAT observation & points DH. Another important point you neglected to touch on is the fact that Donahoe states that their QUOTE "transitioning away from auctions toward straight ecommerce." This is so ridiculously stupid that I can't attempt to imagine what these execs may be smoking when they make these disasterous decisions. UH, doesn't EBAY essentially have a INTERNATIONAL monopoly on the On-Line auction Business where most serious merchandise bidders, as well as, the general public will go to bid on items? So why in the World would you want to tranisition away from something you legally have a Monopoly on, versus going to being one of the numerous competitors in the vastly competitive Ecomerce market where AMAZON & others are grinning from ear to ear. The only reason I can possibly see for them to do this, is that there is BIG money waiting under the table from the organized bidding power brokers who would desperately like to see EBAY auctions quickly fade into the sunset. Elimination of auction sites for mom & pop shops would be very sad thing for the Public & consumers in general. We'll be forced to back to crooked neighborhood pawn shops where you'll basically nothing for items you want to sell &/or get an honest value on. Hey, at least Donahoe & his cronies will fill their greedy little pockets.
I also am a long-time seller on Ebay and am totally discouraged by the lack of support that Ebay now affords as well as Paypal. They only look-out for the buyer and forget that the sellers are the actual money makers. They will most definately loose more excellent sellers going forward.
You can clearly see from this interview that Donahoe is vastly short cited, with very limited technical knowledge & appears to be a puppet on a string of other top execs. The PAYPAL business can easily be out done by more advanced & sophisticated On-line pay competition sites who's core Businesses will be Banking & Finance. These new On'line companies will steal this market away from PAYPAL faster then you can blink an eye. As for his totally neglected & mismanaged Gold mine & core auction business [EBAY] he will see other highly competitive companies pop up offering much more cost effective fee structures, with vastly better & user friendly customer assistance that will easily get sellers to give up on EBAY in favor of these substantial & profitsble Seller benefits. Once SELLERS are gone, guess where the buyers will go? NOT EBAY
"“We thought fun could overcome less than optimal user experience,” Donahoe admitted. “Now we’re restoring trust and layering fun on top.”"
What a joke! FUN? FUN FOR WHO? Ebay has been in a turmoil since January 2008! John Donahoe has been kicking around small sellers and treating them like crooks to the point where they left for other sites or else reduced their listings on ebay. More of his outrageous policies and restriction will come this fall – followed by yet another wave of sellers leaving! Then he goes around trying to fill the site up with leftover stock buyers didn't want to begin with and chinese dropshipped junk! At this time last year Ebay had between 12 and 15 million listings – now they have over 33 million listings and still managed to lose 29 percent of their profit in core! Read between the lines folks. Mr. Donahoe is a master at spinning his web but that doesn't make good business or a solid business plan. Buyers do not like the "new Ebay" they do not like the mass produced junk they can easily find in their neighborhood Walmart. They've been showing that to Mr. Donahoe since third quarter last year! Donahoe stubbornly continues – expecting to see a miraculous "turnaround"! What's it going to take before this madness is stopped – before powers that be realize what is happening to a once proud and successful company! Paypal and Skype can't hold them up forever!
yes, and as a power seller on Ebay I find it disgusting that Ebay requires us sellers to accept paypal. It has cost me money as Paypal does not protect the seller's from fraud or scam artist. recently a Paypal refunded a customer of mine $510 even though I provided proof of delivery in good condition..The worst part is that Paypal refunds the buyer and does not require the buyer to send the merchandise back. I now have to go 900 miles and find the fraudulant buyer and hope I can retieve my property. This has happened more than once and I am a person with a 99.8% rating, power gold seller and in excellent standing. To monopolize the payment methods by forcing us to take a payment plan I do NOT always want to use, is simply wrong when there is NO seller protection. To add insult to injury, Ebay won't investigate such issues and will not suspend these type of crooked buyers…not allow the seller to give this buyer a negative feedback! And to add to this, Ebay has collected its fees and commissions for this transaction from me and will not refund. Paypal is great for the buyer and awful for the honest seller! Ebay has lost a lot of seller business because of this and that is what has contributed to lost auction revenues. Why do you suppose Ebay gave up on the "Ebay live Auctions" ….because the major auction companies lost too much with paypal and refused to accept it. Ebay dropped the program and then changed policies: all sellers must now accept Paypal…no checks, no money orders, no cash etc. cost me 30% of my sales and created a nightmare to fight without protection. shame on Ebay
Ebay will never be the same till Donahoe will leave he taken this darling of the internet….into a flee mnarket …I used to sale $200.000 a year i left ebay im doing so much batter …Donahoe care less about the salers …Soon the stock holder will understnd he is the one person all alone that will take Ebay down .