eBay Shareholders High Bidders in Auction for Crappy Earnings
by John Paczkowski
Posted on January 21, 2009 at 2:31 PM PT
EBay is run by smart people who don’t use eBay and spend hours debating the data about how other people use eBay. That is the problem. You can’t solve your way into the future.”
– A former eBay strategist on the company’s fatal flaw
If IBM (IBM) and Apple (AAPL), with their bullish earnings, are the flame of hope around which battered investors are huddling today, then eBay is the sopping wet blanket tossed over that flame. The online auctioneer reported fourth-quarter earnings Wednesday afternoon and they are dismal to say the least.
Net income for the period fell 31 percent. Revenue fell more than six percent to $2.04 billion, its first year-over-year quarterly decline this decade.
An ugly showing, which eBay (EBAY) blamed on a softening consumer economy and “tough holiday season.” But there’s another force at work here as well: skeptical eBay sellers irked by recent changes to the company’s auction fee structures. They’ve been abandoning eBay for rivals like Amazon (AMZN), Etsy, and Bonanzle, and the company has suffered from their departure. According to Nielsen, traffic to eBay.com was flat year over year, decreasing three percent from a three-month average monthly unique audience of 66.5 million in Q4 2007 to 64.7 million in Q4 2008. Worse, eBay’s gross merchandise volume–the total value of all goods sold over the site–fell 16 percent year over year.
That’s concerning because by all rights GMV really should be growing. What do consumers do during financially uncertain times? They look for deals that will stretch their shrinking budgets. Apparently fewer and fewer of them are doing that on eBay these days because higher fees and other changes the company’s made to its auctions have resulted in fewer bargains. As Digital Daily commenter Rolin Bach aptly noted earlier this week, “To be successful online, you have to offer something better than the department store down the street. This is why eBay is failing. Wal-Mart has better prices. Buying on eBay is not a deal anymore. Not now, not tomorrow, not ever.”
Given sentiments like that, it’s no wonder eBay’s shares have lost more than half their value over the last 12 months and will in all likelihood continue that downward trend in the months ahead. “Seller discontent with eBay is on the rise due to higher fees and other changes, and we believe eBay has seen numerous sellers migrating away from the eBay platform and creating their own selling sites,” Brian Blair and Ryan Hunter of investment research firm Wedge Partners wrote last September. “We don’t have a handle on how much of the slowdown is due to economic conditions and how much is due to competition and execution, but we do believe a decline in these key metrics presents continued risk for the company.”
Indeed. Especially since eBay management has a very different perception of the changes it’s brought to the buyer/seller community. Consider these remarks from eBay CEO John Donahoe, delivered during an event at Legg Mason Capital Management in September 2007:
We set out a year ago to think about how we could change before we are forced to change. We took a good look at ourselves in the mirror and didn’t like everything that we saw. We saw a very successful business and a lot of momentum but we saw that our user experience and ability to satisfy our buyers and sellers wasn’t what we wanted it to be. By using a real focus on the customer, we embarked on a series of fundamental changes that will ultimately span a three-year period. We started by creating a future vision. This was critical because not everyone felt the impetus to change, given the amount of success we were experiencing. There’s a real push to keep doing what you’re doing because it’s working. We dove deeply into an understanding of our customers, their needs, their unmet needs, and their alternatives….We had to create a mind shift at our company–we had to think bold and not just incremental. We had to create a vision of the future so people could let go of a very successful past. We had to understand that this wasn’t going to just happen overnight. While we’re doing this, we’re running a successful business. We need to drive these principles of disruption at the same time that we’re executing a very successful business.”
Now, looking over eBay’s latest earnings, is that really what’s happening here?
Certainly doesn’t look like it.
Comments
Ebay is too expensive now that you have to use paypal. Ebay and paypal fees are too high, and ebay is too difficult to deal with. I left ebay after 12 years of buying and selling. I may still buy something on occasion, but I’m through selling. Ebay wants the seller to pay for shipping, pay for insurance, pay paypal fees, pay ebay fees, and deal with not being able to leave feedback to the buyer. Ebay is a rip-off!
Posted by bob long at January 21st, 2009 at 2:48 pmToo bad…. so sad…. we’ve been saying that the new Donahoe business model IS, WAS and WILL destroy eBay and it sure seems to be coming true. And don’t even try to blame it on the economy. eBay should be flourishing during times of economic turmoil.
Even if they did change their evil ways, too many of eBay’s best and long time sellers have been so alienated, cheated and discarded, that they have found new and other more profitable venues (Diamond PowerSellers and over-seas garbage sellers excluded).
http://www.Bonanzle.com is a great example. They’re growing at an astonishing rate. Shareholders—keep your eye on this one!
If you want to know where eBay’s business is headed, simply ask their customers (the sellers). No one knows the market better than veteran store owners.
Shareholders can easily find out what’s really happening on eBay’s community forum called “Seller Central”. But be quick! eBay loves to silence the truth and remove posts that are not pro-eBay.
Shareholders: You keep listening to eBay’s Spin Doctors and you will lose, just as Enron shareholders did.
Posted by Rolin Bach at January 21st, 2009 at 3:31 pmI wish to assure you that although eBay is down almost 20% year over year, this has absolutely nothing to do with all those noisy BAD fleamarket sellers whom we routed off the Marketplace last year. They were just bad and noisy and had no effect on anything even if they didn’t come crawling back.
10 year user 100% + FB
DSRs 4.9,4.9,4.9,4.8
Now a happy website owner and very active on Bonanzle.com using Google Checkout as my payment processor.
No buy, no sell, on eBay, ever again. Its over.
Posted by Henrietta Russel at January 21st, 2009 at 7:03 pmI’m lucky that I have inventory that turns quickly. Otherwise, I’d owe eBay an even higher amount of selling fees than the 15-25% of sales that I pay now. On my new selling platform (Bonanzle.com), I can list hundreds or thousands of items at no cost and pay just a small fee when the item sells.
The webiste is easy to use, easy to search for items, and just as easy when it comes time to completing a sale. The online community and real-tme chat gives buyers and sellers the ability to talk, ask questions, and negotiate a sale price.
So, as Bonanzle http://www.bonanzle.com grows at its exponential pace with NO listing fees and commission fees that average 4 to 5%, I will move my entire inventory over to Bonanzle. The sellers are leaving eBay in droves. And the buyers are starting to follow them.
My holiday selling season was down 40% on eBay. Some due to the economy, some due to eBay’s mismanagement of the marketplace and indifference toward its sellers. In the one month period that I’ve been on Bonanzle, my sales have already exceeded my expectations. I fully expect my Bonanzle business to double my eBay business within 6 months. All at a cost that will be about 60 to 70% less than eBay.
I’ve been doing this for almost 4 years. At one point, you could have easily assumed that I was a paid evangelist for eBay – I talkd them up that much. Now, I see the future… it’s Bonanzle.com
I’m happy to take my 100% feedback and 4.9 DSR ratings, along with my products, to a site that allows ME to run MY business the way I want to. Bonanzle’s management responds to customer (SELLER) concerns quickly and personally. Unlike eBay, Bonanzle doesn’t send an automated response to a seller’s problem that doesn’t acknowledge or address the concern. The Bonanzle management actually cares about their customers and it shows on their website and in their business practices.
Make the investment in Bonanzle. You won’t be sorry.
Attention BUYERS: Bonanzle sellers can afford to give you a better deal on your items @ Bonanzle.com
Posted by Tom Wayne at January 21st, 2009 at 7:36 pmJohn wanted the smaller sellers gone, they were too noisy and in general were bad sellers. Been buying and selling on Ebay for years.
DSRs 4.9,5.0,4.9,4.9.We are Power Sellers. That is not for long as we have not sold anything since before Christmas on that site. For some reason I noticed that our search standing has been reduced to standard – OH I know why! it must be time for billing again. Mysteriously 24-48 hours pre-billing our DSRs and search status drop (no discounts that way!) and then within that same amount of time after billing WA LA our account is restored as it was. This is the 5th month in a row that has happened.
So we left for Bonanzle where the doors were open wide for us. Back to enjoying a simpler way of life, actually having FUN, actually have contact with management with personal and immediate responses, the fees are almost non-exsistant and we make sales!!! Bye bye John! Hello Bill Harding and Mark Dorsey!!!
Posted by Mary Kawecki at January 21st, 2009 at 7:39 pmTheir Fees??
Posted by Ted Steenwerth at January 21st, 2009 at 8:13 pmCome on how about their attitude towards alot of us..
My wife sick in the hospital, and she gets a negative feedback for not responding quick enough to a seller(abuse)
Then my wife dies a month later., and same seller telling me I better buy her laura ashley for $4 or else I’ll leave you negative feedbacks??
Did sleezbay do anything to help. NO!! and I have the email the lady sent me as proof..
Then the site is being bombarded by people who they screwed and those people happen to know how to use a computer, and are hitting them with viruses and trojans..LOL
Sleezbay They tried to get me to sell an item for $30??
They sent this lady a win and the auction site had 15 minutes left??? And I had a buy it now and a reserve on it.. and not for no $30..
I was with sleezbay for a few days.
my deceased wife put up with them since 2001 to 5/2008.. me a few days and well sleezbay your history. I searched and found etsy. bonanzle. ioffer and tias trocadero etc.. I have been at ruby lane for years.. I mainly use Bonanzle.com. very friendly..
I do not kiss arse.. and sleezbay’s trust and safety department is supposed to take care of this stuff???
Then they removed the real auction instructions once I threw it at them.. The start bid is $30 and you have to bid .99 cents to a dollar OVER the starting BID.. NOT $30..But $30.99 or $31.
They removed that real quick, and I am sure put it back changed.
Their software allowed that to go on all these years LOL
they owe how many people for these false bids..
SLEEZBAY it only took me a few days, and now people after years of being with them are running cause the FEES???
And then I got in an argument with some buyers in their posting section,, trying to tell me the rules, and I did not cave..
Why because I do not care who you are KISS MY ARSE… Leave me negative feedback cause I will not let you bully me.. I hate sleezbay… Only took me a few days too..
The rest of you????
A lady left me a neg.
so I went to her feedback section, and because sleezbay stopped that seller leaving neg crap at another persons feedback section.
I had to post a neg comment in her postive section..
They were mad at me for that.. LOL LOL LOL Sleezbay…
I can understand paypal fees with all they have to do. They have protected me for years.. I send them the proof and they go get em..
I have had several problems one with a skin care company in california, got my money back. Then amazon.com took my money from paypal, I confronted Amazon.com, and they were we have no Idea why we did that??? Again sent the proof to paypal got my money back.. I mention sleezbay to paypal they get a little perturbed.. They do not like being associated with sleezbay..
Paypal is dealing with the feds being it is a money center..
They have to go by a whole different reality..
I am one of the thousands of long time sellers chased off in 2008 through their unfriendly new policies and new exhorbitant selling fees, leveraged and collected twice, once through eBay and again through Paypal, on the same auction by the same company who owns both eBay and Paypal. eBay’s new policy dictating to sellers they can only accept payment through Paypal was the final straw. eBay/Paypal even took a big bite out of the postage collected, making it impossible to list an item with actual mailing costs without facing a loss.
I am still looking for an alternative site to sell. Unfortunately Bonanzle only has a fixed price format on their items, a selling price which the seller sets, along with a make-a-best-offer option which usually indicates that it’s a bad item that isn’t selling. The seller-set fixed price format is the reason bonanzle will never be recognized or cited when determining true market values on any vintage or collector items since the seller is setting the market value instead of the buyer. That’s not how it works in the real world. An item is worth what a buyer is willing to pay, no more, and the buyer sets the price – not the seller.
And yes, the mass exodous last year of good sellers has negatively impacted eBay’s bottom line and not the economy. We all love a good deal. With the new excessive fees now in place wiping out seller’s profit margins, a good deal is hard to find on eBay. Sellers walked. Buyers walked. The new CEO tried to fix something profitable that wasn’t broken. A bad management decision.
eBay: “PREPARE FOR IMPACT”.
Posted by Cheron Gibson at January 21st, 2009 at 9:24 pmAlthough I still have some sales on eBay, the fees have significantly eaten into my profits and I have closed my store.
I have opened 2 booths on Bonanzle and one on Etsy. Sales aren’t quite what they used to be at eBay, but Bonanzle is full of friendlier people and the most helpful and responsive founders. Buyers will come as the sellers her have what they can no longer find on eBay.
As smaller sellers, we need to go where there is positive energy and support for us. eBay has become a dumping ground for mass-produced junk and is no longer the fun place to get deals that it used to be. Which is a shame since it was so much fun before!
As for the OBO format, it does allow for buyers to set the price, if they don’t agree with what you’re asking for an item they are free to submit an offer, and you can counter it. Sellers should be careful not to be pricing excessively, but they will adjust down if needed. As the buyers come there will be an adjusting to the market prices to make it more accurate and reflective of pricing as a whole.
Go Bonanzle!
Posted by Christy Librizzi at January 22nd, 2009 at 7:01 ameBay has lost it’s touch. New alternatives have arrived up and are taking advantage of eBay’s mistakes. The best of the lot seems to be Atomic Mall(www.atomicmall.com) as it gets the highest and most exposure on Google and Google shopping than any other commerce site out there.
More and more buyers go to Google everyday for their shopping needs so the site with the best search engine exposure will eventually end up on top.
Posted by Casey Jones at January 22nd, 2009 at 8:14 amUntil eBay realizes their decline is attributed to a Gestapo Management style, their stock will continue to plummet. Auction buyers cannot purchase what is not available. eBay has treated their sellers so poorly, they are saying in numbers “Enough”. Yesterday, eBay turned the phones off for their top selling Powerseller Account Managers with only a recording the phones were turned off due to inclement weather. When I finally reached someone at another number and inquired about the weather, I was informed it was a beautiful day. The Account Managers could not handle the volume of complaints from their top sellers as eBay was ending the auctions that made any reference to checks or money orders. I am a Platinum Powerseller and ended 47 of my auctions yesterday. Sellers like myself will continue to seek more friendly internet sales sites and eBay will continue to tank. I have this strong message for the Board regarding Mr. Donohoe, “The fish stinks from the head!”
Posted by diane pearce at January 22nd, 2009 at 8:36 amebay’s model is dead. craiglist is the new model and new leader.
meg whitman got ebay into this mess.
why doesn’t allthingsd email her and ask her how she messed it up
Posted by Sam Harrison at January 22nd, 2009 at 12:37 pm