Barron's company cover stories... and for that matter, most articles on
companies appearing in the mass media... are usually puff pieces that
are basically re-writes of company press releases and annual reports,
with a few quotes about "everything is great" from a telephone interview
with a company officer thrown in. So, naturally, the Barron's story
makes it sound like Ebay is firing on all cylinders -- so why is it that
as both an Ebay seller and an Ebay buyer I have been getting flooded
with special discount offers all year long? Far more than ever before.
Right now as I seller I get my first five listings per month free with
no insertion fees of any kind regardless of my starting price or if I
put a reserve on. Ebay never did that before, not a permanent on-going,
month-after-month insertion fee reduction. And I'm always getting $5 and
$10 coupons to take off the bottom line of an Ebay purchase. Ebay
doesn't make even $1 on most of its sales these days, so offering $5 or
$10 bucks off a purchase is a money-losing proposition, but they figure
it's a cheaper way to drive more traffic to the site than paying for
advertising on prime-time TV.
These stunts are all the actions of a retailer whose revenue stream is
faltering. PayPal is a different story. It has become *the* online bank
(and with good reason) and now people use PayPal to pay for almost
everything online, including a whole lot of stuff (pricey stuff) from
websites other than Ebay. I won't use anything but PayPal for any online
purchase and will not buy from a site that doesn't accept PayPal
payments, simply because I don't want to give my credit card number out
of websites any longer and with PayPal I don't have to (plus I know I
can always get a refund of my money if something goes wrong with my
purchase). So, yeah, PayPal is a goldmine and buying up the company was
the best move Ebay ever made. Note that while Bruce does not auction on
Ebay anymore, he still takes PayPal payments.
Anyone who spends real time following the stock market knows that a
stock's price on Wall Street often has little to do with how well it is
actually doing -- this is particularly true of internet company stocks,
which have always had their stock price determined by emotion and hype,
not fundamental economics.
But all that is background to what Ebay is now doing (and has been doing
ever since it went public): They are only worried about improving their
official earnings-per-share on a quarterly basis. That is the only thing
the stock market cares about and so it is the only thing that the
operating officers of Ebay care about, regardless of whatever feel-good
"we're all one big happy Ebay family" press releases and e-mails they
may send out.
Ebay decided to become Amazon, and they pretty much have, with genuine
auctions (not fake, endlessly re-listed, fixed-price retail offerings
pretending to be auctions), now making up only about 10% or less of its
business. The problem is, Ebay is nowhere near as good at being Amazon
as Amazon itself is, so they need to keep the *appearance* of being an
auction house because it is the only unique aspect they have going for
their retail site -- the only thing that keeps people going to Ebay and
checking it instead of just going directly to Amazon; this idea that
they might find "an even better deal at an auction on Ebay".
And sometimes they do, but only when the item being sold (not really
auctioned) is a close-out, out-of-date or last year's model product
being heavily discounted or else something coming direct from an Asian
wholesaler who either doesn't want to pay Amazon fees or else wants to
be on *both* Ebay and Amazon simultaneously (there are now a lot of
those sellers, who are selling the exact same item on both sites,
usually for the same price).
To address the original question (and I'm sure Bruce already knows this,
which is why he finally jumped ship and started running his own auction
site): I can't see that Ebay will ever return to being primarily a real
auction site because they don't want to and don't see any reason to:
Their variation on the Amazon business model is making them plenty of
money, and is a model that Wall Street can understand and likes. They
figure since they still allow those who want to bother to stage real
auctions on Ebay that they can have their cake and let it go stale too.
-- JR
Franc wrote:
This week's Barron's has a cover story on Ebay called Ebuy. This Dow
Jones Business and Financial Weekly indicates "Ebay's core e-tailing
business is rising, while its PayPal and Skype units thrive. The
auctioneer's stock, up 50% this year, is still cheap. Look for another
30% jump before the gavel comes down." As much as Ebay may not work
for you Bruce, it seems to be working very well for its board of
directors and stockholders and unfortunately I don't think
some unhappy auctioneers and buyers are a concern to the Ebay
management. Auctions have apparently become a much smaller part of
Ebay's bigger business. FRANC
Bruce wrote:
I say, "Let eBay be eBay". Forget all the changes and new-fangled
notions that have brought eBay down, and return to the roots of
what made eBay what it was.
Get rid of DSR's, and the micro-managing of sellers. Let people
charge what they want for shipping, and above all let search work
like it used to.
Charge a reasonable listing fee, and allows hidden reserves, but
charge a high listing fee for reserve auctions, and then rebate
90% of the listing fee if the item sells, to greatly discourage
people listing reserve items that don't sell.
About the only change from the eBay of 2001 I would suggest would
be what I first saw as a painfully obvious necessary change when I
started selling in large quantity that year.
Qualify all the users (with good ID) and each person gets ONE ID,
and if you screw up bad (with set rules defining what screwing up
bad is) then THAT PERSON is banned, not just their ID.
Let the millions of good buyers and sellers deal with each other
just as they did in 2001, and given today's difficult economy, I
think millions of old users and millions of new ones would flock
to the site.
Let eBay be the eBay that was. It worked perfectly well until the
leaders of eBay fixed it until it is now broken (maybe beyond repair).
Bruce
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