Tuesday, October 17, 2006

Questions the Analysts Should Ask eBay!

With the 3rd quarter earnings call just a day away I thought I would present a few questions, that need to be asked, for analysts covering eBay for their clients.
  1. How many current eBay sellers are using Skype?
  2. Why doesn't eBay adopt Skype as their own method for communicating with sellers?
  3. Are there any plans to spin off stores onto their own platform?
  4. Are their plans to change their business model and focus more on advertising than sales?
  5. Are they moving Half.com's free listings into CORE search in early 2007?

Just a few questions to start the debate. If you have additional questions let me know.

2 comments:

Anonymous said...

I'm pretty much convinced that analysts aren't really very in touch with the actual, you know, real world.

They appear to live in ivory towers that are papered with printouts of figures and numbers, and I'm sure that if all you ever do is vaguely look out the window on the lands far below, chart and graph the numbers, and take what every company says about their figures as absolute gospel.

I don't think analysts are clever enough to ask questions like this. ;)

Anonymous said...

The real reason eBay Sellers are so upset.

Written by “this.is.a.posting.id”, on the eBay Stores Discussion Board - http://forums.ebay.com/db2/thread.jspa?threadID=1000365393&start=0.

That is without a doubt the most concise, insightful, astute, and lucid description of the current state of eBay!

What people keep overlooking, is that the fee hikes are just "the tip of iceberg" "the last straw" actually the least of the many reasons sellers (and buyers and apparently stockholders, for that matter) are depressed discouraged and angry about what happening with eBay.

The real reason price increases were met with such outrage (especially this latest increase for stores and the equally controversial fee increases back in 2005) is that we are being asked to pay ever increasing prices for ever decreasing quality.

For one thing, over the past 2-3 years we have all had to try to adjust and re-adjust our business plans to constant, unnecessary and often counterproductive change for the sake of change, which has made the site increasingly confusing, counter-intuitive and non-user friendly. Some of it simply makes no sense at all, for instance why do they expect buyers to click a tab labeled "Buy" when what they want to do is browse?, and why does "all items" not mean all items?

Sellers have to waste time constantly reeducating themselves how to use the basic functions and buyers just leave.

These changes are rolled out unannounced with no chance to prepare and no regard to the damage they cause. Sellers have no recourse for the loss of sales they sustain when these "enhancements" backfire. We sellers are not consulted at all on most of these decisions but we literally pay the price for management’s mistakes when sales plummet.

I'm talking about things like "rolling-up"(abolishing) categories and therefore dumping the existing listings into "other" or even completely irrelevant higher categories. (Remember the pottery and glass/item specifics fiasco of 2004? among others) and some absolutely, mind-bogglingly, nonsensical ideas (that, in incontrovertible proof of life's unfairness, someone actually gets paid to come up with) like making "Books" a subcategory under "entertainment" (circa summer 2004 again, anyone know what changed at HQ about that time?)

Worst of all, and there is no excuse for this, eBay admittedly does not test the programming of new features to see if it even works at all! And it never does, every change is inevitably accompanied by a series of glitches that make various basic functions of buying and selling impossible or intermittently available at best, often this chaos goes on for months, buyers are frustrated, sales wither and sellers literally pay the price. Is it any wonder they don't want to take the risk of running auctions anymore? If the search and bid functions are not working properly, and they, all too often, aren't then, sellers are paying these ever higher fees for nothing.

As of right now we are being treated to whole array of glitchy new changes, new search tests, new SYI forms, new shipping calculators and "experimental" inclusion of outside paid advertisements in search results. For the second year in row, right on time to ruin the holiday shopping season. They never learn from their own mistakes and never listen to the advise/warnings/pleas for mercy from sellers who loose their shirts when these "enhancements" backfire and drive away sales.

The other factor degrading the value of eBay as a sales venue happens because eBay can't or won't be bothered to enforce its own rules.

Sellers don't just face competition from the number of sellers/listings/similar merchandise increasing, and need to adjust other normal changes of supply and demand, all of which is to be expected.

The problem is that honest sellers are in a no-win situation of having to compete unfairly with out-right frauds for placement in the increasingly glutted and cluttered search results.

The site really is flooded with crap: Keyword Spamming, Deliberate miscategorization, fee-avoidance, S/H gouging and counterfeit merchandise gets top billing on every search, while the (sadly relatively few at this point) relevant listings that the buyer is actually looking for, are hopelessly buried in the junk-heap.

Honest sellers who truthfully describe and fairly and realistically price items and shipping are lost in a crowd of scammers.

And how does eBay respond to this? They lower fees for 1¢-99¢ listings and increase the number of identical listings allowed. At the exact same time they claim management is "troubled by the influx of identical and poorly priced commodity listings”? HUH? How does this make sense? Does this inspire confidence in eBay’s management? No, I didn't think so.

The trade in unique, special and rare items that eBay was built on, which buyers come here for, because they can't find it everywhere else? Is gradually being replaced with a bland, generic and overpriced online dollar store, mixed with some real steals (literally) on fake designer bags and nonexistent big screen TVs. Will this attract buyers?

Bottom line, eBay's value as a selling venue has declined markedly within the last several years. To put it simply, because of the reasons I described above, virtually anything listed on eBay today has a much lower chance of selling/getting the same price, as it did just a year or two ago. EBay listings are an increasingly risky investment, higher prices for lower possibility of return.

IMO, MOST of the decline was NOT do to factors like macroeconomic conditions or the growth/maturing/novelty wearing off of online commerce or the impossibility of completely eliminating risks like fraud, "bad transactions" and technical problems, or normal market forces, like changes in supply/demand for specific merchandise or simply because there are more sellers.

For the most part, eBay's loss of value as a selling venue for all types and sizes of sellers could and should have been easily avoided.

EBay’s decline happened because whoever it is making the decisions and has the power to determine the quality-level of eBay's "product" (that product being the ability of potential buyers to search for, find and view the advertising-listings that sellers pay for)
are either:
1. grossly incompetent or
2. acting in a blind, unreasoning panic to keep making very short term fixes to some sort of long-term crisis or
3. Insane and acting under the delusion that all these hare-brained schemes are magically going to be successful, despite logic, common sense and all available evidence to the contrary or maybe simply overestimating their invincibly as a virtual monopoly (i.e. believe quality is expendable and they can keep making their $ on fees even if nothing ever sold at all)
4. They just plain don't care and don't have to, because they plan to take their golden parachutes and bail before the whole thing implodes.
5. Employees having to justify their jobs coming up site enhancements
6. (Insert favorite conspiracy theory here) there is some secret plan to fundamentally change what eBay does the corporation will still exist, but they plan to abolish or de-emphasize stores/auctions/price ranges/used merchandise/new merchandise/small sellers/large sellers/something, your guess is as good as mine and instead make their money on things like skype or selling outside advertising or functioning as search engine for big business advertisers or who knows what...at which point all us EBay land peasants will simply be left out in the cold and told to eat cake.

These are the only explanations I can possibly come with for all the contradictions, reversals and mixed messages eBay’s management keep sending out.

There is no way to interpret the state of chaos that eBay has degenerated into over the course of the last two-three years or so as anything other than gross incompetence and/or some level dishonesty and obfuscation on the part of those in charge. And no way to interpret it as anything other than bad news for sellers, a business on eBay is indeed a foundation built on quicksand, a substandard construction getting shakier and more unstable every time the powers to be try to fix what isn't broken and neglect to fix what is. Of course a "rent" increase of up to 500% isn't going to go down to well at a time like this.

(Wait and see the reaction when core fees get a hefty increase in the upcoming February 2007 fee hikes and the upcoming June 2007 Postal rate increases & the change to dimensional weight rates. That's the real reason for this fee hike, they overpriced the core fees back in 2005, sellers resort to more store inventory listings instead of auctions, in effect eBay competing against itself for sellers, they have to make the store option unprofitable, so they can keep increasing core fees without sellers having recourse to lower fee listings, they regret ever creating the store option, because they watered-down the "price elasticity" of their own monopoly)