Thursday, December 21, 2006

VoIP Problems Continue

I don't want to be known as the Anti-Skype but I still have very serious concerns regarding eBay's involvement in this business. I do not own shares in eBay and I am just a former seller who decided there was no longer any upside to doing business on eBay.
However, I do care about the current seller base and the issues they are facing and eBay's $2.5 Billion purchase of Skype, in my opinion, has diverted attention and resources away from eBay's "bread and butter"; the marketplace business.

Imagine what $2.5 billion in investment could have done for the Marketplace business. The ROI would have been much greater and achieved faster than will ever happen with Skype. Buying, and investing that $2.6 Billion in growing more TSE marketplaces (Tailored Shopping Experience) makes far more since than getting into a completely new business with tons of competition. eBay could have easily done a marketing deal with Skype rather than buying the company.

Om Malik writes on his blog today:
“As a reader put it nicely, VoIP business is no different than the long distance business. High costs of acquisition, and very low margins. In other words it is a sucker’s game. One IP Voice, learnt this the hard way, and had to file for Chapter 11 Bankruptcy protection as it tries restructures. Good luck! The company sells VoIP to small and medium sized businesses. Well good luck with the makeover, because selling VoIP to SMB is beset with precisely the same problems as the consumer market. Too many players, too little profit. We will see more of these press releases in 2007.”

Skype is not going to go bankrupt but faces the same issues this small player faced; too much competition and very low margins. (I faced the same issues on eBay) eBay has made the hard decisions before, see the store fee increase and eBay China, it is time for them to look for an exit strategy for Skype. Meg Whitman has said before; “it is okay to make mistakes as long as you fix them quickly.” Skype is a mistake that needs to be fixed so that eBay can concentrate on what it does best.

Wednesday, December 20, 2006

How eBay Sellers can offer Google Checkout!

This article is an example of how one eBay seller was able to utilize Google Checkout's $10 off promotion to more than triple activity on his website.

"Steven Grossberg, who sells video games online from his home in Wellington, Fla., recently sent an enticing offer to 20,000 customers: $10 off any purchase over $30 using a new payment service, Google Checkout.

Traffic on his site more than tripled, and best of all, he said, Google picked up the tab for the promotion."

Scot Wingo of ChannelAdvisor is helping his customers implement this Google Checkout strategy and makes a very astute observation "So ironically by banning Google Checkout on eBay, eBay is pushing sellers to promote it heavily off-eBay, so it's a double whammy (no eBay rev, no Paypal rev). It will be interesting to see how long eBay can go with this "GMV leakage' going on."

Wake-up eBay! The solution to turning your marketplace business around is right in front of you but you won't listen to anyone. Protectionism does not work, instead of fighting so hard to protect your marketplace you need to embrace the changes in ecommerce and facilitate sales wherever they can be made. eBay 2.0 needs to be a radical departure from the version we see today.

I feel sorry for Michael Linton as he takes over the fixed price marketplace business at eBay. Michael will soon be saying "Toto we aren't in Kansas (BestBuy) anymore." Michael certainly brings a different perspective to the position but can he mesh with the current eBay culture? eBay has had a difficult time meshing with Skype Management and obviously didn't have a clue how to make China work (to be fair very few people know how to make China work)

They are spending so much time bailing out water that they can't fix the gaping holes in the hull of the ship. I’ve often used the analogy of eBay as a ship without a rudder and now you can add that the ship is taking on water.

Former eBay Exec Surfaces!

Former eBay Chief Operating Officer, Maynard Webb has come out of retirement to take the CEO position at a leading Silicon Valley startup called LiveOps. This was to be expected as Maynard is a a well respected executive and still a young man (51 years old)

According to the article, LiveOps is a "Palo Alto-based company whose technology routes customer service calls to 9,000 work-from-home agents around the country."

I wonder if they will use Skype to route those calls? LOL

Congrats to Maynard on his new position!

Tuesday, December 19, 2006

Comprehensive article on the plight of eBay's Skype

Here is a great article on the plight of eBay's Skype. At some point it is going to have to start making some money. I still think this was a major blunder on the part of eBay and may never pay for itself.

Monday, December 18, 2006

More eBay China Rumors!

Take it for what it is worth. The rumors have been out there for months that eBay was going to sell its Eachnet business to of Hong Kong. Now a disgruntled Eachnet worker has come forward to tell what is going on behind the scenes.

There is no way to validate this "employees" charges but it is interesting reading none-the-less. It is clear that eBay is making changes in their China Business but as for now there isn't any clear evidence what the strategy is going to be. Here is the memo from the alleged Eachnet employee.

Below you will see the first part of two press releases Ebay China puts out this week. I am sending this to you since you write about China and since you know China and since you should know the truth firstly.

EBay now abandons China and us, the loyal workers.

I am one of the many disgruntled Eachnet employee. I have suffered through the incompetence of Ebay leaders for many years. I admit I am greedy. I stay for money. But Ebay has screwed up our Company and in China.

Now that they abandon the market through partnership with Tom Online to be announced this week. The final draft of the press release headlines are below.

Not only are they being fooled, they are basically paying bribes to get the deal done. It is comedy and a travesty and should go down as the worst deal ever in Chinese history.

They have given Tom everything, and get nothing in return. They even have to "donate" millions of USD to Tom to get them to take the deal!

Everyone knows that Tom is controlled by a dragon lady named Solina Chou. What not all know is that Solina Chou recently invested in UMPay.
In order to get the deal done Solina tricks Ebay into making a huge investment into her crony-laden business, UMPay.
So, as part of the deal, Ebay's Paypal Company will invest $105 million into Umpay. This money will be used to buy out Solina Chou and other cronies including Winston Wen, son of Wen Jia Bao! Is this business or a bribe?

Meanwhile we employees suffer. We have to live through leaders who have failed us.

Since our founder Shao Yi Bo was pushed out by Ebay top management, we have had german, American, Taiwan and Hong Kong leadership: no real Chinese. No wonder we are beaten at every turn by Jack Ma team.

Ebay failed in China because it relies on one leader who did not understand the market at all: Meg Whitman. Meg Whitman is Ebay Mao Zedong. No one dare tell her the truth. She exports her cultural revolution and it dont work in China. She is clearly a smart lady but is a no-nothing about China, taken advantage of at all turns.

This deal will just put her down in history as China's worst businesswoman ever.

But its not just all her fault. Huge fault also lies with the USA born Chinese, Harvard MBA that work in Silicon Valley for her. Also the deal makers around her. They tell her what she wants to hear. They think they are smart. But at every turn they are robbed.

They did the deal with Eachnet on bad terms they fired our real leader Shao Yi Bo on bad terms they hired new people on Bad Terms

The only one who will laugh all the way to the bank is the Tom Dragon Lady.

Please see announcements below and I thank you for your help in telling the world about how we have been wronged.

I know everything on this deal and am happy to send you more.

eBay 2.0 - Marketing Vehicle

I found an interesting article on this morning. It was another take on what I've been discussing for months: eBay as a Customer Acquisitions tool.

The article is entitled: The Challenge for eBay Sellers and is written by Allison Hartsoe of Internet Business Skills. She does an excellent job of explaining how eBay has changed for the sellers using the concept of software versions. She writes:

Classic eBay, or what I'll call eBay 1.0 was about creating an efficient market to liquidate goods and make money. Back in the late 1990's when the ratio of collectibles (i.e. beanie babies) to consumables (i.e. ink jet cartridges) was 80% to 20% of eBay auctions, this made sense. The collectibles industry lacked the ability to bring the Pez dispenser seller in contact with the Pez dispenser lover. Enter eBay and voila! Prices for hard to find items equalized with demand as sellers found buyers. And sellers made money.

Then in the early 2000's collectibles and consumables switched places. I'll call this eBay 1.5. Gradually, consumables become a larger part of eBay listings until it's 80% consumables and 20% collectibles. But the consumables industry doesn't operate like collectibles. Consumables require reliable suppliers with recurring products and price reductions driven by volume purchases. By manipulating factors outside of eBay, sellers still made some money.

And now we have eBay 2.0. The gap that allowed sellers to make money on eBay has steadily closed. Costs have risen in the form of eBay fees, external tools and competition. Sellers are screaming that they can't make money. Some feel they've hit a revenue ceiling. eBay has responded by purchasing 5x the volume of search terms from Google that they ran last year. They also rolled a completely new platform (Express) to attract a different type of buyer. The challenge for sellers is that no matter how many new buyers eBay brings to the platform, sellers still cannot make money if each product is purchased for the same miniscule net profit.”

She goes on to say that eBay 2.0 is no longer a sales channel but a marketing channel. I know eBay management would disagree with this assessment but they’ve been blind to the dynamics of the site for quite a long time.

EBay 2.0 is a marketing channel and with Sponsored links,, and Classifieds eBay 2.0 will be an entirely different place to do business. In its current form that is not a good thing for sellers. Maybe eBay 2.1 will be the right version.

Read Allison's entire article here.

Friday, December 15, 2006

Is Overstock a Takeover Possibility?

According to Eric Buscemi, in his Blogging Stocks blog, it looks like may be in play for a takeover. The potential suitors are the usual suspects: eBay, Amazon, Yahoo and Google. Amazon has the most in common with Overstock and a purchase would increase their market share. I don't see this as being eBay's cup of tea, they create virtual marketplaces and Overstock actually buys and ships real product but think of the possibilities if they merged Express with Overstock. How does sound? Yahoo has too much trouble in-house right now and I don’t see a place for it in their reorganized structure. Google is an interesting possibility; could become their first marketplace venture and would cause some serious problems for eBay.

Thursday, December 14, 2006

eBay Related Links You May be Interested In!

The eBay Gulag! - I came across this article on Scot Wingo's eBay Strategies blog. Be careful who you associate with. They may put you out of business.

Here's a great Org. Chart on eBay management. It details where the new employees (Linton and Justus) fit in the scheme of things. Pay close attention to where Bill Cobb is placed. It seems to me everyone could report just as easily to John Donahoe as to Bill Cobb. (I found this on Ina Steiner's Blog).

Tuesday, December 12, 2006

eBay Just Doesn't Get IT!

You may be able to find "IT" on eBay but eBay, as a company, just doesn't get "IT".

Every morning I search the web, communicate with my sources and do my research on ecommerce and specifically eBay. I look for an interesting story or perspective to discuss with my readers. I try and find something positive but most often I find only negative. This morning was no different.

At the Cowen and Company Internet Conference last week four eBay Power Sellers spoke about the problems they faced on eBay. Todd Rath of Rock Bottom Golf, Jennifer Canty, of Dyscern, Dan Yen of Movie Marz (my former competitor) and Douglas Deist, the vice president of operations for Exel-I.

Each of these eBay sellers spoke about the troubles they experienced on eBay. These are not small hobby sellers; they do this for a living. Rock Bottom Golf has annual sales of $18 Million; Movie Marz reportedly does $12 million a year in sales. In most businesses your top clients get treated like royalty, there is constant communication; you definitely want to keep the big clients happy. This isn’t the case with eBay.

Here are some excerpts from the article:

“Mr. Rath is not happy with eBay, and did not mince words. His complaints include a lack of communication with eBay (he hasn't heard from his rep in 15 months), annoyance that eBay tries to maintain a "level playing field" for its sellers (and, he said, consequently caters little to its largest sellers), and frustration with ever-rising fees being charged on eBay.”


“Dan Yen, whose company Movie Mars offers more than 250,000 new DVDs, games, and CDs, was most upset with eBay's propensity to change its fees and rules without notice. In frustration, Mr. Yen began selling on Amazon (AMZN $39), where he said he quickly saw a jump in sales. Some of the panelists, though not all, said they saw greater profitability in selling on Amazon, and said consumers have more confidence in the company. Jennifer Canty, who was more supportive of eBay than her fellow panelists, nonetheless agreed that the company had not done enough to boost the image of its sellers.”

After selling on eBay for 5 years I came to the conclusion that eBay does not want large sellers and therefore has not addressed many of these issues. I thought I could make an all eBay business work and I was sadly mistaken. Sellers who want to grow must begin looking at eBay as a customer acquisition tool and budget their marketing dollars accordingly.

Monday, December 11, 2006

New Management at eBay!

Things continue to change at Last month Phillip Justus was brought on board at company headquarters to oversee the CORE business and this week it was announced that Michael Linton the former Chief Marketing Officer at Best Buy, Inc. will be heading up eBay's Marketplace businesses (, Stores, Express, eBay Canada and Motors)

I think this is a smart move and hopefully will bring about some much needed changes in the eBay’s marketplace businesses. There may still be hope for the stores platform.

I have one question though, what is left for Bill Cobb to do? It seems to me that these two executives are taking over the two largest business segments on and according to the announcements will report to Bill Cobb. It seems odd to me that ebay is adding to their management ranks rather than streamlining their business units. I can't help think this is a precursor to a not to distant announcement regarding Bill Cobb’s future at eBay. Of course that is pure speculation on my part.

More changes at eBay's Skype - It's been an interesting year for Skype managers as the tug-of-war between original Skypers and the eBay managers sent to mold Skype continued. Now it looks like the original Skype managers have won.

Thursday, December 07, 2006

Yahoo Management Shakeup! Is eBay Far Behind?

With Yahoo shaking up the executive suite can eBay be far behind? The plight of these two companies is very similar. Both stocks are trading way below their 52-week high. They are both #1 in their categories but slowing growth is a major concern. Yahoo has been criticized for not being nimble enough to compete with the much more effective Google while eBay has had an easier time with investors for at least acknowledging problems and attempting to resolve them. At this point eBay’s saving grace is they don’t have any real competition for their Marketplace business. There are signs that PayPal will experience some pressure from Google’s Checkout in 2007.

If eBay investors thought 2006 was a tough year just wait until 2007. My hunch is 2007 will be this current managements last year to turn things around. Maybe there is a "Peanut Butter Manifesto" being written right now by an eBay executive.

Wednesday, December 06, 2006

Google Checkout Revisited!

Google has extended their free transaction program for Google Checkout. Sellers using Google Checkout to process sales will pay no transaction fees through the end of 2007.

This reminds me of the “Browser Wars” between Microsoft Explorer and Netscape in the 90's. Microsoft gave away Explorer in an effort to take market share from Netscape and was successful in becoming the dominant browser. It looks like Google is taking a page from the same book, putting tremendous pressure on eBay's PayPal.

If PayPal's growth is slowed by this approach eBay will be in trouble. PayPal is the business segment responsible for eBay's growth at this point.

It wouldn't surprise me if this added pressure from Google ended up with eBay and Google making an agreement. Possibly adding PayPal to Google Checkout and Google Checkout to eBay.

Follow this link to see what some eBay sellers are saying about this extended promotion from Google.

Tuesday, December 05, 2006

Perception is Reality!

Click on the title link to this post for a recent eBay discussion board thread on why eBay isn't mentioned in Women's magazines as the place to shop this holiday season. There are some interesting takes.

Celebrities use eBay as a promotional vehicle, crooks use ebay for scams, Kooks use eBay to sell ad space on body parts but what is the perception of the nearly 700,000 regular folks who use eBay to make all or part of their monthly income?

They are hobbyists, stay at home mom's, handicapped, but they can't be real business people (that's the perception but it isn't reality) eBay has a perception problem and sellers need to be aware of that. My suggestion: I would take the eBay off of your business cards and begin calling yourselves online retailers. Perception is reality and how eBay is perceived in the world won't change.

Monday, December 04, 2006

Promotions and More Promotions!

I have been around eBay since 1999 and I have never seen this much promotion activity. Ina Steiner mentions three more promotions for eBay sellers this week.

It is clear to me that eBay has hit the wall or ceiling if you will. They must now prop up CORE listings by discounting not because of competition but because their marketplace is in trouble.

I could see this approach if there was a major competitior out there but there isn't. eBay controls the Auction business on the web. So what is the problem? Apparently there are some serious problems with the CORE marketplace. The 4th quarter earnings report will be very interesting.

eBay Revenue Growth vs. GMV Growth - Two Perspectives

A recent article on discussed the current trend in Revenue vs. GMV growth on eBay. This chart shows the comparison. As you can see Revenue is growing faster than GMV and it appears the purchase has a great deal to do with this (notice the separation between the 2 trend lines). This should be good news for investors because as eBay's marketplace business matures and GMV flattens out (or even declines) they can still see Revenue growth through other initiatives. Investors should be concerned though that slower GMV growth puts pressure on PayPal revenue and if eBay cannot get PayPal adoption across the web (see Google Checkout here) they will see a slowing of revenue growth from eBay’s star performer. EBay marketplaces are maturing, PayPal may not be far behind and Skype may never generate much. Where is the Power in “The Power of Three”.

As I said there are two perspectives on this data. Investors are happy in the short-term because they can see continued growth outside of eBay's CORE marketplace but Sellers should be very concerned as they see GMV growth slowing and in some cases declining on eBay's Core business. GMV (Gross Merchandise Value) is a key indicator regarding the health of the marketplace, as eBay's GMV growth flattens out sellers should be concerned.

As the eBay marketplace reaches its capacity to move product, sellers must reconfigure their business plans. In order to grow your eBay business you will need to grow your share of the eBay business rather than rely on marketplace growth. The problem with this approach on eBay is in order to increase share you will need to increase your listings/fees. Conversion rates will decrease putting even greater pressure on margins. Take it from me eBay market share comes strictly from having more listings than other sellers. This is not a strong business plan. I can attest to that.

My suggestion is that sellers seriously look at growing their businesses outside of eBay. This approach gives you greater control of your marketing dollars and makes you less dependant on a maturing marketplace. EBay is growing slower than ecommerce as a whole so if you want to grow look outside of eBay.

Friday, December 01, 2006

More on Overstock and Patrick Byrne's Message Board Post

I've read Patrick's post several times and honestly I feel his pain. So often message boards posters go over the line of decency when complaining. I've noticed it on the eBay boards, the local High School football boards, etc.

What amuses me is the post's following Patrick's. They are all cheery and thankful while those same members were not so kind when they thought Patrick wasn't listening.

At no time is it ever reasonable to attack someone personally. Whether they be Pinks on the eBay message boards, employees of Overstock or Customer Service Reps. at your vendor. It is completely unacceptable!

When I was selling online I occasionally had to do exactly what Patrick did "fire the customer" It was our company policy that if a customer used profanity the CSR gave them one opportunity to calm down and if they didn't they were encouraged to call back when they could be reasonable. Very rarely did I have to fire a customer. What happened to old saying "treat them like you want to be treated"?

You get better results with honey then you do with vinegar.

Patrick has posted a new message to sellers asking for suggestions.