Tuesday, October 31, 2006

Greg Isaacs Finally Lands with Leadpoint

Greg Isaacs, former Director of eBay's Developer program has officially announced his new venture. He was recently hired as Vice President, Marketplaces for LeadPoint a Los Angeles based leads exchange marketplace. Congratulations Greg!

Monday, October 30, 2006

Who wins the Race the Tortoise or the Hare?

Yahoo has been sitting on the sidelines while Google gobbles up some prime online real estate. Yahoo is just now launching their long delayed search application called Panama while Google announces a new application just about every week. What's the problem at Yahoo? I call it decision constipation. eBay and Google live by the Mantra "make quick decisions and fix the problems as they develop" While Yahoo takes the much more conservative approach of a traditional business.

Who has the best approach? The Tortoise (Yahoo) or the Hare (Google, eBay)I think both approaches have their positives and negatives. Yahoo's approach to software development is a negative. Software will never be perfect and if you continue to delay product launches you will fall behind the rest of the marketplace. eBay launches applications quickly and fixes them as they find problems. While this approach is occasionally bad for buyers and sellers it hasn't affected eBay in the marketplace. Google launches applications in Beta form while it continues to mold and form the program. This approach has been a big positive in the Marketplace.

On the acquisition front though, I believe the roles are reversed. EBay made a quick decision to purchase Skype and they paid heavily for a business that may never materialize. If you look at eBay’s purchase of PayPal though that was made after many years of trying to compete with them (more of a Tortoise than a Hare). Yahoo on the other hand hasn’t made a market changing acquisition since Overture, which in my view saved their business.

Yahoo would be better served to speed up their development of applications to compete with Google and Microsoft than to purchase online dinosaurs like AOL or infants like Facebook. The “Tortoise” approach to M&A is the right approach. Yahoo needs to be a developer first and a buyer only if a market changing application becomes available. They would be far better off buying 10 low priced technology startups and developing their applications than making a huge purchase like AOL or merging with eBay. But this approach requires them to speed up the launching of applications.

New Math! This is Where Bill and Meg got the 6% Increase.

This summer, when the eBay fee increase was announced, Bill Cobb mentioned that the average increase per seller would be around 6%. Most sellers laughed at this because actual listings fee's increased from 150% to 500%. Nobody could figure out where they got their 6% number from.

I came across this video while reading the eBay stores board and realized that Bill Cobb went to the Ma and Pa Kettle school of Math. Check it out for a good laugh.

Ma & Pa Kettle Math

Friday, October 27, 2006

eBay's Stock hits $33

eBay's Stock hit the $33 mark today at 12:31 EST. but what explains the increase from the 52 week low of $22.83 in early August? Overall eBay is sitting on a ton of cash $3 billion, is still generating large amounts of free cash flow, has zero debt, has been buying back it's stock, and appears to have survived the seller crisis that developed when they raised fees. The market as a whole is rising and eBay's peers are doing well. So there’s your answer.

Investors, lets not get over exuberant though, eBay lowered 4th quarter earnings targets as well as 2007 guidance so eBay's management isn't exactly feeling bullish going forward. While eBay may hit there revised 4th quarter numbers they will be experiencing more seller unrest after the holidays as the sellers that hung on through the holidays leave the site. Also January is when they always announce fee increases so get ready for a new round of seller unrest during the first quarter.

Now Randy Smythe from the investment firm of Smythe, Stern and Lippman (Tell the SEC I’m only kidding and if you follow my advise your nuts …. unless of course I’m correct in my analysis) is initiating coverage as Peer Perform with a year end target of $35. For you longs out there though the stock price will settle in once again around $30 for most if not all of 2007 so if you bought at anything under $35 pick your spots because $35 will be the high for the next 52 weeks unless eBay makes some significant changes.
See I can be an analyst too. I should be added to the list of Analyst's covering eBay's stock. I’m not the Motley Fool but I can make predictions with the best of them. I wonder if the press will cover my predictions. Tell your friends.

Tuesday, October 24, 2006

BuySafe offers Choice!

Since I am traveling this week. I may update the blog less frequently but I did see a short notice on AuctionBytes about BuySafe's new options. Since BuySafe was crutial in helping my customers when I went out of business (I am a little biased but this sounds interesting). They are offering sellers an option to bond all of their items or allow the customer to decide. I'm all for choices.

Thursday, October 19, 2006

Is StubHub the Business Model to Compete with eBay?

There have been a small numbers of rumors that eBay is planning to buy StubHub.com, while these are just rumors they do, in my view, point out a chink in eBay's armor. I recently wrote an article for my Associated Content site called: How do you Beat eBay in the Auction business? One Category at a Time! I wrote this before I spent any time looking at StubHub.com so I wanted to expand on my original article here.

StubHub is the poster child for the concept of "One Category at a Time!" or as my friend Graham says "Death by a Thousand Cuts" eBay is in the ticket business but it appears a young vibrant competitor like StubHub is cutting into their upside. StubHub is a ticket site that is doing all the right things and they are making some inroads into eBay's Ticket business. They have made one cut, who is going to make the next 999?

What would happen if others took the same approach as StubHub? It looks like many so called eBay competitors want to be as broad as eBay; that effort will fail. They should, instead, think more about becoming the next eBay Motors (or StubHub since they may be bought by eBay). eBay competitors should "Think Vertically"! Find a category they know well and make a success. Who knows when you become successful maybe eBay will buy you.

The Day After

I am digesting the eBay earnings report bit by bit and will post comments throughout the day. One of the first things that stuck out to me was regarding eBay Express: Quote from transcript: "During Q3 we continued to work on tailored shopping experiences that meet diverse buyer and seller needs and increase activity across Marketplaces. eBay Express, which debuted in Q2, offer buyers a great source to find new items they might otherwise search for elsewhere. Early results show eBay Express is having the intended effects. 89% of shoppers who have made a purchase on eBay Express say the experience met or exceeded their expectations. And buyers who shop both eBay.com and eBay Express are spending significantly more time, and nearly 25% more money with eBay, than those who have yet to try Express."

First, all of these "New" items listed on Express come from the eBay.com site so if customers search elsewhere wouldn't they search eBay.com. Or is the buying experience on eBay.com less satisfying then Express.

Second, eBay is touting an 89% Express satisfaction rating as if it is a good thing. On eBay you can't even maintain Power Seller Status unless you have a Feedback rating of 98% or greater.

Third, “buyers who shop both eBay.com and Express are spending more time and 25% more money.” Once again all of the product on Express comes from eBay.com listings so if they are spending 25% more money what is wrong with eBay.com. Could it be that customers prefer a fixed price marketplace to an auction marketplace?

Wednesday, October 18, 2006

Resources Related to eBay's Q3 Earnings Report

eI've tried to gather a number of resources dealing with eBay's earnings report on 10-18-2006. Read these titles carefully before you click on to the site and read the whole article. It looks like the consensus is "3rd Quarter numbers were great but....." I've made the point several times over the past month that eBay is a "Ship without a Rudder" and it certainly appears to be the case. If Management is not confident in the 4th Quarter of 2006 and FY 2007 why should investors be?
  1. eBay's Q3 2006 Earnings Call - Listen to a recording of eBay's earnings call.
  2. eBay Q3 2006 Earnings Call Transcript - If you don't have time to listen.
  3. EBay's Profit Rises, but Growth Of Core Business Is Questioned - Wall Street Journal
    (This is a Subscription Site) - Quote -"EBay's outlook for the rest of this year and for 2007 is mixed. The company projected a 17% to 21% rise in 2007 revenue over 2006 revenue to about $7.17 billion on the high end. That falls short of Wall Street's current 2007 consensus estimate of $7.35 billion in revenue, according to Thomson Financial."
  4. Soft Guidance at eBay - TheStreet.com - Quote: "eBay posted a 10% earnings gain for its third quarter but the online auction's guidance kept alive concerns about the company's core domestic business."
  5. UPDATE - EBay posts profit up 10 percent, cautious on 2007 - Reuters Quote: "But analysts said it is too early to say whether steps the company is taking to reaccelerate growth in its core business are working and the company forecast 2007 revenue sharply below Wall Street forecasts. "
  6. Auction Leader eBay Exceeds Q3 Views, But Its Outlook Lags - Investor's Business Daily - Quote: "EBay is still king of online auctions, but these days its crown is looking a little worn.
    The online auctioneer on Wednesday reported third-quarter results that beat analysts' expectations, but its outlook for the fourth quarter and for 2007 lagged views."
  7. eBay: Holding Firm, for Now - Business Week - Quote: The online auction site's third-quarter earnings just beat expectations,but can it live up to 2007 forecasts?
  8. Rock-a-Buy eBay - The Motley Fool - Quote: "It was another mixed quarter at eBay even though this tug-of-war found the optimists muscling a little more pull than the pessimists."

It appears PayPal has become the king of eBay, Inc. and Skype may be the lap dog. We still don't know which way Skype will go and it appears neither does eBay. From the earnings call Meg Whitman says in regards to Skype she's "cautiously optimistic and will give better guidance at end of Q4". In my view the words "cautiously optimistic" means she doesn't have a clue.

Now let's see how the Market reacts. So far eBay's stock is up 6.25% today as of 3:30 EST. I guess the markets have spoken

eBay Inc. Announces Third Quarter 2006 Financial Results

It looks, on the surface, like eBay had a good 3rd Quarter but I only gave the report a quick read. I will look at it more in-depth this evening and give you my view. In the meantime, please read this report and provide your comments.

eBay Inc. Announces Third Quarter 2006 Financial Results

Some Interesting Blogs on eBay and eCommerce in General

I've come across some interesting blogs recently and wanted to list some of them here. It's always good to hear different views.

AuctionBytes Blog - News, rumors and speculation about the online auction industry by Ina Steiner, Editor of AuctionBytes.com
Common Sense E-Commerce - Blogging about contemporary ecommerce business.
Blogging Stocks - Bloggingstocks.com covers some of America's most widely-held stocks deeply, analytically and obsessively.
Steve Woda's Blog - Steve is a Founder of buySAFE.com and writes about buySAFE, eCommerce, eBay, Economics, Entrepreneurship, Online Fraud, Trust and Safety, etc.
eBay Strategies - Scot Wingo's Blog on eBay related topics.

As I come across other interesting blogs or information resources I will list them.

Predictions Please!

Let's predict the outcome of todays eBay earnings call. If 28 different analysts can look at the same data and come up with completely different estimates why shouldn't we make our own wild guesses; one of us is bound to be right.

I'll go first:
I think ebay will hit their numbers for the 3rd quarter but reduce their guidance for 2007 which should send the stock price down.

If you want to follow the conference call but can't listen in Melly Alazraki will be blogging real time during the call. I'll update the link when it becomes available.

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.

Monday, October 16, 2006

How do you Beat eBay in the Auction business? One Category at a Time!

Check out my latest article on Associated Content.
Colbert Demands Royalties From YouTube/Google Merger

eBay to Report 3rd Quarter Earnings on Weds. 10-18-06

eBay is set to report 3rd quarter earnings on Weds after the bell. According to this earnings preview from Business Week "Wall Street remains mixed on whether eBay's efforts to reinvigorate core growth are working."

I can't wait to see how the market reacts to eBay's numbers. Has the stock stabalized or is there still some downside to account for? We will have a better idea on Weds.

Make Sure you have Permission to Sell that Product.

Recently, two large eBay sellers were suspended for 7 - 14 days for VeRO (Verified Rights Owner) violations. These suspensions could have a huge impact on their business even putting them out of business.

If you currently sell or plan to sell on eBay please take some time to review eBay's guidelines on VeRO so that you can take the appropriate steps to avoid the same fate. It is important for you to have permission to sell specific products, use images and product copy. Be Careful What You (Re)Sell On EBay

Sunday, October 15, 2006

Will Participating in Discussion Boards Help your Business?

During the 5 years I sold on eBay I never once read a discussion/message board. I wasn't sure I would benefit in anyway by participating on those boards. Now that I no longer sell on eBay and have evolved into commentator/observer and blogger on everything eBay; I've spent a lot of time on these message boards. While I can no longer post because eBay banned me I can still read them. Sure, there is still a lot of anger but I also see many productive threads that reveal the ingenuity and creativity of American entrepreneurs. Most, of these users will never have large businesses but if they can reach their personal goals they will be successful.

A recent thread illustrates my point; the OP (original poster) is struggling with eBay fees in relationship to sales and is asking for help. The responses will surprise you. Please take the time to read the thread.

Thursday, October 12, 2006

Freaky eBay auction of the day!

Hundreds of thousands of people are trying to make a living selling items on eBay but what gets the press is freaky stories like this.

Mummified Remains Are Advertised on EBay

It looks like the Mummified remains are no longer selling on eBay but check out this site for more Bizarre Auctions

Wouldn't it be nice if eBay were a respected shopping site rather the butt of many jokes.

Wednesday, October 11, 2006

PS-3 Pre-Orders a No-No on eBay

With the street date of Sony's PlayStation 3 more than 30 days away (Nov. 17th), sellers who jumped the gun and listed auctions or store listings have seen their listings cancelled and according to this blog some have had their user ID's suspended (though I haven't confirmed this)

I did a quick search for PS3's on eBay and it appears T&S didn't get them all. Some listings are still going on. Is eBay once again removing listings only on those items that have been reported or are they doing a simple search like I just did and removing all of them. (Apparently eBay was able to get around to this and many other PS3 listings)

I have no opinion on listing preorders for PS3's I do want eBay to apply the rules to every seller. Now why is it they couldn't remove the Louis Vuitton fakes. Selective enforcement is useless eBay.

Is eBay's "Best Match" actually the "Best Choice"?

A story this morning from Information Week is getting a lot of attention. eBay announced on Oct. 9th that they would be introducing a new search feature for buyers called "Best Match" Esteban Kozak with eBay’s Finding team (why can't they just say search team) says "With Best Match, what buyers do on the site affects the order in which listings are displayed. In other words, if buyers running a particular search often end up viewing, bidding on, or buying, a certain type of item more often, this will be factored into our relevance calculations. These types of items might then display higher on the page in subsequent searches.”

My first impression is that this will have a limited effect on the Marketplace. As most sellers know, unless Best Match is a default search the number of buyers that will choose it is limited. So we will have to wait and see what the impact will be. While I don't agree with the introduction of this feature just before the 4th quarter buying season, I will reserve judgment on the feature until I can see how it works. It may be beneficial to sellers. I just don't know yet.

Tuesday, October 10, 2006

What’s happening to eBay’s top sellers?

According to a list of the top 10,000 eBay sellers as of September 2006, generated by Sellathon.com a site that tracks eBay sellers by their feedback, some disturbing trends are developing:
  • 25% (8) of the top 32 US sellers (129,714 feedback or greater) are either NARU (Not A Registered User) or are inactive (No longer sell on the site)
  • 8% of the top 500 sellers worldwide are either NARU (Not A Registered User) or are inactive (No longer sell on the site)
  • My former ID GlacierBayDVD is still #8 even though I haven’t been doing business on ebay since mid February of 2006.
  • The top 4 feedback sellers on eBay are the same company (Eforcity, EverydaySource, Itrimming, and AccStation)

Some more facts:

  • The top 10,000 eBay sellers range from 8333 feedback at position #10,000 to 410,805 at position #1
  • 9594 ebay sellers in the top 10,000 have less than 50,000 feedback.
  • 2 Top sellers have recently been suspended for 7 - 14 days due to VERO violations. Both sellers are long term Power Sellers.

I believe that if we check this list again in February of 2007 the number of top Power Sellers NARU or no longer active will more than double.


Monday, October 09, 2006

If you sell on eBay and have a Trust and Safety story either positive or negative, I believe my readers would love to hear it. I’ll start:

I have several stories but the issue that had the most impact on my business happened in Sept. of 2003. We were running 5,000 auctions at that time and doing very well. One morning I got into the office and checked my account and found that sales had dropped like a rock. I was very confused. After researching the problem I found that eBay’s Trust and Safety had cancelled all 5,000 of our auctions for a supposed violation of their mature items rules. Since I was a Power Seller I had a contact phone number (If I had not been a PS I may never have resolved the issue) When I spoke to the Trust and Safety representative I was told that the offending title was Old School Unrated and because this was my third violation (I have no record of ever having one violation) they had cancelled all of my auctions. I was quite upset. I said, “Old School is an R rated movie and the Unrated designation is a marketing ploy by the Studio to increase sales. It just means that this version of the movie has not been rated by the MPAA (Motion Picture Association of America)” I went on to explain “we had been selling R-Rated movies on eBay since we began”. I was getting nowhere so I asked “if she could give me a standard from which I could post items in the future”. I wanted to know the rules. She stated that “eBay does not set disclose any standards”. “Well than how am I supposed to know what to list? I asked. She replied, “If you can’t watch the movie with your 13 year old daughter, you shouldn’t list the item” I went ballistic. “That’s is completely subjective how can you have rules that are subjective?” I asked for a supervisor and eventually resolved the situation though even the Supervisor would not give me a standard to list by.

The drop in 5,000 auctions put us in a major cashflow bind as it took up to 7 days to bring sales back up. I later came to find out this behavior from Trust and Safety was not uncommon.

Lets hear your stories!

Sunday, October 08, 2006

Weekend news bits you may not have seen:

Rumors: Google-eBay Click-to-Call Marriage On The Rocks?

It appears now that this was a hoax. Hacker Cracks Google Blog

That's why I called this information a Rumor.


Articles: Can you earn a living on eBay?

As a former seller, who for many years earned a living on eBay, I have a contrary point of view on this subject. I think the title of this article should have been: Can you earn “some income” on eBay? In my view it is getting increasingly more difficult to earn a living on eBay but I believe you can certainly still make some extra cash. If you are looking for eBay to be your path to riches you might consider looking elsewhere. The cost of doing business on eBay increases every year and while it is true that there is a lower cost of entry than other traditional businesses making a living on eBay will not come cheaply. Entry is easy growth is expensive! Go into this with your eyes wide open.

Friday, October 06, 2006

Marketwatch - 10-6-2006 - Sell rating hits eBay; Google takes a breather

Quote - Among the sector stocks that were the most active in early action, eBay
EBAY 30.15, -0.31, -1.0%) , stood out, trading down to the $30 mark as investors digested news that analysts at Cantor Fitzgerald & Co. initiated coverage with a sell rating. Analyst Derek Brown also set a price target at $25 for the online auctioneer's shares.
"We find that eBay's core franchise and primary engine growth has weakened materially in recent years, as buyers and sellers alike have shifted their behavior in favor of alternative commerce platforms," Brown noted.

Another day another price target for eBay.

Thursday, October 05, 2006

Well, it appears the Pinks -- Pinks are eBay employees who participate in board discussions and are identified by their pink border -- are back in force on the EBay Stores board. What do you think could be the reason for that? For 3 months they pretty much stayed away and let the board run amok. What could be their reason for coming back? Is it to clean up the board before the 3rd Qtr. earnings report? Are they just trying to take the board back? Are they slapping boardies for their comments and deleting offending threads? Are they checking to make sure I'm no longer on the board? Inquiring minds want to know.

What are your thoughts?
I thought I would use the first post on my new blog to address a comment from one of my Associated Content readers. Here Goes:

P. Cook "Randy, it would be of great benefit to publish a structured book to help eBay sellers handle the challenges concerning eBay. As an eBay-related book author myself I feel I can advise you to not write about what's wrong with eBay in a book or otherwise without also giving your readers clearly stated methods for overcoming those problems. People want answers with immediate application. If you indulge in what's wrong with eBay without providing solutions, the value of you message will be lost. Your message is worth broadcasting - do it well. "

Hi P. Cook - I thought long and hard about your comment and agree with it in theory. The articles I am currently writing are meant to identify the problems facing eBay sellers. They are more about the future of eBay. They are meant to help sellers think more independently. I hope this approach serves many purposes, one of which is to keep the debate alive. At present I am left to offer only my interpretation of eBay's future because eBay remains silent on what their plans are. I agree with the need to offer solutions and I plan on doing that as soon as the “New” eBay is revealed. Trying to make the “Old” eBay work seems to be a fruitless exercise.

I have decided though to make a small change in how I proceed based on your comments. (Who says I can't listen and learn) In the future I will be posting articles on Associated Content that Identify problems and if possible offer solutions, please realize that the current state of eBay in many cases does not allow me to make concrete suggestions. Case in point. I have often stated that eBay should be used as a Customer Acquisition tool and feel if I had a firmer grasp on eBay's plans I could offer some concrete suggestions instead I am left with discussing principles and suggesting strategies that may or may not work in the "New" ebay.

As far as a book is concerned my goal would be to tell my story rather than teach. I really believe my story could be used as a case study on e-commerce for the small business.

Associated Content is better suited to the types of articles you suggest so I have launched this blog to continue my comments and criticism’s of eBay. I would love to hear further comments.

Thanks!
Randy