Monday, December 31, 2007
New Years also gives me a whole year to look forward to -- new adventures, new stories and new opportunities. New Years Eve is the holiday for optimists and I'm about as optimistic as they get.
2008 is going to be a interesting year from this blogger's perspective. eBay is making the last few changes to their platform and will soon announce a new fee structure. Amazon, looks to continue their momentum into the new year as they expand their 3P business and continue to grow sales faster than ecommerce as a whole. I generally don't blog about politics or the economy but be prepared for some posts in those areas - at least if they impact online sellers.
Here's to leaving all of the mistakes and problems of 2007 behind and looking forward to all that 2008 has to offer. Happy New Year!
Just my 5 cents!
Friday, December 21, 2007
- eBay managers often use "Leave of Absence" to recharge themselves or find new employment. It is actually ideal because they can always return to eBay.
- Meg has been exercising options regularly all year and certainly could afford to defer her compensation for an extended period of time.
- John Donahoe has been hitting the PR trail heavy over the last month and looks to be in line to take over while Meg is away, either as interim CEO or officially as the new boss. If he's successful, with the changes he's making, Meg can leave knowing that the company is in good hands. If he fails then she can come back (assuming Romney loses) and save the company.
- She is very involved in Mitt Romney's campaign and I would say if he wins, she will be offered a cabinet position (Commerce Secretary) and who would turn that down. By not leaving eBay officially she hedges her bets. If Romney does not get the nomination then she can come back to eBay. By taking a Leave of Absence she can work on his campaign indefinitely.
I'm sure you can come up with other reasons this idea makes sense, I've just listed a few. If I was a betting man I would say that Meg will announce here Leave of Absence in January and hit the campaign trail for her good buddy Mitt.
So, I guess if anything really interesting comes up between now and the new year I'll post about it.
Just my 5 cents.
2008 is shaping up to be an interesting year for eBay sellers as management makes fee changes and rolls out more "buyer experience" initiatives. In fact, I would say that 2008 will be the make or break year for this eBay management team.
I hope all you sellers got all your shipments out in time this year and can relax just a little over the next week, take a breather and re-energize yourselves for next year. Its time to make hard decisions on future plans for many of you and I wish you well.
Just my 5 cents.
Thursday, December 20, 2007
eBay CEO Meg Whitman to Speak in Iowa
by: Hani Durzy
Thu Dec 20 2007 13:56:26
Hi all -- I just wanted to clarify a couple of things that Ina and others have brought up. Yes, Meg is a supporter of Gov. Romney, who is a longtime friend and former colleague of hers; in fact, she is his National Finance Co-Chair. It’s a purely personal choice and is not representative of the views or opinions of eBay Inc. It also has no impact on her ability to address the day-to-day operational needs of the business. Meg was already on personal vacation time this week when she went out to Iowa on behalf of the Romney campaign; she paid for the travel and expenses entirely out of her own pocket, and didn’t use company aircraft to get there.
As a high-profile executive, Meg has a lot of company among business leaders who have chosen to publicly support one candidate or another (Cisco’s John Chambers is a McCain supporter; Warren Buffett backs Clinton, just to name two.) But as a private citizen, Meg has the same rights as everyone else, including the right to back whatever candidate she chooses. "
Now, this is what a PR person should be doing, this is the first time I've seen a blog comment from Hani Durzy. I appreciate him speaking to the facts behind Meg's trip to Iowa. One question I do have; Why doesn't eBay PR make a concerted effort to comment on blogs and message boards. Hopefully this is a sign that they are changing their tune.
“The thing that distinguishes great managers is that they care about their employees,” said Whitman, who joined eBay in 1998 when she was hired by its founder, Pierre Omidyar.
The second principle involves being the right person in the right job at the right time with the right values, she said.
No. 3 is the ability to focus, focus, focus. She said it is better to do five things very well than to complete 15 tasks in a mediocre manner."
Maybe these suggestions fall under the category "Do what I say , not what I do" I am sure the first item is accurate. I've never heard that employees don't like Meg.
The second item is very appropriate, at this time in the life of eBay. Perhaps Meg is no longer "the right person in the right job at the right time with the right values" and the last quote regarding focus is curious since she's spending much of her time on the campaign trail rather than focusing on the problems with the site.
Just my 5 cents!
I think that Overstock is a great site and fills a need in the supply chain but I don't believe it will ever make money with Patrick Byrne as CEO and since he owns controlling interest in the company only a meltdown will put Overstock in-play for acquisition.
I've said in the past that I believe Amazon should acquire Overstock. Amazon management has proven their ability to make a low margin business work and would be able to turn Overstock around but Patrick Byrne is in the way.
Wednesday, December 19, 2007
There is a rumor building that Shopping.com has been billing clients for non-existent clicks and so far I'm not getting anywhere with any of my contacts. That could mean there is nothing to the rumor or I'm just not asking the right people. I've contacted eBay PR but do not expect a return email.
If you have any information or examples of phantom billing please contact me or post in the comments to this post.
UPDATE: Apparently there is nothing to this rumor. eBay's PR department has still not replied to my request for information (what a surprise) but I can't find any evidence that there are problems with Shopping.com billing practices.
UPDATE on the UPDATE: Hold the phone, it appears there may be some truth to the rumor after all. Stay tuned, I will post info as I receive it. Still haven't heard back from eBay PR.
Tuesday, December 18, 2007
Here are some examples:
- Amazon Q2 07' Earnings report analysis - A pretty bearish assessment considering where Amazon's stock price is today.
- Collection of articles and posts related to eBay Live Events - Its really amazing how the same things are said year after year and nothing really changes.
- Amazon vs eBay Auction Wars - We know who won this battle but there is a new battle brewing.
- eBay Announcement Archives - There are tons of fun little tidbits tucked away in past eBay site announcements. (SIS and related posts are fun to read)
- Meg and the Machine - This is where we find the " "A monkey could drive this train." quote
I hope you find them as enjoyable and if you come across an old article or blog post that is interesting please let me know.
Both posts referred to a recent interview of Donahoe by The Financial Times in London. It certainly appears that John Donahoe is next in line to be Meg Whitman's replacement and as he increasingly takes a more upfront, active role, it is clear (to me at least) Meg will be leaving sometime in 08'.
I am already on record as saying I think she will leave by the 3rd quarter of 08' but is it possible she would leave sooner? Perhaps as early as Q1? What do you think? I think it is pretty evident that she will be leaving, maybe the only real question is when? Tell me what you think.
Monday, December 17, 2007
As conversion decreases because of the number of listings on the site many sellers may find that 70% of their core listings do not sell the first time, so many sellers automatically relist the unsold listings to take advantage of eBay's relist credit (if the items sells the second time the listing fee is credited). The problem arises when a seller, who normally doesn't use gallery, took part in the free gallery promo and relisted the unsold item. eBay does not allow you to modify relisted listings so the gallery that was used when it was free is used again at the regular price of 35 cents. If the items sells you would get a credit for your listing fee but still have to pay the 35 cents for the gallery image -- feature fees like gallery do not come with relist credits. If the item does not sell the second time then you would again pay for the listing fee as well as the gallery fee.
If you are a large seller and rely heavily on automated software for relists this can soon run you into a hefty bill that you weren't accounting for. In one case a large seller, who normally does not use gallery but lists thousands of auctions a week, realized his gallery bill alone on relists would be close to $3,000 for the week following the promo and decided not to relist any listings that were part of the promo. Instead he listed fresh listings without gallery.
So, if you do not normally use gallery but did take part in the free gallery promo make sure to weigh the numbers on your relists. Is it more cost effective to just list new items without gallery then to relist unsold listings?
"The combination makes sense because Amazon's strengths have always been eBay's weaknesses: service and site interface. eBay's global network effects, meanwhile, though much diminished in recent years, would make the combined company the world's dominant commerce platform."
Surely a combined eBay/Amazon would be the "world's dominant commerce platform" almost immediately but Amazon doesn't need eBay to accomplish this, they have charted a course for their business that will eventually make them "the world's dominant commerce platform"all on their own. While eBay struggles to maintain the status quo, Amazon works diligently on a long-term plan.
Here are 5 reason's this idea is a pipe dream.
- Culture Clash - Amazon is run by entrepreneurs, visionaries, long-term thinkers. eBay is run by consultants who micro-manage the bottom line, are only concerned with the quarterly results and only make changes when they are forced to. The company cultures are too divergent. Jeff Bezos is not going anywhere, so eBay managers would need to adapt to the Amazon way of doing things which means most of them would head for the exits.
- Amazon doesn't need Auctions, they tried this on their own and it didn't work. Fixed price is the future and Amazon is the king of "Fixed Price". Auctions have matured in the biggest eBay markets and will continue to mature in other International markets. Amazon, is charting a different course with its 3P Seller business and will eventually become the #1 marketplace for professional sellers. While eBay will continue to be the place for the casual seller.
- Amazon, is a technology company, eBay is not. Amazon is investing in its platform for the long-term while eBay tries to figure out how to grow without investing in technology or infrastructure.
- Amazon doesn't need PayPal, though I'm sure they would love to own it. Amazon, looks at payments as a cost not a revenue stream and their goal is to cut costs so that they can increase profitability. PayPal is best suited as a stand-alone company but that won't happen in the near-term because it would expose the major weaknesses in the Marketplace business.
- Amazon will get there on their own. They have a long-term plan and they are working on that goal. Adding eBay would be a distraction that would derail their efforts in accomplishing that goal.
IMO, eBay would be much better off merging with Yahoo than Amazon as the company cultures are very similar and eBay is heading more towards an advertising model then a retail model. Amazon would be better off acquiring Overstock.com or Buy.com than merging with eBay.
Just my 5 cents.
Friday, December 14, 2007
I originally just glanced over the list of new hires until this morning when I noticed one of them was the new PayPal CMO (Chief Marketing Officer).
Barry Herstein is Chief Marketing Officer, responsible for PayPal's global branding and marketing initiatives. Herstein was formerly CMO for American Express International's consumer business where he developed and implemented integrated consumer marketing strategies designed to grow AmEx usage outside of the U.S.
While, it appears Mr. Herstein was brought on to develop the Global PayPal business, I believe if PayPal wants to get traction on the other side of the eBay wall, they need to consider a comprehensive ad campaign including, for the first time ever (as far as I can tell) a TV ad campaign. After all Visa, Amex and Master Card all do extensive TV advertising. If PayPal wants to play with the big boys they will have to also. PayPal is an established brand on eBay but needs to become a worldwide consumer brand, that requires the kind of reach TV provides.
Just one suggestion, hire an agency other than BBDO, New York.
Just my 5 cents
Thursday, December 13, 2007
In contrast, the Apple Computer ads with PC Guy vs. Mac Guy are excellent. When I see those ads, I actually stop surfing to watch. After seeing one recently, I was struck by the realization that the ad could just as easily be eBay Guy vs. Amazon Guy but since Amazon doesn't do TV advertising and eBay wouldn't do a similar ad because they would be compared to PC Guy, I don't see anything similar coming from them. Unfortunately, we won't be seeing them anymore either; according to Fresh Intelligence Mac Guy is no longer a part of the campaign going forward because after the initial success the audience began to identify with PCGuy as the underdog. Maybe eBay Guy could be the underdog.
The point is, there are very clever ways to get your message across and the Apple ads were very effective but even they have a shelf life. My suggestion to Michael Linton: when it comes time for the next ad campaign lets think outside the box a little. Maybe hire the Ad agency (TBWA\Chiat\Day ) behind the Apple ads.
Just for fun, here is a recent PCGuy vs. Apple Guy ad. While watching it, just imagine the PCGuy is eBay and the Apple guy is Amazon. Pretty powerful huh? I hope eBay can come up with a much better campaign next time.
According to comScore: Amazon only visitors grew 3.8% Y/Y from 16.2% to 20% while eBay only visitors declined 5.6% from 46.9 to 41.3 and visitors that overlap and visit both sites grew 1.7% from 36.9 to 38.6. This growth in overlap visitors appears to all be coming from eBay where it looks like eBay only customers are venturing out to add Amazon to their shopping sites but Amazon only customers are not adding eBay to shopping sites they visit.
The trend is obviously heading towards Amazon. eBay still has a huge lead in visits but that is due to their monopoly of the Auction space.
If you would like to listen to the replay of the conference call please send me an email and I'll get you the info.
Wednesday, December 12, 2007
There is this from an article about the investment posted by the Baltimore Sun: Scott W. Devitt, an analyst with Stifel, Nicolaus & Co., said "the deal demonstrates how retailers might shave operating costs.He said that 2 percent of Amazon.com's operating margin goes to credit-card processing fees and that Bill Me Later's costs would be about 0.5 percentage point lower.
Retailers are often frustrated in their efforts to lower processing costs with a credit-card industry that "essentially operates as an oligopoly," Devitt said.
Amazon, realizes that they need to increase their margins and are taking a 2-pronged approach. They are expanding their high margin 3P Seller business while investing in technology to cut operating expenses.
The impact of this deal with Bill Me Later, may not be felt for several quarters but it certainly shows Amazon is moving aggressively to cut costs.
Expected Fee Changes In 1Q Neutral to Slightly Negative
· Drastic Fee Structure Change Expected. We are expecting eBay to make category price changes in early 08 that would lead to a drastic shift in listings fees to final value fees. More specifically, we expect eBay to reduce domestic non-motors, non-real estate, category listings fees by 50% and increase final value fees by 30%. The change would reduce listings fees to ~40% of revenues per listing from ~60% today; shifting the risk in the model to eBay as the company will become more reliant on back-end fees, which are more variable than the front-end guaranteed listings fees.
· Needed to Readjust Seller Economics. We believe that this is something eBay has to do to readjust the seller economics and possibly bring value back to the eBay platform. Our numerous contacts within the industry are in agreement that eBay has no choice but to walk down this path.
· Analysis Shows Modest Negative Impact to Financials. Our analysis of the expected fee change shows that it would lead to a 2% reduction in eBay’s 08 domestic core transactions revenues, or one cent reduction in our non-GAAP EPS estimates, while increasing sellers’ revenues by 4%. A sensitivity analysis incorporating various listings fee and final value fee scenarios, shows that eBay could lose upwards of 27% of its domestic transaction revenues in our most aggressive assumptions but actually increase revenues by 18% in our more optimistic assumptions.
· Satisfy Sellers But Does Not Address Buyer Demand. Overall, we believe that the fee structure change would pacify sellers who are dissatisfied with the economics on eBay, convince them to stay on the platform, and lessen the GMV bleed to other channels. Moreover, eBay can reduce the listings fees and come close to a revenue neutral scenario. However, a fee structure change does little to solve the problem of lack of buyer demand on the platform.
We all know some major fee changes are coming to eBay in Q1 of 08' but will "Seller Fatigue" negate any benefit to eBay. If the last three promos are any indication; sellers just pocketed the savings while overall listings increased just slightly. This is going to be an interesting first quarter.
Tuesday, December 11, 2007
All of the blog posts referencing Green Monday were from November except of course this one. All of this got me wondering. Is eBay trying to create something where nothing really exists?. Is the second Monday in Dec really anything bigger than Cyber Monday?
We've all heard of Cyber Monday and Black Thursday but not much about"Green Monday" supposedly the busiest day of the year on eBay. You would think if that was the case some people would be talking about it.
Monday, December 10, 2007
This tool is very slick and will help sellers to monitor their DSR ratings more effectively, so they can improve any areas that may be falling into the bottom group of sellers. DSR ratings are here to stay and will eventually be used to advantage or disadvantage seller listings; this tool will help sellers monitor how they are doing.
Of course, this does take sellers up to the 19th perhaps that last day they can feasibly still ship items for Christmas so maybe eBay won't do anything new. My feeling is that they will not do anything promo wise until the first of the year, though I believe they should make gallery free on all listings going forward.
Sellers, be aware that this sale ends on Weds, so make sure if you only use gallery because its free, to remove it from your listings starting Thursday or you in for a surprise on your eBay bill.
Friday, December 07, 2007
Ralf VonSosen, Vice President, Marketing and Catherine Cherubino, Vice President, Business Development have left the company and there has been no announcement regarding their replacements or the reason they are leaving.
The two are still listed on the Executive Team profile on the company's website. The press contact email on the site just bounced back to me so my attempts to get information are ongoing.
I won't speculate as to the reasons for the departures but will update this post as more information becomes available.
Update: Ralf apparently left 2 weeks ago and as of this update is no longer on the Executive Team page at their website. Catherine's picture is still there though. maybe until my next update.
Thursday, December 06, 2007
Hopefully StubHub will win out. That would make me almost prophetic in my 2008 predictions. Get working on that CT.
After reading the article, it is clear that the differences between eBay and Amazon are even greater than many of us imagined.
""Shareholders should not expect to make any money on 'Harry Potter 7' -- I will tell you that right now," the Amazon.com Inc. chief executive told the gathering, which took place in June near the company's Seattle headquarters.
That his declaration carried a prideful tone rather than one of foreboding illustrates a key Bezos character trait, one that has seduced customers and -- at times -- frustrated the investment community. The 43-year-old founder of Amazon stubbornly keeps his sights on the oft-stated goal of building "Earth's most customer-centric company," with seemingly little regard for turning a profit in the short term."
I've been following eBay for nearly 8 years and that is not a statement Meg Whitman would ever make publicly. Profit has always been the driving force behind eBay's actions. eBay lives and dies buy its ROI (that's kind of catchy) But that approach means that you don't invest in customer-centric initiatives until it is required of you to "keep the train on the track"
These two companies have drastically different management styles. Amazon is run by an entrepreneur while eBay is run by a professional manager. Amazon invests in their growth while eBay manages their bottom line. Amazon makes decisions for the long-term, eBay makes decisions for the quarter.
Interestingly they both live by the data. With eBay, metrics guide most decisions and with Amazon it is much the same.
"Bezos' love of figures is hardwired. He cut his teeth with Wall Street players such as Banker's Trust and D.E. Shaw, the latter of which was founded by a former computer-science professor from Columbia University who developed high-tech quantitative trading systems. Bezos is known to prefer decisions based on data, often reminding his management team that, in the decision-making process, the right data can put the most junior person in a company on par with top executives."
When Amazon opened its doors to 3P sellers in 2001 many investors, employees and pundits thought they were crazy to allow others to compete directly with their own products.
"In some cases, the prices of competing merchants undercut Amazon's prices on the same items, resulting, unsurprisingly, in lost sales.
The notion, according to Bezos, was that such information would create an overwhelmingly positive experience for customers, whose future purchases could make up for the near-term hit.
"This was a very controversial decision inside Amazon," Bezos said when quizzed by a shareholder on the practice at the annual meeting. "But from a companywide point of view, our view has always been to say, 'Let's be simpleminded about these kinds of cannibalization decisions and cut through the complex thinking by just [asking] what is better for the customer.'
"And," he continued, "if we side with the consumer on that kind of decision, over time it will force the right kind of behaviors on ourselves."
Because of this devotion to serving the consumer, Amazon has become a viable marketplace for 3P merchants. While it is difficult, if not impossible, for these merchants to brand themselves on the Amazon platform, at the end of the day, selling more product takes away some of that pain.
Amazon deals with Wall Street differently than eBay as well.
"We felt that if you're really were serious about [building a business], the question was how we should do things in the short term," Covey said. "One is you put customers first. The other is not to get trapped in short-term interest of Wall Street. Jeff thought all that through from the very beginning."
Alberg agreed. "Jeff doesn't pay much attention to the stock price and [to] what analysts say is valuable. In his mind, what's really important is how much cash the company generates. He holds to that."
While in the early days, Meg used to say we don't pay attention to the share price, their actions over the last 2 years reveal a different story.
Amazon, under Bezos is continuously testing the boundaries. eBay, under Whitman is managing the bottom line. The difference between the entrepreneur and the manager.
Just my 5 cents!
Wednesday, December 05, 2007
1. eBay and Yahoo Merge! At some point next year I see these two companies coming together as their respective share prices flounder. I just can't see investors putting up with another year like the last two. Yahoo is a on a short leash and eBay will be, especially as they move towards changing their marketplace fee structure.
2. If eBay and Yahoo don't merge, I believe Meg Whitman will leave the company to begin her next adventure. John Donahoe is becoming more of a public figure and seems to be the likely replacement. If #1 happens then I believe Meg will stay. (Remember for entertainment purposes only)
3. Amazon, will continue to make in-roads in the 3P business and add Automobiles towards the end of the year and will begin directly competing with eBay Motors.
4. ChannelAdvisor will go public! (No need to expand on that).
5. Amazon will acquire Overstock.com and that will be the end of TV commercials with "Its all about the O" as the tagline. Overstock has a decidedly different customer demographic then Amazon (60% female) and would fit into a portfolio of ecommerce sites.
6. eBay will institute category based pricing for each of it's major categories.
7. StubHub will sign a deal with the NFL prior to next years football season.
8. eBay will separate Stores from the core site and provide Store Sellers with the marketing tools to market their products all over the web including listing in eBay's Core, co-op advertising through Yahoo and listing on Shopping.com. In order to make this work they will need to develop a separate platform with a shopping cart system. They already have this with Express so all they need to do is make Express the UI for each store while the current listing system supplies the inventory. With this new site sellers would pay a single monthly hosting fee and only pay listing fees or FVF if they choose to sell through eBay's CORE or a Stores based Site like Express (don't worry sellers it won't be the same Express as we see today), or they could market to their product using paid search or other methods. Store/Shops would become the worlds largest collection of independent Websites. This is not as difficult as they seem to want to make it -- Express front end and Stores back-end for each individual store. The technology is already in place.
9. eBay's PR department will return my emails.
10. MyBlogUtopia will replace TechCrunch as the top blog (You have to think big folks)
Tuesday, December 04, 2007
Both stocks are floundering and there are far more synergies then problems with a joint union. I've posted about this before, Scot Wingo has mentioned it several times as have so many others.
Today, the Motley Fool joins the cavalcade, calling for Harry and Sally to finally get hitched. Stop dancing and make a commitment. The Fool's take is very interesting.
What do you say Meg? Why don't you and Jerry get together for dinner and drinks and if he doesn't propose you go right ahead and do it.
Imagine if similar deals are struck in other regions where eBay has had trouble gaining traction. Does this lay the groundwork for eBay, Yahoo and Alibaba to do a deal in China? How about eBay and MercadoLibre doing a deal for South America (they already own a minor stake in Mercado Libre), GMarket in Korea and Qxl Ricardo in Eastern Europe. Once they are entrenched in the auctions business doesn't it make sense that PayPal, Shopping.com and Classifieds would be next.
About a year ago many pundits were criticizing eBay (including me) for losing ground in Asia, this new deal with Yahoo Japan may be the first volley in eBay's new strategy to take over the auction world.
Just my 5 cents!
Monday, December 03, 2007
"Yahoo Japan and eBay are apparently set to combine their online auction sites. Although an announcement has not yet been made, the Nikkei claims that operations are set to begin before the end of this year, and that Yahoo Japan users will soon be able to bid on items listed on eBay’s US-based site. Next year, Yahoo Japan items will be listed in English on eBay, allowing users in North America to bid on items from Japan."
So I guess eBay and Yahoo aren't going to merge they are just going to get in bed together. I wonder how Yahoo shareholders feel about this move. It's like letting the "fox in the hen house"
Its a good deal for eBay though. Haven't figured out if it will be good for sellers just yet so stay tuned.
Just my 5 cents!
The press is saying that ecommerce is alive and well so lets put some meat on that bone and see which marketplace or channel is working best for you. Don't be afraid to tell me if eBay is doing well for you because ultimately if eBay is doing well other sellers want to know.
So either email me or post a comment about your Q4 so far. This is not a scientific survey, I'm just taking the temperature of the marketplace business.
Friday, November 30, 2007
A former colleague of mine used to say "Perception is Reality" and it doesn't matter what the truth is its the perception that counts. For instance, if you drive to a sales meeting in a new BMW, the perception is you are successful. It doesn't matter that you are in debt up to your ears. So, reality rarely has much to do with how you are perceived and this can have negative consequences as well.
In the case of eBay right now, many Sellers have the perception that eBay doesn't care about them, they are just numbers in a P&L, even with all of the talk about being the first social network, community, etc. Is this the truth? I don't think so, many employees that I've spoken with care deeply about the seller community but the perception has become the reality.
This is also a problem in the buyer community, the perception is that eBay is full of fraud and scams but is this the reality? It doesn't appear to matter because buyers are not flocking to eBay like they used to. I could go on and on with examples but I'm sure you get my point.
So, as a blogger and observer of eBay what am I to do? I try and look past the perception and see what is really going on and then share my observations with you.
Based on conversations with sellers, analysts, vendors, current and former employees, I try and cobble together an opinion that I think is at least close to the mark, though sometimes I just throw stuff against the wall to see if it sticks (eBay buying Channel Advisor was one of those occasions and that post got a lot of run). I'm sure the eBay employees that read this blog often say, he doesn't have a clue. Many of them call Scot Wingo "WingNut" I wonder what nickname they have for me.
Everyone wants to know what eBay is now and will become. Sellers and service providers want to have information to help plan their futures; investors want to know whether to stick it out or jump ship; competitors want to know what the plans are so they can take advantage of any areas of weakness; employees want to know what the plan is so they feel secure; buyers want to know if it is safe to buy on eBay and well, you get the point.
There has to be a way for eBay to communicate more effectively with the different constituents so as not to give away secrets to the competition, run afoul of the SEC, or start a mass exodus of buyers and sellers.
I've used the phrase "eBay Speak" quite often in my posts and it seems to be the preferred method of communication for the company. "eBay Speak" is vague, ambiguous language that leaves the listener asking what did they say. "eBay Speak" is using the same buzzwords year after year without any real changes. "eBay Speak" is saying "We Here You" when a problem is discussed and then 5 years later saying "We Hear You" about the same exact problem. What "eBay Speak" does is form a perception for the listener that eBay is "full of it" and you really can't believe much that is said.
I'm going to throw something against the wall right now or yell out "E8" to see if I hit the mark. I believe that 80% of the problems eBay is facing at this time are directly related to negative perception. How else can you explain beating estimates quarter after quarter and seeing the share price stagnate, seeing sellers leave for Amazon because they can't get a fix on where eBay is going or not being able to attract buyers because they think they will be ripped off. 20% of the problems are real, like glitches on the site, seller economics, problems with search, fewer buyers etc. but some of these problems could be fixed with a change in perspective.
With eBay, "Perception is Reality" and as I see it, the problems will continue until the perception matches the reality. That will only happen when eBay is communicates better, ceasing the use of "eBay Speak". Sure, it is not as simple as this but if eBay doesn't grab hold of this simple concept and begin telling a story people will believe all the changes they have planned won't accomplish much.
Thursday, November 29, 2007
"Mr. Linton, 50, a former CMO at Best Buy, has been with eBay for about a year as senior VP-marketplace adjacencies, heading eBay Motors, Half.com, eBay Canada, eBay Stores and ProStores. He replaces Gary Briggs, 44, who said he is leaving eBay after six years to spend more time with his family. "I have the opportunity to go and be a dad," Mr. Briggs said"
Wow! This is big news and an indicator of eBay's future direction. Linton understands retail and I believe will be very effective in changing the focus of eBay's marketing efforts. My guess is that the last several ad campaigns managed by Briggs have not been effective and eBay Senior Managers want to go a different direction. I wonder if an Ad Agency change is in the works as well.
I was very harsh in my criticism of eBay's "Shop Victoriously" campaign and I see this as a sign that it was unsuccessful. I would like to wish Gary Briggs well in his future endeavors and I look forward to the direction eBay will be taking with Michael Linton as CMO.
I think this is a big positive for eBay buyers and sellers.
Update: I have been told that I may be reading too much into this move and that it does not really signal a change in direction. I guess only time will tell.
I know it can be a struggle to go through some of the Stores Board threads because there is almost always bickering and OT (off topic) discussions that de-rail the conversation and often the discussion seems counter productive but if you are willing to take the time to find the nuggets of wisdom it can be very insightful and at the very least I find it entertaining. Most of the sellers who post on the board are smaller sellers with very strong opinions and some who post no longer even sell on eBay but still enjoy being part of the board to stir the pot help struggling sellers etc.
Let me point out a few user ID's that are consistently sharing from their heart and often have some insights that are very, well insightful - my High School English composition teacher Mr. Hepp would have a few words for me regarding this blog.
oldspartantrader is a wise businessman who tries to take a macro viewpoint on the current state of eBay. He's a successful businessman that is passing his business onto his kids but enjoys sharing on the board. His name is Carl, at least that's how he signs his posts.
itspostingtime is occasionally considered an eBay plant but he (I believe he's a he) has some very good points that tend to be closer to the company line than most others and his viewpoint is welcome in any discussion.
clact - I kind of consider Marty the Pied Piper of the Stores board (that is not a negative). He is generally a very optimistic sort who wants eBay sellers to succeed and he is full of ideas -- some are a little far out there, approaching "Tin Hat territory" but then again so are many of mine. He has a great passion for eBay and especially eBay Stores.
sandrarn83 - Sandy is often at odds with Marty almost like a brother sister type of thing. There is mutual respect between them but lots of bickering as well. Sandy has lots of opinions, many that I share and I like her passion for online sellers and her own business.
I know this post is sounding a little like "As the Stores Board Turns" but I think it would be good for media types, analysts and especially eBay Senior management to take a few moments to read what they are saying. Sometimes, it can be way out there and sometimes it can get a little heated but it is well worth the read.
I've left out many different posters to the board and I don't want to slight anybody but honestly this post would go on and on. Here is a good example of the discussions these sellers are having on a daily basis; the third page of the thread in particular.
Just my 5 Cents!
I did some test searches and was amazed at the selection available on Amazon. What amazed me even more was that eBay only has 1,154,800 listings in auto parts and accessories. This may not be a direct apples to apples comparison of the selection on both sites but it is close enough for a blog post.
How long do you think it will be before Amazon starts selling cars?
In other news related to auto parts, eBay just announced that they had launched eBay Motors 2.0, though I don't think they are actually calling it that.
Sorry for the unnamed source thing. (that was for you ML)
Just my 5 cents!
Wednesday, November 28, 2007
Earlier this year, Skype had a major outage of their service and customers that relied on that service were unable to communicate using Skype for the better part of a day, again there was a simple apology and a promise to do better.
eBay has had a major outage in the past, PayPal has had several, not to mention the constant glitches being reported by sellers with both services. In the case of PayPal some items were being shipped to old addresses because of a glitch in the database and sellers were getting emails blaming them. In fact, in most cases the small business is blamed for the problem because they are the direct contact to the customer. Heck, even shipments sent through the post office that get lost or delayed are blamed on the seller rather than the Post Office. When I answered email in the early days of my business I was always amazed that I was responsible for the delivery by the post office. Of course, in an effort to retain a customer I did my best to help the customer out by shipping a replacement, refunding for a lost shipment or compensating them for the delay.
More often then not the only compensation the small business owner receives is an apology and a promise to do better. In the case of the post office its "why didn't you pay for insurance, delivery confirmation, Express mail because its guaranteed".
Sure, many of these problems are corrected quickly, systems are beefed up or rules are put in place to prevent it from happening again but the small business takes it in the shorts every time with little to no compensation. Many of the day to day glitches are more of an annoyance rather than a major problem but small business owners have little margin for error. They aren't sitting on Billions of dollars in cash so they can write down the value of a mistake (Skype) most small businesses can't take many hits that are out of control in addition to the mistakes they make on their own.
How can small business owners hold their service providers accountable? They need to demand an SLA (Service Level Agreement) that spells out compensation for not meeting minimum service levels. eBay, PayPal, Skype, Amazon, Yahoo, Google and many others that charge for a service need to make service level promises that they either keep or they compensate their customer.
In the TV Business there is a think called "Make-Goods" where a network will compensate an advertiser with additional airings of their commercial, if the show did not meet the ratings goal. It is the same concept as an SLA. Small Business owners should demand an SLA agreement from their service providers.
Tuesday, November 27, 2007
- 30,000 listings on Amazon.
- 150,000 eBay Store listings and 10,000 Auctions listings (about half closing over the weekend)
Monday, November 26, 2007
Rather than doing my usual thing of commenting on the article I was hoping we could all read it fresh from our own perspective and then come back here to have a discussion about it. I know many of you do not comment on posts but please feel free to post anonymously because your opinion is very valuable and as eBay and Amazon appear to be in transition this year. It seems an appropriate time to discuss these things.
Here is a key paragraph from the article: (Remember this is from 1999)
BATTLE ROYAL. It's a collision in the making with an impact that could ripple far beyond which pioneer will lead the E-commerce revolution--and which will follow. Indeed, the budding behemoths present a fundamental choice for consumers in the Internet Age: Will most people gravitate toward fixed prices at the likes of Amazon's clean, well-lighted superstore, with its familiar brand-name retail sheen? Or will the masses take a shine to dynamic pricing, the fluid give-and-take on eBay's friendly, funky swap meet cybercharged into a global bazaar?
8 years is a long time and I thought this Blast From the Past would be interesting for you. Please let me know what you think.
Here is the link to the article.
eBay vs. Amazon.com
Fixed prices or dynamic pricing? Whichever wins biggest will shape the future
Sunday, November 25, 2007
If you are not familiar with Cyber Monday, it is the online equivalent of Black Friday in the Brick & Mortar world and supposedly the top sales day for online sites. So hopefully many of my readers will be very busy today getting orders ready. I would love to hear any of your Cyber Monday stories.
One seller I've been speaking with didn't need to wait until Cyber Monday.
They sell on both eBay and Amazon and their eBay sales were normal this weekend but their Amazon sales actually broke a company sales record on Black Friday and that record was broken again the next day and then again the next day (Sunday). With that kind of an increase this weekend I would expect that Cyber Monday would bring a new record.
Here is a direct comparison between the two marketplaces for this seller:
eBay Store Listing fees: 150,000 listings - $7500 plus $49.95 store subscription per month
eBay FVF - 10%
Amazon Listing Fees: $0 plus $39.99 per month seller subscription.
Amazon FVF - 15%
eBay - 500 sales a day (150,000 listings)
eBay NPB (Non-paying Bidder) 8% (40 sales)
Amazon - 750 sales a day (30,000 listings)
Amazon NPB - Zero
eBay - 300 emails a day
Amazon - 30 emails a day
This seller also says that Amazon sales are more profitable. A year ago this seller was selling 800 to 900 items a day on eBay with the same number of listings.
This is a snapshot of what is happening at eBay and Amazon. Who do you think is going to have a better Christmas?
When the 4th Quarter numbers are released it will be interesting to see the Y/Y GMV growth for eBay's US Marketplace compared to the Sales growth for Amazon's US business.
Monday, November 19, 2007
Bob Peck of Bear Stearns writes:
We estimate that sellers listed 15.2 mn non-store items on the U.S. site last week, down 1% from the previous week. As we expected, the gallery promotion (Nov. 6th - Dec. 12th) did not provide meaningful lift to the listings. Listings were up 5% Q/Q but down 2% YoY. We note that YoY & Q/Q, listings were up against tough comps due to promotions. QTD, we estimate that sellers listed 101.2 mn items on the U.S. site, up 14% Q/Q but down 10% Y/Y. In our previous note, we attempted to quantify the impact of the gallery promotion on eBay’s revenues and concluded that total revenue impact of gallery promotion could be up to $15 mn for eBay, which could be offset by a 9% increase in listings. As such, should listings growth continue to be sluggish, we think eBay could take a loss as a result of the promotion.
I'm sure that eBay is seeing an increase in advertising revenue as well the benefits of FX (Foreign Exchange) so those increases may very well pay for these promos but where does eBay go from here. They have run 3 separate extended promos since the beginning of September with very limited success. How many more arrows do they have in their quiver?
This will probably be my only post this week so I would like to wish you all a wonderful Thanksgiving Holiday.
Wednesday, November 14, 2007
At this point there is no confirmation that it was actually a bomb but employees were evacuated from one building as a precaution.
"One suspicious package was discovered. We immediately evacuated the mailroom," spokesman Hani Durzy told Reuters. "The building remains evacuated at this point," he said.
In October of last year, an explosion rocked the PayPal office across the street from eBay's offices. To date nobody has been arrested in that case.
There is certainly a huge amount of dislike, in some cases outright hatred towards eBay by former members but nothing can justify this type of behavior. Hopefully it was not an explosive device and employees can return to work soon.
I'll update you with further info as I get it.
Update: According to San Jose Police Sgt. Nick Muyo, a suspicious package reported at eBay's Hamilton Avenue offices this morning "was not an explosive device." So eBay employees should soon be back to work.
If anything really interesting strikes my fancy I will pop in and post about it but in the meantime you can check out my What am I Reading? list in the right sidebar or checkout some of my previous posts in the Archive section of the blog.
Tuesday, November 06, 2007
2007 - Year of the Buyer:
- Reinvest in eBay's core by simplifying the site, improving finding, and accentuating the things that make eBay fun and unique. (Finding 2.0, Widgets, eBay Desktop, Bid Assistant etc.)
- Take a more proactive approach to Trust & Safety to protect our members from fraud. (Safeguarding Member IDs, etc.)
- Improve the buyer experience on the site by holding sellers to higher minimum standards (T&S Crackdown, Feedback 2.0)
Many of these changes greatly affected sellers who were still reeling from the fee increases of Aug. 2006. There is some evidence that a large number of sellers have left the site or moved large portions of their inventory to other sites, with Amazon getting a large share. So what does eBay do for an encore? Well, I'll help them out.
They should make 2008 "The Year of the Seller". I would look for Bill Cobb or whomever is in his position (sorry couldn't help it) to announce initiatives that benefit the top eBay sellers, category specific pricing, free gallery etc. We are already seeing movement in this direction as management tests what type of pricing will give them the most bang for their buck (three extended promos since Sept. 1st, each very different from the next)
The only question I have is: Will this new focus on the seller be "a day late and a dollar short" The seller/management relationship is tenuous at best.
I would like to add a few suggestions to their list:
- Allow sellers to link out to their own websites from Core listings. That would make the expense of CORE listings more palatable.
- Include Store listings in search (now that they supposedly can handle it with Finding 2.0)
- Provide FVF discounts for return customers.
I'm sure I can come up with about 100 other suggestions but these will suffice for now.
So what happens in 2008 for Investors? Well, IMO, much the same as happened to Sellers this year. Investors will probably not be too happy with the changes. Bob Peck of Bear Stearns has already suggested that there will be margin pressure in 08' due to the need to improve seller economics and Jeetil Patel of Deutsche Bank says the margin pressure combined with problems with demand will cause further pressure on the company's profits. I would look for real volatility with the stock in 08' but that is just a layman's opinion.
So, we can already see what these changes will bring in 2009 "The Year of the Investor" when eBay once again focuses on the bottom line and investors. (Can investors wait that long?)
In theory, these changes should right the eBay ship and make all three constituents (Buyers, Sellers and Investors) happy come 2009. IMO, 2008 is the key year for eBay management. If their efforts on improving buyer experience take hold with buyers and they can keep sellers on the site then improvement will be evident towards the end of 2008 and eBay can once again concentrate on investors. If these changes do not accomplish what management wants then by the end of 2008 Investors will be jumping ship.
Lastly, as I wrote this post I thought, "this is actually a very nice plan" and hope that it works out for each group involved. Sellers will come back to eBay when it once again becomes a viable marketplace for their business. Investors may sell their shares as margins are pressured but will come back when things improve. The jury is still out whether buyers will come back. Let's hope they do for everybody's sake.
Just my 5 cents!
Monday, November 05, 2007
"That is so contrary to eBay's philosophy since it started," says Ina Steiner, editor of AuctionBytes, a trade publication for online merchants. "High-volume sellers have been demanding volume discounts for years. It wasn't until Amazon increasingly moved in on eBay's territory that eBay reacted to the demand."
Hani Durzy, eBay's director of corporate communications, responds that the company has always run experiments with its pricing structure and this move is "absolutely not" a reaction to Amazon's competition. "We expect that our sellers, even our biggest sellers, are multi-channel," says Durzy. He does add that eBay will be considering more pricing options in 2008 than it has in the past. (Bold is mine)
This is similar to eBay saying the Google ad embargo was not related to the Google Checkout party at eBay Live.
The article this quote was taken from is very interesting and a good read. Click to it here.
I normally don't write about IAC but thought this latest move was very interesting and might be an option that eBay chooses in the not-too-distant future. There has been talk of a PayPal spin-off and most sellers think Skype should be a separate business anyway.
Could eBay Spin-off the "Power of Three" in the near future? Let me know what you think? Skype makes sense as a stand alone company and so does PayPal which would leave eBay to concentrate of becoming the Web's complete shopping destination.
I think it would be a smart move.
UPDATE: I guess somebody else thinks its a good idea also. The Wall Street Journal has a post about breaking up eBay.
Sunday, November 04, 2007
In the announcement, eBay suggested that sellers "list more items with the savings". I think much like the 33% discount on listing fees eBay will find that listings will not improve dramatically. Sellers will most likely just take the savings and run. There may be a slight increase in listings from sellers who already use Gallery but I don't believe it will be substantial.
It is clear that eBay is heading towards free Gallery on the site which will take away a huge revenue stream for the company but the move will improve seller economics and make the site nicer for buyers. It won't increase listings IMO. This is a good deal for sellers and buyers. I wonder what investors will think.
Just my 5 Cents!
Friday, November 02, 2007
Who can post on ZDNet? Bloggers who have established blogs, users that have something good to say but want to pursue “one off” posts and those who just want to chime in from time to time. If you’re trying to get more eyeballs for your own blog, and you think you have what it takes to be on ZDNet, send us a recent post. If our editors like what they see, your entry will be posted on ZDNet, along with a prominent link back to your blog.
So I figured I would give it a try and posted one of my recent posts. The post made the cut and is now on the Between The Lines blog but strangely they didn't give me credit or link back to my blog. No worries, as this is a Beta test but I sure hope they correct this little glitch. They did include my signature "Just my 5 cents!" So my regular readers will know its mine.
Wednesday, October 31, 2007
Online retail spending in the third quarter grew 23% over last year’s third quarter to $28.44 billion from $23.05 billion, comScore Inc. reports. In the first three quarters of the year, online sales grew 21% to $83.58 billion from $69.12 billion.
“Online retail spending continues to grow at rates in excess of 20% year-over-year, which suggests that the market is still far from maturity,” says Gian Fulgoni, chairman of comScore
Obviously online sales continue to grow and are far from mature. The comScore numbers do not include auctions, so an apples-to-apples comparison with eBay is not going to be very accurate but we can compare growth rate of ecommerce to auctions to see which of the two is the mature market and which is the young buck that’s still growing. (Obviously you know where I’m going with this but lets look at the numbers).
eBay is the largest auction business online and its US GMV grew 10% Y/Y in the 3rd quarter (3% of that growth came from StubHub which is a FP (fixed price) business). Some estimates put eBay’s GMV from FP and BIN in CORE at 35% so if we just look at where the growth in eBay’s business is coming from, it's not auctions. Meg Whitman recently said during the Q&A section of eBay 3rd Q earnings call; you're going to see a higher percentage of our GMV in fixed-price. I think it's the fastest-growing part of the market.
eCommerce in the US (excluding auctions) on the other hand grew 23% from a much larger base $23.05 billion than eBay’s $6.1 billion. Heck, Amazon’s Y/Y GMV, admittedly from a much smaller base, grew by 42% according to Amazon’s 3Q earnings call; In the North America segment, revenue grew 42% to $1.79 billion. This is the highest growth rate in seven years.
So it appears that ecommerce continues to grow unabated while eBay continues to just muddle through. If Fixed Price is the fastest-growing part of the market as Meg said then wouldn't you think that management would concentrate on that type of product rather than coming out with a "Shop Victoriously" campaign or "Windorphins"? Auctions have lost their mojo.
It is clear to me that eBay has bet on the wrong horse. Auctions are eBay’s mature business while Fixed Price is where their future growth will come from. Management needs to champion Fixed Price and Stores in CORE while managing the auction business as a mature business. There needs to be a complete shift in thinking.
It is not all doom and gloom. Half the battle with change is admitting that the old way doesn’t work any longer. Maybe there is a 12-step program for eBay management. If eBay will admit auctions are no longer the Holy Grail, eBay is uniquely suited to begin growing as fast as ecommerce. Most Sellers don’t want to leave eBay but they are being forced to look at multi-channel selling to save their businesses just help them sell product and they won't even complain about fees. Multi-channel selling will not go away, that train left the station a couple of years ago but if eBay embraces their sellers and changes their focus the future can be bright again.
In some ways they are already addressing some of these issues. The new “finding” should help eBay add Store items back to CORE without hurting the “buyer experience” (hopefully this is their intention) and the new semi-persistent BIN will help drive up ASP’s and conversions.
Auctions have their place but the growth is in Fixed Price.
Just my 5 cents!
Sunday, October 28, 2007
Very interesting read.
Here are some key quotes but please take the time to read the entire article because while I try to provide context with my comments it would be better to read the article in its entirety. My Comments are in bold.
In discussing the challenges eBay is facing.
EBay is responding with a whole new strategic gamble--one some company insiders say is its most ambitious ever. The mastermind is John Donahoe, 47, whom Whitman brought aboard three years ago and installed as president of eBay Marketplaces (and as her heir apparent). His bold stroke--what he calls "our number-one strategic priority"--is recasting the site to focus primarily on buyers, not sellers.
As obvious as this realignment might seem, it is a sea change for an outfit that long regarded sellers as its main customers; some 1.4 million vendors rely on the operation for their primary or secondary income.
This is truly a gamble because in many ways eBay has burned their bridges with sellers. I would guess that sellers would come back if the buyers are there but never again will eBay have their undying loyalty.
Too much Clutter!
From the beginning, the strategy was to amass an unrivaled array of goods that would attract buyers. It worked well. In fact, as Donahoe now admits, it worked too well. The site became bloated and unwieldy. At any given point, it features about 100 million items for sale, with nearly 7 million new listings every day. "EBay's abundance was one of its attractions," Donahoe says. "But if you type in 'BlackBerry' and get 23,000 search results, it's not that helpful." (His offhand math is not far off the mark: A search in September produced 3,911 phones and PDAs, and 17,771 accessories.)
I still don't know why this is a problem. Search for BlackBerry on Google and there are 59,900,000 results and Google just shows you the top 10 on the first page. Most eBay buyers just buy from the first page of results anyway. The difference is eBay listings end so each listing will appear in the prime real estate (first page)at the end of the listing giving each listing the same exposure.
In my view these changes are directly related to SIS (Stores in Search) in 2005 when eBay added store listings to regular store search. With this article eBay says why they rolled back SIS and it wasn't because of the buyer experience. It was because their auctions took a huge hit.
New CTO Matt Carey arrived in Dec of 2005
Carey inherited a catastrophe. Shortly after he arrived in San Jose in December 2005, the site's core listings, largely auctions, and those for its 600,000 individual stores were combined for the first time--a blunder no one now takes credit for. Previously when you typed in, say, "Sony PlayStation," the search engine combed through only the core listings. To see the other merchandise, you had to surf over to the eBay Stores site and do a separate search or browse the stores. The goal of combining the entries was to show a broader mix of inventory on a single search; the effect was to give more exposure to the store products. The new setup was rolled out with no customer testing.
Within weeks, nearly every measure of eBay's business was down. Bids. Return visits. The conversion rate, or percentage of listings sold. Average sales price.
In hindsight, it's hard to understand why no one at eBay foresaw what would happen. Because eBay charges less for store listings than core auction listings, once they all appeared in a single search, many sellers shifted their inventory to save on fees. Suddenly, store merchandise, which tends to be pricier, was crowding out the auctions--and the bargains. Auctions bottomed out at just 17% of total listings, yet they still accounted for 91% of sales.
The misstep triggered headlines, a falling stock price, and pointed questions from analysts. Whitman explained repeatedly that the marketplace was out of balance. In March 2006, eBay rolled back the program. Finally, in August the company used its only real lever: It raised fees for store listings.
At the time SIS was rolled back eBay said the reason was because the buyers experience was damaged. Most sellers saw an increase in their sales during SIS so have always felt "buyer experience" was a red herring. The real reason is in the quote above.
Please read the entire article, it is the most comprehensive piece I've read about the behind the scenes reasoning of eBay managers.