Friday, November 30, 2007

Perception is Reality! So Where is eBay Going Really?

I spend a lot of my time trying to figure out what direction eBay is heading in the short-term as well as long-term. Unfortunately, I have to base most of my posts on observation of one side of the equation (the outside). I rarely have enough data to make hard and fast assessments. I also have a bias towards the seller so I often inject that bias into my observations. The problem with this approach is I have as many misses as hits. Its like playing a game of Battleship, trying to figure out where the boats are and then surrounding them until I can blow them up.

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

eBay Promotes Michael Linton to Replace Gary Briggs

According to Advertising Age, Michael Linton will be replacing the departing Gary Briggs as eBay's CMO (Chief Marketing Officer)

"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.

More Interesting Tidbits From the eBay Stores Board

This post is dedicated to my friend in Sandy, UT who makes fun of my use of the Stores Board as a news source!

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!

Amazon is in the Auto Parts Business -- Who Knew!

I heard some interesting numbers yesterday, from an unnamed source, that Amazon now has over 2 million listings in their auto parts and accessories category. This surprised me because I wasn't even aware that Amazon had an auto parts and accessories category.

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

When Big Companies Don't Deliver!

Yahoo Small Business had a bit of a hickup on Cyber Monday, if you haven't heard yet, their shopping platform was down for most of the day on arguably the biggest shopping day of the year -- so far. In this case, Yahoo Small Business clients took a big financial hit on a pretty important day. Also, their retail customers were not unhappy with Yahoo, they were unhappy with the small seller who's site didn't work. So the small seller is impacted both in the wallet and in customer satisfaction due to no fault of their own. What did these small businesses receive as compensation for their trouble, an apology.

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

It's a Cyber Weekend!


It looks like online sales over at Amazon grew steadily over the weekend; at least for one seller.

Their eBay sales were up about the same as Amazon but with 2 IDs. They also had to double the number of auctions closing and their conversion rate was 25%.

  • 30,000 listings on Amazon.

  • 150,000 eBay Store listings and 10,000 Auctions listings (about half closing over the weekend)
Just a little real world evidence that it now appears to be a Cyber Weekend.

One additional note about their eBay sales. Prior to August of 06' and the Store fee increase this seller averaged 800 - 1000 items a day on eBay alone with about 4000 auctions and 150K listings in each store.

One seller does not make a trend but it does make a blog post.

Just my 5 cents!

Monday, November 26, 2007

Blast From the Past - eBay vs. Amazon Circa 1999

I came across an article written for Business Week in 1999 comparing eBay and Amazon and was blown away. Apparently not much has changed over the last 8 years and then again everything has changed (like the numbers).

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

Just Another Cyber Monday!

Maybe the Bangles need to write a song about Cyber Monday. Is it really that big of a deal? When I was selling on eBay there was never a huge increase in sales on Cyber Monday but from what I'm hearing that's not the case over at Amazon.

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:

Fees:
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%

Daily Sales
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

Customer Service
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

eBay's Gallery Promo Stuck in Neutral

Just popping in from the Denver airport while I travel and I wanted to comment on the latest eBay promotion of "free gallery" for CORE listings. It began on Nov. 6th and will continue until Dec. 12th but it doesn't appear to have accomplished much. I didn't believe it would increase listings much but I thought it might improve conversion. I tasked some sellers who are now using gallery because of the promo if they noticed an increase in conversion rates and they are saying it is pretty much the same as before "poor".

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

Bomb Scare at eBay's San Jose Campus!

This morning's mail brought an unwelcome surprise to the eBay mailroom. A suspicious package was found by mailroom employees. The bomb squad was called in and the building evacuated. As of this post the bomb squad is still working on the scene.

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.

Just Popping in to Say Hi!

I've been working on a project that is limiting my time for posting on the blog. Fortunately not much exciting has been happening. I should be back to regular posting again on Monday of next week.

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

2008 - eBay's Year of the Seller!

In 2007 eBay management said they were going to concentrate on the buyer experience and called 2007 the "Year of the Buyer", well I can't actually find any quote where they said that but 2007 was considered the "Year of the Buyer". Here is Bill Cobb's State of eBay announcement from January of 07'

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:

  1. Allow sellers to link out to their own websites from Core listings. That would make the expense of CORE listings more palatable.
  2. Include Store listings in search (now that they supposedly can handle it with Finding 2.0)
  3. 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

"eBay Speak" Quote of the Day!

Don't worry this won't be a regular post, I just came across a very funny "eBay Speak" quote from eBay spokesperson Hani Durzy in response to a quote from Ina Steiner; regarding volume listing discounts.

"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.

Breaking Up Is Easy To Do!

IAC (Interactive Corp) announced today that they would be breaking up the company into 5 separate publicly traded businesses. IAC is the parent company of HSN (Home Shopping Network), Ticketmaster, Ask.com and numerous other web properties. The investment community looks like they like this move. Here are the details.

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

eBay Just Got Much Cheaper for Sellers!

Following the 33% discount on listing fees through Monday Nov. 5th, eBay has announced that beginning Tuesday Nov. 6th Gallery will be free through Dec. 12th. This is a great deal for sellers who already use Gallery and a smart move to improve the buyer experience on the site because most sellers will be using Gallery on their listings.

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

ZDNet Opening to Bloggers!

Recently, ZDnet.com announced that they were reaching out to bloggers for their content:

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.