Tuesday, March 04, 2008

It's All About the Numbers!

I mentioned in a previous post, that eBay's "Active User" count is suspect because of the number of individuals and businesses that have multiple "active" id's. eBay is having difficulty adding to this "Active User" number or re-engaging innactive accounts. As of this year, eBay has 248 million registered accounts, yet only 83 million of those accounts are active. That means 33% of registered eBay accounts are "active" which is defined as: All users, excluding users of Half.com, StubHub and Internet Auction Co., our Korean subsidiary, who bid on, bought, or listed an item within the previous 12-month period. Users may register more than once and as a result, may have more than one account.

Two-thirds of eBay's registered accounts have not bid, bought or listed on eBay over the past 12 months, so why does eBay trot that total registered user number out in the press? It means absolutely nothing. Sure 248 million is much more impressive sounding than 83 million but when 2/3rds of that 248 million number haven't done anything on the site in the last 12 months it make the total number meaningless.

Well, eBay is following this same pattern with its PayPal numbers. In a recent article on alternative payment options; Cliff Hopkins, senior director, PayPal merchant services said, “When merchants offer PayPal on their sites, they allow 141 million customers around the world to shop with peace of mind because they don’t have to share their financial information online.” Wow, 141 million customers, that is amazing, is that "active customers" or total accounts? According to eBay's 10K filing, PayPal had 57.3 million "Active Accounts" which are defined as : All registered accounts that successfully sent or received at least one payment or payment reversal through the PayPal system within the previous 12-month period. Well, at least PayPal has 40% of their total accounts that are actually active, compared to eBay's 33%

Now, 57.3 million active PayPal accounts is a very impressive number, but certainly not as impressive as 141 million. So in the press and apparently in their sales pitch to merchants, PayPal uses the total user number. To an online merchant the only number that matters is "Active" customers.

To put PayPal's numbers in perspective, lets compare them to "Active Customer" accounts on Amazon. Since each "Active" Amazon account is also a payment account (Amazon facilitates all transactions on their platform).
  • 57.3 million "Active" PayPal accounts (PayPal accounts grew 16 % Y/Y)
  • 76 million "Active" Amazon customer accounts (Amazon accounts grew 19% Y/Y)
Now, lets look at Skype: In eBay's 10K filing they don't even breakdown the "Active" Skype users, they just disclose the total account number of 276.3 million. The "active" user number must not be nearly as impressive.

eBay's "Active" numbers are certainly impressive but they aren't world beating. Amazon has nearly as many customer accounts as eBay "Active Users" and more payment accounts than PayPal. So next time an eBay or PayPal executive gives you "the numbers" just divide it by 3 to get closer to reality.

Just my 12 %

11 comments:

Anonymous said...

Why do you waste your time writing articles that no one cares about !!!!!

Randy Smythe said...

Anonymous!

Apparently you care enough to come to My Blog Utopia and comment on one of my posts.

I enjoy what I do and I have a lot of great readers. I write for online sellers and I certainly don't do it for the money.

Thanks for stopping by.

randyluver said...

Randy you ebay hater you.

If you had any objectivity you would compare apples with apples like looking at Amazon's registered user to active account ratio.

But we all know you have an ax to grind with Ebay.

By the way if you actually did some digging and homework skype has approximately 30 million active users and its highest concurrent user count is 12 million. Which makes skype of the largest telecom companies in the world even tho they don't compare themselves to a telecom. project revenues is 600-700 million in revenues for 2008 and PROFITABLE.

Randy Smythe said...

randyluver,

Thanks for stopping by. As for total registered users, it really doesn't matter what eBay has or what Amazon has. Active users is all that matters.

BTW, just because I criticize eBay doesn't make me an eBay hater.

You are a shareholder and my view is contrary to your view, so you criticize me.

Different viewpoints are healthy, thanks for doing the homework for on the Skype active users.

Anonymous said...

You have to remember that his business failed. You do not close a business if you are making alot of money. Even if you hate it you could try to sell it. This is why he hates EBAY!!!!

Randy Smythe said...

Geez Annonymous! At least randyluver called me out on something I wrote in my post and he made up a cool user name.

At least be a little more creative with your comments and add something to the discussion.

Anonymous said...

I am calling you out on your negitive articles. You have an ax to grind due to your business failing. Everyone always blames the company for their failures. Remember you where selling trading cards for young kids. Did you expect it to last forever. You have to modify you business model when things change. Or as you know the business will FAIL !!!!

Randy Smythe said...

My company was Glacier Bay DVD. I sold over $13,600,000 worth of media items over 4 years on eBay. I do not blame eBay for my business failure and I'm on record saying that I made some mistakes.

The Pokemon story was just how I got introduced to eBay. If you have problems with my views on eBay, why not debate with me about those views rather than trying to personally attack me.

Just type "Randy Smythe" in Google and you will see all kinds of content about my story. Then come back here and show me where I blame eBay.

I'll keep responding to your comments as long as you want to have a dialogue and you get your facts straight.

Anonymous said...

Just a few months ago, Glacier Bay DVD was crowing about becoming one of eBay’s very top sellers, with the highest positive customer feedback rating of any merchant on the marketplace. Today, despite having amassed some 268,199 feedback ratings from customers over more than six years on eBay, it’s gone. Or as they say in eBay parlance, NARU’d—“No longer A Registered User”—which can mean everything from merchants simply quitting to eBay kicking them off for not paying bills or getting too many complaints. (Update: eBay says it can’t comment on why Glacier Bay is now NARU, but a spokesperson says it was eBay that took the action.)

What happened? eBay’s online forums are buzzing with mostly uninformed speculation, but maybe only owner Randy Smythe knows for sure. And he’s not talking. The phone number on his domain registration for glacierbaydvd.com, which is now a blank page, is out of service, and he hasn’t returned an email request for an interview. The auction news site Auctionbytes, which just reported the disappearance, apparently wasn’t successful in reaching Smythe either.

But gleanings from the eBay community indicate that the merchant had been struggling for some time to contend with a glut of new entrants into media products. …

Although sudden disappearances of large sellers from eBay appear fairly rare, they're not unknown as eBay grows and attracts more and more sellers. (Another top seller, electronics merchant BuyEssex, was NARU'd sometime last year.) Indeed, some observers believe that while the exit of large sellers can't be construed as a good thing, turnover generally is inevitable and even healthy for the marketplace: It may be an indication that new sellers, bringing more efficient techniques, are continuing to try eBay. "For every seller who goes out of business, there's 10 to fill the void," says Scot Wingo, CEO of ChannelAdvisor, whose selling services Smythe used. "Where there's demand, supply will find it."

Wingo wouldn't comment on Glacier Bay DVD specifically because of that relationship. But he said a number of large DVD sellers on eBay are now offering auctions that start at rock-bottom prices, then charging higher shipping to make up for the loss on those auctions. That, he says, has made it tough for merchants trying to sell the DVDs themselves at a reasonable profit. Smythe told me the same thing about seven months ago, vowing to move more of his business from eBay to his own Web site as a result.

Wingo believes that shipping problem may ease when eBay Express, a new method of selling on eBay that's more like traditional retail, debuts this spring with pricing that includes shipping automatically. But Wingo, and other eBay sellers, think the make-it-up-on-shipping practice has conditioned bidders to expect lower prices.

In any case, that's not the only problem Glacier Bay may have run into. Jay Senese of Jayandmarie, a CD and DVD merchant who is also one of eBay's largest, thinks that Glacier Bay contracted with media distributors such as Baker & Taylor, Ingram, and Super D to drop-ship DVDs and therefore didn't have complete control of inventory availability. Indeed, a review of Glacier Bay's eBay feedback page indicates an escalating number of negative ratings blamed on nondelivery of merchandise. Senese, who says his business is still doing well, says he stocks his own merchandise so he can guarantee he has a product in stock.

Does the disappearance of such a large seller portend troubles for eBay? Not by itself. Actually, the large sellers I've talked to recently seem a little more sanguine about eBay lately than they had been earlier last year, when fee hikes ticked off many of them. One recent fee hike was tempered by some fee drops in other areas. Sellers report communication lines seem to be more open these days. And some large sellers seem excited about eBay Express's potential.

Still, with a lot of balls in the air, such as the recent acquisition of Skype, eBay will have its hands full. With competition intensifying from the likes of Google, eBay can't afford to lose too many of its marquee merchants.

Full disclosure: The reason I noticed Glacier Bay DVD had disappeared is that I bought a CD from the company in early January. Despite a claim that it had shipped, I still have not received it. Nor have I received a response from the company asking what happened. Before realizing the merchant had stopped doing business on eBay, I also filed claims with both PayPal and buySAFE, mostly as an experiment to see what would happen. Those claims are pending.

Anonymous said...

I googled Glacier Bay DVD and I found this Business week Article.

Randy Smythe said...

Isn't that the beauty of the Internet. You are more than welcome to continue your crusade.

Can I ask you what your intent is? You hide behind an Anonymous posting ID, follow me around to other blogs to attack me and then come to My Blog Utopia to attack me, what is all of this effort meant to accomplish?

Is it meant to discredit me with my readers? Are you compensating for other short comings?

I haven't deleted any of your comments and I'll gladly let you rant on but I won't respond any further.

I'm actually flattered that I have a "Blog Stalker". I have arrived.