Saturday, March 01, 2008

Rocky Road Ahead for eBay!

It's one thing for a seller or a blogger to say that eBay is in for a rough year, but when the company itself says it, we all ought to sit-up and take notice.

According to Reuters: (Bold is mine)

Online auction leader eBay Inc (NasdaqGS:EBAY - News) warned in an annual report on Friday that it faces difficulty getting former customers to return, adding to the normal challenge of attracting new users to its sites.

In its annual shareholder filing with the U.S. Securities and Exchange Commission, eBay cited a variety of new threats to its business that reflect "changing customers demands."
EBay acknowledged that its main auction business faces slowing growth in each of its top three markets.


"We face challenges in the U.S., U.K. and Germany, which are our three largest markets, as growth of listings, active users and GMV on the eBay.com platform in those countries has slowed," the company said in the regulatory filing.

IMO, the active user number is the most troubling. eBay's global user number grew less that 2% Y/Y. Active Users grew by 1.4 million accounts (Worldwide) from 81.8 million in 2006 to 83.2 million in 2007 and this isn't really an accurate number because according to eBay, "Users may register more than once and as a result, may have more than one account." At Glacier Bay we had 5 selling accounts; which would have been considered active. Many sellers have separate buying and selling accounts.

If eBay is not able to attract new users or re-engage the roughly 120 million non-active eBay accounts, there will be troubling days ahead.

Let's put eBay's 83.1 million active users into perspective: According to Amazon's Q4 Earnings Call Transcript "Active customer accounts exceeded 76 million, up 19%. Worldwide active seller accounts were approximately 1.3 million, up 15%." (Bold is mine)

You would think the "law of big numbers" would be affecting Amazon as much as it appears to be affecting eBay, but Amazon grew active customer accounts by 19% and active seller accounts by 15% Y/Y while eBay grew active accounts by less than 2% Y/Y and Amazon is only in 6 International marketplaces (Canada, United Kingdom, Germany, Japan, France, China ) while eBay is in 28 International markets.

eBay management has a tough road ahead and they are making some huge bets with their recently announced changes. Active users is a metric that I will be watching over the next several quarters to see if those bets will pay-off.

5 comments:

permacrisis said...

RKS-

Re multiple, active accounts:
Sellers of any consequence use a posting ID on the boards, and you can be certain the recent turmoil inspired more than a few. (My favorite: green*negs*and*spam ) So yes, I agree that the 80+ million figure is somewhat suspect.

Boycott ebay said...

Ebay has the fix.

"Shopping.com Listings on eBay?"

http://blog.auctionbytes.com/cgi-bin/blog/blog.pl?/pl/2008/3/1204379814.html

Chris said...

I tried to count up my active accounts a couple of days ago... I ran out when I got to seven. To be honest I can't even remember half the user id's I have used, let alone the passwords, and that's just those from the last 12 months!

I hate to think how many accounts I have in total, I guess I have more forgotten and dormant accounts than active.

Anonymous said...

I post nonsense on eBay boards to get a laugh. Just trying to be funny. Nothing mean. But, no matter what you say it offends someone. Thus, posting IDS.

Lately I have begun using my main selling ID to post on the boards. I think this comes from the realization that I don't care much any more and that I'm about ready to bail completely.

This morning I had my first sale of a pure vintage "collectible" I had listed on Amazon using my Pro Merchant account into the "general" catch-all catagory.

I've had sales of collectibles on both FREE sites I've been testing, Craig's List, Google Base, and now Amazon.

eBay has messed up the auction business and is losing the fixed-price business to Amazon and a variety of small players. This will become a nibbling death like a man overboard in a stream of pirrhanas.

Sue Bailey said...

FWIW, I'm cutting down the number of active accounts I have: I used to be a big advocate of sellers having buying accounts. But recently, I've been treated like absolute dirt by three huge sellers when buying on my (8) feedback newest account: all three of them failed to deliver what I'd ordered, and all three of them called me a "newbie" who didn't know what I was talking about. When I buy with a 10k+ selling account, I don't get treated like that.

And I'm not using my posting accounts any more either because the eBay boards have become such boring places full of people whinging about how they're leaving eBay. I wish they'd hurry up and leave.