Wednesday, May 07, 2008

Brilliant! The "eBay Bucks" Test is Brilliant!

Warning!

If you choose to read further, please make sure to wear your "Tin Hat" and verify that there are no “Black Helicopters” in the airspace around your home or place of business.

After thinking about the new "eBay Bucks" test some more, I came to a simple conclusion: This test is brilliant on eBay's part.

First, they test the program with half of Q2 still ahead of them, so there is plenty of time for the excited registrants of the program to "Shop Victoriously" and earn their "eBay Bucks". eBay collects their regular take while delaying payment for the promotion until Q3 – Brilliant!

Since we have no idea how big the test group is we will assume it is sizeable enough to move the GMV and revenue needle upward for the quarter while pushing the cost of the program into Q3.So in Q3 these excited “random” users continue to "Shop Victoriously" for another month-and-a-half before they get to redeem their earned “eBay Bucks” and eBay continues to get their regular take from sellers.

Now, here is the brilliance of the program: The user will have one month to redeem their "eBay Bucks" and they can only use it for purchases on eBay between August 22nd and Sept 21st, 2008. I don't know about you, but I'm on vacation in late August so I won't be on eBay buying anything and would most likely forget about my "eBay Bucks" when I got back. That time of year, is also when consumers are doing their “back to school” shopping which I don't recall every doing on eBay.

Even if I did redeem my earned "eBay Bucks" I would have to spend them on eBay where they would once again get their take of the FVF and other fees from the seller.It's all in the math and the percentage of users who would actually redeem their "eBay Bucks" will be relatively small; just think of how many gift-cards never get redeemed. Those "random" users who do redeem their "eBay Bucks" will have spend them on eBay where eBay still gets the FVF on that purchase and eBay generated far more revenue from the increased spending for 3 months, while only allowing the redemption for 1 month.

This is a perfect example of offering a promotion that looks like it will pay out pretty big to the user, but that actually costs eBay very little and by rolling it out now, they can stoke their Q2 numbers without having to pay anything for the promotion. -- in case you are wondering, that is the "tin hat" part of this post.

Anyway, if the promotion increases sales on the marketplace everybody will be happy; sellers because they sell more product; investors because the promotion really doesn't cost eBay much; eBay managers because they are able to get the benefit in two quarters and buyers because they think they are actually earning something.


Brilliant, I say Brilliant!

Can you tell I was bored?

8 comments:

John said...

Now they need to extend this to sellers.

Imagine if say, 5% of the fees that you pay eBay went into an eBay bucks fund. You could then use that to buy things on eBay. It'd turn a lot of sellers that only sell into buyers as well. This could then make them much more conscious of the 'buyer experience' and drive up GMV for eBay

Anonymous said...

Randy, you've been posting a mile a minute and keeping up with all these nutty changes. You are the little guy in the 1980's videogame running atop the spinning barrel. I get the feeling that when YOU say, "It's over", it really will be OVER.

Please let me know when it's over.

Randy Smythe said...

John, unfortunately I don't see that happening with eBay.

Anonymous,

I can say this. The old eBay is over and right now I don't see anything special in the new eBay. I wish I actually had the Crystal ball though.

Rupesh Sanghavi said...

The trckiest part of ebay Bucks is you can use all on ONE transaction only. All unused money will go away. So either you buy equal or more valuable item than your accumalated ebay bucks or loose. I guess, ebay is pushing towards higher value transaction with this. Remember, they change Min starting price not to long ago.

Cliff said...

Is anyone else having trouble accessing eBay Bucks?

I've been trying for two days now to sign-in to the program through the email in 'My Messages' and all I get is a blank screen in Firefox and an error page in Explorer.

I'm not having any trouble accessing any other sites.

Marty said...

Randy, the way accounting works, if Ebay gives out these certificates, it will show as as a liablility on its balance sheet. Its not like it disappears til 3rd quarter for financial reporting. The auditors will match the expense with the period it was accrued in. I do like the idea of the coupons, but like everything else its in test mode, only to some people, not straightforward. Anything is better than nothing and I do hope it works out!
Marty :)

lgem13 said...

Thats not true about 1 transaction you can use it on as many as you want during the time period if you have enough to do so. Also, it is paying out big because these are things im buying anyway & to beable to earn off of what i was already getting is an awesome benefit I LOVE IT!

lgem13 said...

Also, I am aware this blog was posted years ago & unsure if that is how ebay bucks was but as of right now its awesome