I've said it many times before; the strategy eBay management has chosen is a big gamble. If it works, there really isn't a huge upside, IMO. If it doesn't work the downside is going to be pretty bad.
For the most part, the changes have successfully kept eBay Marketplaces running in place, but I certainly don't see any huge growth happening.
Questions affecting eBay's future (in its current form).
- Do the changes give management enough running room to grow the non-GMV businesses and PayPal, to take the pressure off of Marketplaces?
- Can they pull a rabbit out of a hat and sell Skype for at least $4 billion? (that would give them some running room)
- If the "economy" is the problem with eBay Marketplaces, then what excuse will they have if Amazon has a great Q3 and even better Q4?
- How long will investors, sit around waiting for the turn-around?
- Will the courting of Internet Retail Top 500 merchants save eBay? Who are the next "big guys" to come to eBay and Anchor a category?
- If eBay has a demand problem rather than a supply problem, will they need to spend more money to stoke demand?
Here's how I see it playing out; no I do not have any crystal ball. If I am wrong, you can find this post sometime next year and tell me I'm an idiot.
I'm working from the belief that the current eBay strategy is wrong, so I already believe it will fail, but I think we are in for a rocky rest of 2008:
- The next 2 quarters for eBay will continue to show slowing growth and Amazon will continue to grow faster than everybody else - taking share.
- Margins will be maintained, because management won't spend the money necessary to get growth moving again. If you are changing the way eBay works shouldn't you be letting the world know that this is a new eBay? I haven't heard one word about a new ad campaign.
- Investors will get tired of all of this and start voting with their shares, as some already have. Opening the door for one more year of restructuring, under a new management team and/or the company will be acquired.
I know I'm going out on a limb about the management changes. It seems unbelievable that the management team would only get a year to turn the business around, but I just can't imagine there is that much rope for this team.
Yahoo investors were calling for Jerry Yang's head 9 months after he took charge and he's a company founder. John Donahoe took over eBay in March but he was in charge of the Marketplace business for 2 years before that.
Unfortunately, I think we are past the point of no return on this strategy, so it is just going to have to play out.
And yes, if you have read my blog in the past, I do have a strategy that I believe will work, but it is too late to implement it now. We will just have to wait until Q1 of 2009 when eBay once again re-organizes.Just my 12%