Thursday, January 31, 2008

Amazon Webstore vs. eBay Store

In a previous post I did a quick comparision of the Amazon's WebStore vs. Yahoo's Store offering and eBay's ProStores, so I thought I would mix it up a little bit and do a comparison between the Amazon WebStore and the eBay Store.

eBay has close to 500,000 eBay Store/Shops globally and is the top Store platform in the world. The biggest advantage eBay Stores have over their competition is that items listed in your store will get some exposure in eBay search. Over the past couple of years though, this exposure has been very limited, bringing the value of an eBay Store down. While this comparison will certainly not be an Apples to Apples comparison, I'm sure you will be able to see the major difference and decide which is the best option for the online seller. You will also see my preference pretty easily.

Amazon WebStore:

  • $59.99 monthly fee plus a 7% FVF (Amazon calls it a commission, which is more accurate) You can put an unlimited number of items in your Amazon WebStore for no additional cost. You can also have multiple WebStores for no additional cost. The 7% fee on each sale also includes any transaction related fees including merchant fees.
  • It has a shopping cart and uses the same technology that has made Amazon an online retail leader. You can merchandise your products (offer discounts, highlight specific products) and have access to effective marketing features like product recommendations, customer reviews, and recently viewed items for your own store.
  • Lots of flexibility with the look and feel and you don't have to be a "techie" to get up and running.
  • Amazon's close to 80 million active users can buy on your WebStore with their existing Amazon account and your customers are protected by the Amazon A2Z guarantee.
  • Designed for SEO (Search Engine Optimization) Helps your items show up in Google and Yahoo natural search.
  • There is no Amazon WebStore search and your items are not available on Amazon.com so with a Webstore you would have to do marketing yourself.
  • You get more margin control because you are not competing directly with other sellers in search this gives you flexibility in your mechandising and promotions.

eBay Store:

  • Different monthly fees based on exposure level and features. I will use the Premium Store (formerly Featured Store) for this comparison as it is the closest to an Apples to Apples comparision. Premium Stores have a monthly $49.95 fee, eBay also charges 3 cents per listing for items with a sale price of $24.99 or less, 5 cents a listing for items priced $25 to $199.99 and 10 cents a listing for items price $200 and up (these are the new listing fees that begin on March 1st.) Each listing runs for 30 days, so if you relist after 30 days you will incur the listing fee again. eBay also charges 12% FVF on the sale of each item, this does not include transaction related charges like PayPal or merchant services etc. When you add PayPal fees or merchant fees to the mix your total fee could be as high as 16%.
  • eBay Stores do not have a shopping cart, which can make it difficult to merchandise your items.
  • A Featured Store gives you 10 custom pages: "Use customizable pages to boost your brand, communicate store policies, and connect with customers."
  • eBay Stores give you a feed to submit to Google Product Search
  • eBay Stores get limited exposure in eBay Search (When 50 or fewer CORE listings are found eBay will display up to 50 related Store listings and lowest price generally gets the sale but store items are competing with CORE items for exposure.
  • Store Items to get exposure in Google natural search
  • Lower prices get the sale on eBay because you're competing directly with other sellers in search.

Okay, so now that we have seen the two different stores and their features and benefits, lets look at what happens when a seller of widgets has 1,000 items to sell and all of them sell for $24.99 in price (for ease of comparison they both have free S&H) and they sell 300 items per month. So lets look at the fees a seller would incur in this scenario. In both cases the seller sold $7,497 worth of widgets in the month and after subtracting COG (cost of goods) they were left with $3748.50 in Gross profit because they had a 50% Gross Margin. (I'm just rying to make the comparison easy to understand) So now lets consider the eBay Stores and Amazon WebStore fees as a Marketing Expense and call it COS (Cost of Sales)

Amazon Webstore:

  • $59.95 per month fee, no listing fees, unlimited items, pages etc. 7% FVF. The total monthly cost on the Amazon WebStore would be: $59.99 plus $524.79 FVF for a total of $584.78. (COS) or 7.8% of Sales leaving the seller $3,163 in Gross Profit.
  • In the case of the WebStore if the seller wasn't able to drive enough traffic to their store to sell $7497 worth of widgets their total cost would be $59.99 plus whatever they spent on marketing.

eBay Store:

  • $49.95 per month for Premium Stores, 10 Custom pages, no shopping cart, 3 cents per listing and 12% FVF. The total monthly cost on the eBay Store platform would be: $49.95 plus $30 for listing fees ($.03 x 1,000 listings) plus $899.64 FVF and an estimated $299.88 in PayPal fees for a total of: $1279.47 COS (cost of sales) or 17% of sales, leaving the seller with $2,469.03 in Gross Profit.
  • In the case of the eBay Store, if the seller didn't get enough exposure in search to sell $7497 worth of widgets their total cost would be $49.95 plus the $30 in listing fees for a total of $79.95 (The eBay Store provides the perception that you don't have to risk money marketing your items.)

So the major difference I see, is that eBay takes the percieved marketing risk out of the equation. The Amazon WebStore seller may have to spend $694.69 or more in Advertising etc. to get the same sales as they would in an eBay Store. The difference being that the customer who buys from you at your Amazon Webstore is your customer and you can offer them deals to your hearts content. The marketing expense becomes customer acquisition rather than strict advertising.

On eBay the customer is eBay's and they place limits on your communication with that customer and you will have to pay the same amount in fees if that customer buys from you again, everytime that customer buys from you again. With an Amazon WebStore your marketing expense is going towards getting new customers rather than selling to your old customers. Developing a brand that you benefit from not Amazon.

With the Amazon WebStore you become an independent online seller who controls your own destiny, rather than having to jump through hoops with every change made by eBay. The beauty of this is, you can still sell on eBay by using CORE for those items that are best suited for that platform; if you choose.

I've been over the math several times so if you see any errors please let me know. Remember the comparision and the numbers were just to show the difference between the two platforms (your results may vary) :)

Update: I forgot one very important point: With an Amazon WebStore you can use Yahoo's PPC (PayPer Click) advertising program to reach out to eBay's buyers. In many cases PPC ads get better exposure than eBay Store listings.

Just my 5 cents!

Takeaways For Sellers, From the Amazon Q4 Earning Call

Amazon, in my book, has things dialed in. Sure the share price took a dive after hours yesterday but it recovered this morning and is now off less than 1% from yesterday's close. I'm not really going to comment about the share price, instead I want to look at how Amazon views 3P Sellers, based on quotes from their Earnings call. The entire transcript is available from SeekingAlpha.com

I loved this quote in regards to Amazon's 3P sellers: "We have our sellers, which we view as partners and customers and we’re trying to improve that experience"

I've often mentioned that eBay needs to look at their sellers this way. Over the last several years, the relationship between management and the seller community has soured.

In response to a question from Bob Peck of Bear Stearns, regarding possible reductions in take rate to retain and grow their 3P business, Amazon's CFO Thomas J. Szkutak had this to say: (the bold is mine)

"I would just say that this is such an intensely competitive environment and it has been from the very beginning, and we have lots of competitors. So it’s -- for us, the way we think about our seller business, the business you are asking about, is we think of our sellers as a customer set. We try to figure out what they want and we try to figure out how to give it to them.

We know that the number one thing that sellers want is sales. We also know that these -- the market that we operate in, and we are very grateful for this fact, is a very, very large one and in our view, and we’ve always said this, and I don’t think it’s going to change, is that there’s room for lots of winners.

We have a strategy that we are very, very focused on. We’re not changing it. We like our strategy and we are just going to stay heads down. One of the great examples I can give you for trying to drive sales for sellers is the combination of fulfillment by Amazon and Amazon Prime.

I talked about this just a couple of minutes ago but it’s a very good combination for sellers and as sellers continue to sign up for fulfillment by Amazon and as our buyer customers continue to sign up for Amazon Prime, that combination is going to be very good for our buyer customers and it’s going to be very good for our seller customers as well, and we love that. "

Let's take a look at this quote:
  • First off, Amazon considers their 3P Sellers to be customers and it isn't just lip service. eBay on the other hand rarely, if ever, speaks of Sellers as customers and the perception from eBay sellers is that they are more of an annoyance than anything else.
  • Amazon understands Sellers "We know that the number one thing that sellers want is sales" eBay thinks it is about fees. Sellers want value for their fees. They get that value at Amazon and not at eBay. When sellers are not getting the sales, they will bitch about the fees. Increase their sales and they will stop complaining about fees. It is that simple.
  • Amazon trys to drive sales for sellers and creates program like FBA to give sellers access to their Amazon Prime customers. I know this from personal experience because I use FBA and I now have access to a completely different customer set.

I'm excited about the direction Amazon is taking and I look forward to the years ahead as they expand their offerings for Sellers.

The question, observers of Amazon and eBay need to ask: Why are sellers willing to put up with a more restrictive marketplace and pay a higher FVF to sell their items? The answer "Sales" and the fact they only have to pay Amazon after they have booked the sale.

Update: Actually its not so much of an update, as an exclamation point. I love this quote from Scot Devitt of Stifel Nicolaus "To us, Amazon.com is the Wal-Mart of the 80s, the Target of the 90s or the Costco of the early 2000s, and is a must-own security,"

If you are an online seller wouldn't you want to hitch your ride to a company like that?


Just my 5 cents

Wednesday, January 30, 2008

Auctionbytes Opened the Phones on Feedback!

I wrote my post about feedback earlier today and apparently my position is in the minority. I went to Auctionbytes to listen to sellers venting about the feedback changes and was amazed.

If you have 9 minutes this is very interesting. Click here for the details.

Amazon Has Boffo Q4, Guides For Great 2008, But...

Amazon beats the Street for the Top Line and meets the Street estimates for EPS (Earnings per Share) and provides 2008 Guidance that beats the Streets estimates and the share price is down 11% after hours. Huh? Oh yeah, there's that pesky little metric called operating margin that dropped by 7 tenths of a percent Y/Y.

"The fourth-quarter gross profit margin fell to 20.6 percent from 21.3 percent a year earlier and 23.4 percent in the third quarter."

Unfortunately, I wasn't able to listen in on the Earnings conference call, so I will have to wait until the transcript is available to see where that pesky little .7% went.

Maybe I look at things a little different than Wall Street, but when I compare Amazon's growth story to eBay's, I come up with prefering Amazon over eBay every time.

Tell me something, my wise readers and professional investors. eBay is far more profitable than Amazon, but their growth is slowing and yet they sit on nearly $5 Billion in cash rather than re-invest it. After earnings their share price goes down but not significantly (after all, it is already near the 52 week low it established in mid January). Amazon on the other hand, has a fantastic Q4, guides to a very good 2008 (especially in light of fears of recession) and its share price tanks in After Hours trading (down 11% at the time of this post) Amazon reinvests in their business on an ongoing basis and yet they are punished by the market. What give here?

I don't own shares in either company and I'm a novice investor, but the way I look at it Amazon just keeps growing (the law of big numbers doesn't seem to have affected them) and is earning more each quarter. Isn't that a good thing? I would be investing in Amazon long-term, though today I would have taken a huge hit.

eBay, on the other hand, is very profitable but the growth is slowing (the law of big numbers appears to be affecting them) and the only way I would invest in eBay is if they were paying a dividend (I mean, why sit on $5 Billion when you could be reinvesting it in your business or acquiring other businesess to stoke that growth.) I know they've bought back nearly $4 billion worth of stock already and will buy back another $2 Billion but that doesn't seem to have affected the share price. So, since eBay is no longer a growth story why would someone own their stock?

I'm sure I'm missing something here and would greatly appreciate those of you who know more about investing, to explain this to me. Who would you put your money behind, long-term?


Just my 5 cents!

Let the Games Begin! The Feedback Wars

I was looking around the eBay message boards, to see what sellers were saying about eBay's announced changes and it seems clear to me that the Feedback changes are the most talked about.

I've held off writing about Feedback before because I'm sure I will get lots of comments calling me an idiot, but let me give you a little perspective. When I sold on eBay, for a short period in the summer of 2005, I had passed JayandMarie in Feedback. I believe it was 250,000 or something in that neighborhood (I'm sure Jay would know). I reached that level with a 99% FB rating (this was years before DSRs) I mention that to point out that I know a little bit about Feedback on eBay. GlacierBayDVD has been closed since Jan of 2006 and it is still in the top 20 all-time in feedback on eBay.

So when eBay announced that sellers will no longer be allowed to leave negative or neutral feedback for buyers, I smiled. I knew exactly what was going to happen -- sellers would revolt and would find ways to get around the system if possible.

Feedback is so ingrained in the eBay ecosystem that the announced changes in feedback are more worrisome for many sellers than fee changes themselves.

Okay, so here goes -- I welcome opposing points of view. I like the changes eBay has made to Feedback. Here's why:
  • 100% feedback is not real feedback. If buyers are afraid to leave negative feedback for fear of retribution then you are not getting accurate feedback. This is why buyers began using neutrals to express their dis-satisfaction for a transaction. If you take away the fear of retribution you will allow for actual, valuable feedback.
  • At GlacierBayDVD we always gave positive FB as soon as the customer had paid. In 5 years I maybe gave 100 negatives to buyers (in over 500,000 transactions)
  • Sellers are concerned that if they can't retaliate, they will get more negs and they will soon see their accounts suspended. This is a valid concern and eBay needs to evaluate their suspension rules to take this into consideration becasue feedback ratings will drop across the board.
  • Sure, this will finally end the reign of the 100% FB sellers but they will still rate higher than the bad sellers and isn't that what feedback was meant to do, provide transparency and increase confidence that the transaction would be completed to your satisfaction.
  • Look at the ratings for DSRs, the vast majority of buyers rate 4 or better and they are anonymous and can't be retaliated against. The same thing will happen with feedback once the fear of retaliation goes away.
  • Sure there are going to be crackpots, unreasonable buyers or those who try and extort concessions to avoid a negative. Let me tell you from experience. The number is very small and it won't affect you like you think. We had a customer service policy at GlacierBay that if a buyer threatened negative feedback in exchange for some concession on our part, we told them go ahead and leave the neg. Many of them did, but we survived just fine. We just added their id to our BBL (Blocked Bidder List) and moved on.

My suggestion to sellers, is to concentrate on adjusting your business to the new fee structure, Best Match and Finding 2.0 and let Feedback take care of itself. eBay will need to adjust their algorithm to account for a decrease in feedback across the board because the numbers will drop for everybody.

I may not respond to each comment left on this topic, but I do welcome your comments even if you think I'm full of it.

Just my 5 cents!

Etsy.com is Making a Move, Secures $27 Million

Etsy is an online commerce site for Handmade and Craft items and has really developed a very nice loyal following and apparently they are close to break-even and now getting ready to grow. According to CNET:

"Co-founder Robert Kalin announced in a blog post Wednesday that the company has picked up an impressive $27 million in Series D financing.

The venture funding comes from existing investors Union Square Ventures and Hubert Burda Media, as well as Accel Partners' Jim Breyer, who will take on a seat on Etsy's board of directors.
Etsy is "almost break-even" when it comes to profits, Kalin admitted in his blog post, but it does have 650,000 registered users, 120,000 of whom are classified as "sellers." The company employs about 50 people, and last year opened the Etsy Labs community space in a converted industrial space in Brooklyn."

Please read the entire post at CNET.

The question I have about Etsy, could this site become another StubHub type acquisition for eBay or possiblyAmazon, if they wanted to go after the Marketplace business and use Etsy to reach out to all of the disaffected collectibles and small eBay sellers.

Thank You, Thank You, Thank You!

I'm almost giddy this morning, because when I checked yesterday's Blog Utopia statistics on Google Analytics I had for the second time in a week reached over 400 unique visitors and 750 page views. Why am I giddy? Year over Year that is a 4000% increase in unique visitors and a 6300% increase in page views, granted the growth is off of a very, very small base but it is still growth. Reminds me a lot of the early days of Glacier Bay DVD (except with GB I was making money).

Here are some other stats. (Pardon me for my exuberance)
  • Page Views per visit grew from 1 to 1.92 (that's pretty good since a blog has one page of current posts)
  • Avg. Time on the Site was up to 5:42 from 1.15 (that may have been do to eBay's announcements yesterday and my frequent posts).
  • Of yesterday's 402 unique visitors, 39.6% were new to the blog.
  • RSS Subscribers have increased from 2 to 174 and 72% of subscribers interacted with the blog yesterday by reading posts in their reader or linking to the blog from their reader.
  • 28.86% of traffic comes direct through the browser
  • 35.57% from referring sites
  • 35.57% from Search (3.8% of that comes from Google Organic search)
  • 25.88% of the traffic from search comes from keywords "Randy Smythe" or Randy Smythe Blog
  • 4.4% of yesterday's visits came from the Amazon network (Nice to see you on the blog)
  • 2.5% came from the eBay network (Most of my regular eBay readers were kind of busy in Washington DC)

Okay, I know this post seems very self serving, but I'm showing you the stats as a thank you for your support. I had been told by several professional bloggers that it can take up to 2 years before you get any real traction from your blog. It still isn't generating much in revenue but that will come as I continue to grow. I started the blog in Oct of 06 but really didn't commit to it until January of 2007 so it appears that I am ahead of plan.

I would really like to thank eBay, Amazon, Yahoo, Overstock, ChannelAdvisor and especially online merchants for giving me plenty to write about. Also, I would like to give out special thanks to Ina Steiner, Scot Wingo, Evan P (that's how everybody knows him) Adam N. and my buddy Kevin Harmon from Inflatable Madness for your support in my efforts. And to my friends at eBay and Amazon who would prefer to be nameless (you know who you are) Thank you.

My goal is to discuss what is happening in the world of ecommerce and share my thoughts with you. Thank you so much for making my first full year a huge success.

Update: Crap, I also forgot to thank my Analyst pals (again you know who you are).

One Last Update: I feel like I'm excepting an Academy Award and I keep forgetting to thank people. Thanks to my regular readers my commenters --Anonymous is the most frequent commenter, Thanks :) Also, thanks to my blogger buddies who link to my posts. There, no more updates. (If I forgot anyone I apologize)

Amazon Reports Q4 Earning Today After the Bell!

All signs point to a fantastic fourth quarter for Amazon, but many investors are more concerned about the rest of 2008. With fears of a recession and what impact that might have on online retail, Amazon's guidance for Q1 and the rest of the year will go a long way to determine the direction of the share price.

Some key things to look for:
  • Growth in 3P sales both in the US and Internationally
  • Growth in Amazon Web Services
  • Growth in Amazon Prime subscribers
  • Will they announce anything that will tweak eBay management like 3p fee reductions or something similar. (Not that tweaking eBay management would be their motivation)

They will announce earnings after the bell today and hold a conference call at 2:00 PM PST

Tuesday, January 29, 2008

eBay Express UK is Closing Up Shop.

Lost amongst the news coming from the ecommerce summit in Washington DC, is the announcement that eBay Express in the UK is closing down. Here is the post I found at Tamebay.com. I'm wondering how much longer they will keep Express in the US and German markets now that they have decided to shut down the UK site.

How Much Longer Can Yahoo Go It Alone?

Yahoo's share price is down 10% after hours to $18.55 on weak guidance for Q1 and the rest of 2008. At some point this stock will be cheap enough for someone to come in and acquire the company. How much longer can Yahoo management wait?

The Yahoo group of sites still gets the most traffic on the web and the company is sitting on $2 billion in cash, but they continue to tread water and lose ground to Google. I honestly cannot see them ending 2008 as an independent company. Could a LBO (leveraged buy out) be in the works for Yahoo? Enquiring minds want to know.

eBay UK Fee Changes are Much Different Than in the US

Here is a nice post from my friends over at Tamebay.com in the UK about the changes coming to eBay UK. Please read the post for all of the details but here are a couple of things I would like to point out:

  • Gallery fees remain the same. (In the US they are free)
  • Media categories have their own specific fee structure. (This is what the US needs to adopt.)
  • Higher FVF discounts for good power sellers. In the US the discounts run from 5% to 15% based on DSR rating. Here is the UK FVF fee discounts.

"FVF reductions for good sellers

High-volume business-registered sellers with a score of 4.6 or more on all DSRs over the last 30 days, will be entitled to a discount of 20% off their FVFs. Members of the PowerSeller program will receive higher rates of discount depending on PS level:

Bronze: 20% (sorry, Bronzies: no extra for you )
Silver: 25%
Gold: 30%
Platinum: 35%
Titanium: 40%

In other words, Powerseller level now really is worth something. This is a change unique (as far as I know!) to the UK, and is not happening in the US. "

Thanks to Chris and Sue of Tamebay for the info.

Follow Up to Media Sellers Take it in the Shorts!

Okay, I've had a few hours to calm down and I do have to say that these moves that eBay has made will be beneficial to the vast majority of eBay sellers. Free Gallery for those sellers that already use it is a great thing.

My previous post was specifically about Media Sellers and low ASP commodity product sellers whose margins are already as low as they can go. I was a little amped up in my previous post so now that I've calmed down let me give you a more sensible read on the situation.

The changes eBay is making will cause some short-term pain for Media Sellers but they will adjust and either stop selling on eBay or use it strictly as a cost recovery vehicle. In the short-term I see these actions from Media Sellers:
  • Fewer media listings in CORE and an increase in store listings. If the reduction in CORE listings opens up store items to buyers (more visibility) this will be a good thing. The reduction in Store listing fees tells me that eBay wants media items to be listed in stores. If I list 100K listings in store today it costs me $5000 on March 1st it will only cost me $3,000. That's a nice savings and in exchange I will pay eBay 20 cents more on every $10 in GMV (10% FVF moving to 12%)
  • The problem with that idea. The increase in FVF for stores is now only 3% less than Amazon's 15% FVF but I can list 100K listings on Amazon for free. On eBay I still have to pay $3,000 to list the same number of items. Does this make sense?
  • IMO, eBay should adopt category specific pricing for Media and other like categories that ends listing fees and raises FVF to 15%. After all their new Finding 2.0 and Best Match are supposed to be able to handle the increase in listings.

My biggest takeaway and probably why I got so upset when I heard the news. The amount of effort to do business on eBay is 10 times what it takes to sell on Amazon and with the changes that have been made over the last 2 years I certainly wouldn't find it worth it.

First it was re-balancing CORE with the Store fee increase - That didn't work, so now we have a new plan. What is it going to be next year? I'm hoping that the changes are beneficial for other categories on eBay but if I am a Media Seller, I have to ask the toughest of all questions. Is this worth all the pain and aggravation?

Just my 5 cents!

eBay Media Sellers Take it in the Shorts!

eBay just announced their new fee structure this morning, at the Ecommerce Forum in Washington DC and IMO have effectively screwed media sellers, as well as other commodity product sellers who sell low ASP items. Let's look at some examples for listing in CORE with a Fixed Price: (Free Gallery does not affect media sellers because they rarely use Gallery anyway)

Previous Fee Structure ($9.99 sale in core at 33% conversion)
  • Listing Fee 40 cents x 3 listings before it is sold = Total Listing Fees = $1.20
  • FVF @ 5.25% = Total FVF = 52 cents
  • Total fees to sell a $9.99 DVD were: $1.72

New Fee Structure ($9.99 sale in core at 33% conversion)

  • Listing Fee of 35 cents x 3 listings before its sold = Total Listing Fees = $1.05
  • FVF @ 8.75% = Total FVF = 87 cents
  • Total fees to sell one $9.99 DVD are: $1.92

How is that for a decrease in fees?

Now lets look at what will really happen. Media sellers have traditionally lowered prices on their items to be advantaged in search (lowest price gets the sale) while raising S&H fees to make up the difference. This strategy will no longer work because they will be disadvantaged in search (No more high S&H), so sellers will need to raise their item price and lower their S&H, so that they will show up in search. Let's look at one example:

  • Item currently sells for $9.99 with $5.95 for S&H for a total price of $15.94. Total listing fees (33% conversion) $1.20 and FVF is $0.52 cents for a total fee of $1.73. The buyer pays $15.94 for their item including S&H

Under the New fee structure:

  • Item price is raised to $12.99 with $2.95 for S&H (to make sure the item shows in search) for a total price of $15.94. Total listing fees (33% conversion) are now $1.65 (55 cents x 3 listings)because the item is now listed in the higher ASP tranche and the new FVF is $1.14 for a total fee of $2.79. The buyer still pays $15.94 for their item including S&H

With the new restrictions based on DSR rating and S&H forcing their hand to change their strategy, the media seller will now pay $2.79 to generate $15.94 in revenue, while at the old rates they paid $1.73.

If a seller decided to keep pricing and S&H where it is today, they will be now disadvantaged in search for the high S&H and won't sell the item because of lack of exposure. Remember, in both scenarios the buyer pays the exact same total price for the item, but they feel better about not having to pay excessive S&H in the new approach.

Media sellers, also traditionally have lower DSR ratings and a high volume of transactions, so if they are currently close to the new 4.5 limit for DSRs (to be disadvantaged in search) they will never be able to raise that rating, it will only go down.

In essence, with these changes, eBay media sellers will have to work harder then they do now, to generate the same sales as before and pay eBay more money for the privilege.

Compare this to Amazon or even Half.com, where this same seller sells an identical item for $12.99 plus Amazon's $2.98 S&H and pays 15% FVF for a total fee of $1.94. 100% of this fee is on the back end (after the sale) while on eBay, the seller is still risking money on the front end (listing fees). If he/she only sells 1 item for every 4 times they list (25% conversion) then their fees increase even more.

This is just one example of the effect these changes will have on Media sellers. I chose this group because they are near and dear to my heart. This is not a good day for many of my friends.

eBay would be better off just making Half.com the default listing tool for media on eBay.

Update: Blogger is having some problems today so I'm having trouble posting and answering comments.

I know my example above, is an example of fee avoidance, and the new rules put in place will stop this strategy. I agree with Cliff (in the comments below) that this is better for the buyer experienence. Many buyers prefer the approach where S&H is reasonable and the item price is priced properly but please realize that in both case the buyer pays the same total price.

So the deal he/she thought they were getting before is still the same as the new deal, but eBay gets more money. The strategy is certainly gaming the system, but it is more as a nessisty for survival then anything else. Media sellers can barely survive, with their current margins on eBay and now will most likely stop listing in CORE all-together.

Media prices on eBay will go up, S&H will go down and eBay will make more money. Sellers will need to raise prices substantially to make the same money as they are today.

Update on the Update: I'm still having trouble with blogger so forgive me if i use the post to respond to comments. Cliff, you are correct. This will be a short-term negative for media just like the Store fee increase of 2006. I am certainly not very objective when it comes to media issues.

I think these changes are good for those sellers who previously used Gallery as they their listing fees just went down but for media sellers who never used Gallery before this is a fee increase. eBay needs to adopt category specific pricing for Media and other low ASP commodity items. The simple approach would be to adopt Amazon's fee structure for media items.

Just my 5 cents!

My Early Thoughts About the New eBay Changes!

I'm listening to the webcast of the announcements and looking at the details and well my first response is that this will not exactly go over well.

Key friction points.
  • Media Sellers are going to be pissed.
  • Store sellers will get reduced listing fees but see a 2% increase in FVF.
  • No more negative Feedback for buyers. (This will not go over well)
  • Power Sellers now rule the world.

I'm going to have to sit down and digest these changes and I'll give you my take later today. This is a big day at eBay with lots of changes. Some sound good in theory but others do not. Stay tuned for more.

Rewards and Standards for the New eBay

There is a lot of information to get to so I may be making multiple posts so that you can get the information as quick as possible.

Instead of linking you to the announcement, I'm going to just copy and past the announcement here:

Rewards & Standards

Rewards for great sellersHow are great sellers measured? Customers decide. They give sellers more stars in detailed Feedback if they are satisfied. These Detailed Seller Ratings (DSRs), along with other indicators of customer satisfaction, will influence seller rewards and standards.

Search Visibility
PowerSeller Rewards & Standards
Safe Payments
Feedback Changes
Coming Soon: Seller Dashboard

Search Visibility
Search visibility will be tied to customer satisfaction. Customer satisfaction is reflected in a combination of DSRs, Feedback, and fewer complaints filed of an item being "significantly not as described" (SNAD) or "item not received" (INR). In March 2008, Best Match will become the default sort in search to give more buyers the results they want and will:
Increase exposure for sellers with DSRs 4.6 and above and at least 95% customer satisfaction in the last 30 days.

Decrease exposure for sellers with low customer satisfaction or Shipping & Handling DSRs. PowerSeller Rewards & StandardsWe're taking steps to give new meaning to PowerSeller status on eBay. Starting July, a score of 4.5 or more on all DSRs (based on the last 12 months) will be required for membership in the PowerSeller program. We will reward PowerSellers with fee discounts and other benefits for their record of excellent customer service.

PowerSeller discounts on Final Value Fees (or Transaction Services Fees)
DSRs of 4.6 or more (based on the last 30 days): 5% Final Value Fee discount
DSRs of 4.8 or more (based on the last 30 days): 15% Final Value Fee discount

Expanded seller protection from PayPal beginning February 2008
Protection for any shipping address, not just a confirmed address
Unlimited annual coverage, not just $5,000 per year
Global coverage, extended to 190 countries around the world

Expanded and Extended Unpaid Item (UPI) Protection Program
Expanding to single-item fixed price listings
Extending refund of Feature Fees permanently

Safe Payments
To help ensure more buyers are protected, in some cases we'll require sellers to offer either PayPal or a merchant credit card to customers. PayPal buyer protection covers most qualified transactions up to $2000.00 USD.

Sellers will only be required to provide this safe payment option to customers in certain situations:

For listings in riskier categories, like computers and cell phones
If the seller has 5% or more dissatisfied customers
If the seller has less than 100 Feedback
In a small number of cases (fewer than 5% of all payments on eBay), PayPal will hold payment funds until either the buyer has left positive Feedback or 21 days have passed without a claim.Feedback ChangesThe eBay Feedback system was designed to provide a simple, honest, accurate record of member experiences. Focusing on customer service includes doing everything we can to grow customer confidence in our sellers.
  • Buyers will only be able to receive positive Feedback.
  • Positive repeat customer Feedback will count (up to 1 Feedback from the same buyer per week.)
  • Feedback more than 12-months old won't count towards your Feedback percentage.
    When a buyer doesn't respond to the Unpaid Item (UPI) process the negative or neutral Feedback they have left for that transaction will be removed.
  • When a member is suspended, all their negative and neutral Feedback will be removed.
  • Buyers must wait 3 days before leaving negative or neutral Feedback for sellers with an established track record, to encourage communication.
  • All Feedback must be left within 60 days (compared to 90 days today) of listing end to encourage timely Feedback and discourage abuse.

Buyers will be held more accountable when sellers report an unpaid item or commit other policy violations.

Coming Soon: Seller Dashboard

See how you're doing, at-a-glance! Changes in Feedback and measures tied to Detailed Seller Ratings (DSRs) and the percentage of satisfied customers will help sellers understand and manage their role in serving and growing their customer base. We want to help sellers know where they stand. Soon, we'll be making available a personalized tool to help you understand your:


PowerSeller status
Billing status
Discount qualification
Search standing
Policy violations and potential risk of restriction
Buyer satisfaction (comprised of a combination of: DSRs, Feedback, INR and SNAD complaints)

Change is Coming -- eBay Changes Announced.

Bill Cobb will present the specifics of the changes that John Donahoe touched on in the previous post.

While I wait for Bill's info here are some changes that Ina Steiner has posted. Here is Bill's announcement


I will discuss the changes in more depth later this morning. The new fee schedule is available here.

Announcements, Announcements, Announcements

eBay's Ecommerce Forum began with John Donahoe opening the conference by addressing sellers. Lots of history and thanks for Pierre, Meg, Bill Cobb and Sellers. The event was attended by 200 Top eBay Sellers. Donahoe will touch on the changes but not provide many details. Bill Cobb will come along to provide the details shortly.

Here are some of the key takeaways:
  • Lorrie Norrington will replace Bill Cobb as President of eBay North American Operations.
  • Rajiv Duhta will be taking over for John Donahoe as President of eBay Marketplaces.
  • Scott Thompson will be taking over for Rajiv at PayPal as President.

Buyers want value and selection with great service. For eBay to continue to thrive we all have to be committed to what buyers want.

Sellers want buyers, increased traffic and to be rewarded for developing repeat business and servicing the buyer well.

  • eBay will focus on success rather than listings. Reduce insertion fees for auctions, Fixed Price and Store items.
  • Gallery will be free.
  • Reduction of listing fees will be up to 50% and eBay's overall take rate will come down. The majority of sellers will see lower fees.
  • Reward great seller performance. The level playing field is no longer. eBay is committed to small sellers as well as large sellers. Great sellers will discounts based on buyer satisfaction with up to 15% off FVF.
  • Beginning in March search will advantage sellers with good DSR ratings. "Bad sellers", based on DSR ratings will be disadvantaged.
  • In July, to achieve Power Seller status will need to meet minimum DSR standards.
  • Feedback will be revamped to eliminate Feedback extortion (my words) Sellers will no longer be able to leave Negative feedback for buyers.

Monday, January 28, 2008

2008 eBay Top Seller Summit Webcast

Ina Steiner has just posted on her blog that eBay will be webcasting both the Keynote speech and the Q&A Session that follows from the Top Seller Summit in DC (eBay calls it the eCommerce Forum) According to Ina the time for the Webcast will be 9:00 AM EST (Crap that means I have to get up early).

Click here for all the details

Blog Utopia - My Plans for 2008

As January comes to an end and we begin a new era at eBay with John Donahoe as the President and CEO, I've decided to share some of my goals for 2008 here at Blog Utopia. (Mostly because there won't be any real news to report until tomorrow and I was bored).

  • I will expand my coverage of Amazon's ecommerce offerings, since it is clear that Amazon has won the "perception battle" with eBay.
  • I hope to be more positive about eBay and the future for 3P sellers/merchants on that platform.
  • If the changes being made at eBay are not beneficial for sellers, I would suppose that I may become more negative about eBay. (We'll have to wait and see)
  • I will continue to speculate about what is happening in the world of ecommerce. I hope to expand my network of contacts to get more detail on what will be happening in the world of ecommerce.
  • I won't be doing too many "How To" posts, but I will link to appropriate sources for that information.
  • Once I figure out what Yahoo will eventually become, I may increase my coverage of their ecommerce offerings.
  • I hope to be attending more industry events so that I can give you the complete scoop on ecommerce.
  • My readership has grown 1500% Y/Y (on a very small base) so I will endeavor to increase readership more in the coming year.
  • I've stated in the past that 2008 will be the "Year of the 3P Seller" and I will do my part to make that happen.
  • I would encourage my readers to comment more on Blog Utopia posts. I would like to develop a dialog on what's happening out there and your perspective is greatly appreciated.
  • I going to continue to have fun.

Those are just a few things that I'm planning for this year and I'm also open to suggestions on what I should cover. So contact me or comment on what you would like to see.

Sellers/Merchants, this will be the year when Marketplaces begin to compete for your business. eBay is already doing that and I'm sure there will be more to follow. I hope to do my part to make this happen.

Just my 5 cents!

Big Week this Week!

It is going to be a big week for news this week as eBay announces fee changes for 2008 and Yahoo, Amazon and Google announce earnings.

  • January 29th and 30th - eBay's eCommerce Summit with about 300 top sellers. Scot Wingo will be at the conference and I'm sure sharing little tidbits as they become available.
  • Jan. 29th - Yahoo announces Q4 earnings after the bell. Expect to hear about job cuts.
  • Jan 30th - Amazon announces Q4 earnings - I would look for a huge Q4 for Amazon but conservative guidance for the rest of 2008.
  • Jan. 31st - Google announces Q4 earnings. Look for a good Q4 but nothing spectacular.

As news and info become available I'll post about it here at My Blog Utopia.

Saturday, January 26, 2008

Meg Whitman and John Donahoe on CNBC - Video

In case you didn't get a chance to see the interview, when it ran shortly after earnings, here is the link for your viewing pleasure. Meg Whitman on Retirement

This originally ran on CNBC's "After the Bell" Wed, Jan 23rd.

Friday, January 25, 2008

Free Trial on the Amazon WebStore

Amazon has been trying to get traction with their WebStore product since it was announced last year. I've looked into the service and it certainly has some nice features but while I don't think their pricing is out of whack, I would certainly like to get more flexibility and benefit for that price. So here is my wish list.

I would jump at an Amazon WebStore if:
  • The $59.95 monthly fee included my Pro Merchant account so that my net fee increase would be $20 a month.
  • If I could get the same FBA fulfillment pricing as I currently get for my Amazon.com orders (My FBA items sold on Amazon.com get much better fulfillment pricing than orders from outside marketplaces or websites)
  • I would have no problem paying the 7% FVF if my Webstore items were available in my Amazon.com storefront.
  • I would also like to see a special offer for ClickRiver ads if they were directed to my Webstore.
  • Also, I would like to tie my BuybackDirect.com website to my Amazon Webstore so that I can expand my consumer "buy back" business. Just adding a link would be sufficient for now and maybe WebStore has this capability already.

If anyone at Amazon is listening, adding some or all of these capabilities would greatly increase my desire to open up an Amazon WebStore.

When you compare WebStore to its major Marketplace competitors (eBay ProStores and Yahoo Stores) Webstore is not too far off the mark.

Lets compare eBay ProStores to Amazon WebStore

  • eBay's ProStores - $74.95 per month up to $249.95 per month plus a 0.5% FVF. PayPal and CC processing charges are additional and can run up to 5% depending on volume also if you want more capability you have to upgrade your service from one program to the next.
  • Amazon Webstore scales without having to increase your monthly fee and includes payment processing in your FVF so if you deduct the 4 - 5 % for transaction processing your actual FVF is 2 - 3% Also it looks like with WebStore you don't need an advanced technical degree to get up and running.

How about Yahoo Stores vs. Amazon WebStore

  • Yahoo's Stores - $99.95 per month to $249.95 per month plus a 1% to .75% FVF. PayPal and CC processing charges are additional and can run up to 5% depending on volume, also if you want more capability you have to upgrade your service from one program to the next.
  • Amazon Webstore scales without having to increase your monthly fee and includes payment processing in your FVF so if you deduct the 4 - 5 % for transaction processing your actual FVF is 2 - 3% Also it looks like with WebStore you don't need an advanced technical degree to get up and running.

Amazon has a great deal more functionality then the other services as well:

  • Amazon's 60 million customers can buy on your WebStore using their Amazon account.
  • Ability to sell a wide range of additional product through Amazon's affiliate program
  • Your customers are protected by Amazon's A to Z guarantee
  • Lower up front costs
  • Net 2% higher FVF

The case can be made that Amazon's Webstore is a better value then eBay's ProStore or Yahoo's Store. So even if they don't add the fetures I listed above I am seriously considering it.

I think right now, if they rolled the Pro Merchant fee of $39.95 into the WebStore monthly fee I would be signing up this minute.

Thursday, January 24, 2008

eBay Top Seller Summit - 2008

eBay will be holding its Top Seller Summit (eBay calls it The eCommerce Forum), on Tuesday the 29th of January. My guess is this will be a very interesting meeting. I'm not allowed to attend because I'm now considered the media (although eBay PR never returns my emails), but I hope to get some tidbits from my spies at the conference.

It is widely expected that eBay will announce the new fee changes at the forum, though someone with the user name "In The Know" posted on Ina Steiner's blog that eBay would announce the changes to the community on Friday via the announcements board. Anyway you slice it, its a good bet that we won't have to wait much longer.

At this point I am cautiously optimistic that the changes may actually work, though I see it taking up to 6 months. I know that I have been very critical of eBay over the last 2 years but I'm hopeful these changes are the first sign that eBay "gets it"

What I do know, is that the online seller, after several years at the back of the bus, may be driving the bus sooner than many people think.

The Morning After!

After last night's eBay (Q4 Earnings) hangover, I was going to take a look at what the numbers and guidance really means for eBay sellers but Scot Wingo beat me to it. (Scot's post is a must read.) I guess that's one benefit to being on the East Coast; I'm still sleeping while he's writing. Damn you Scot!

So, instead of rehashing some of the points Scot made in his post I thought I would just touch on one big thing I thought Scot missed (nanner, nanner, nanner).

John Donahoe made this comment during the call:

"While we’ve made strides in these areas, I am clear that we need to do much more. We’ve taken a close hard look at the entire eBay buying and selling experience and we’re going to make breaks from the path where necessary to deliver the experience our users tell us they want. Watch for us to make some exciting announcements about feedback, new user protection programs, customer support and pricing over the next week."

And then later in the call he said this:

"I think our plans around customer loyalty go beyond just the couponing, that’s the one that’s going to hit the revenue figures. Our top buyers believe they are deeply loyal to eBay, they want to do more business with eBay and we need to make it easier for them to do that. That is where you see some changes to our feedback system. That’s where we are providing better customer support for our top buyers, that’s where PayPal can come in and provide them complete guarantees. "

So if I read the tea leaves correctly, it looks like eBay is moving towards an Amazon AtoZ type of guarantee. I can't wait to hear the details of that.

If I find anything else that Scot missed I'll be sure to post about it.

Just my 5 cents!

2008 - The Year of the 3P Seller!

With fears of recession in the wind and announcements of job cuts coming down the pike, I would look for growth in small business in 2008. As the corporate world becomes less secure, many will strike out on their own in the hopes of controlling their own destiny. Starting off small while still employed and learning the ropes, makes since in this environment. There are currently over 19 million sole proprietors and small businesses in the United States and million more worldwide. This number will increase in a recession and soon, very soon, the marketplaces will be competing for their business. eBay has already signalled that they will, by announcing fee reductions. Play.com charges lower fees than Amazon.com, Etsy.com charge lower fess than eBay. Those marketplace that can achieve critical mass in traffic will be reaching out to 3P sellers more aggressively in the years ahead. Power to the 3People! (Sorry, that sounded better in my head)

Amazon is aggressively courting SMB's (Small and Medium Sized Business) to sell on its platform, expecting to add nearly 40K high value accounts in 2008 and expanding globally. eBay, after years of trying to manipulate seller behavior with their 3 levers (I call them hammers) Price, Policy, Product has changed their tune to offering carrots instead. Sellers, on the eBay platform, whether they realize it or not, are getting back some of the power they gave up over the years. Organizations like PeSA and ECMTA should grow their membership in 2008 as sellers/merchants try to unite behind a common goal; selling their product.

One problem, in this scenario, is that both Amazon and eBay are courting high value SMB's because they drive the largest share of the business. The coming changes to eBay fee structure will change the dynamics of their business as larger sellers get the capability to scale on the eBay platform. Smaller sellers will still have opportunities on eBay but it will probably not be the quaint little "flea market" it has been in the past.

So where does this put the small online merchant or the part-time, extra cash, businesses that swell the ranks of eBay sellers? Increasingly, the moves made by Amazon and eBay will marginalize these sellers. Even though eBay will continue to be an auction business, the focus is shifting and auctions will be less of a focus in the years ahead. There is good news though, even though this may be a short-term negative for small sellers, this change in focus at eBay, will open the doors to other marketplaces like Etsy who can fill the void. Also, entrepreneurs who can harness the power of the small business will reap the benefits going forward.

Etsy, is a fantastic business for hand-crafted products and could easily expand to reach out to those small and part-time eBay sellers that will be affected by the changes on eBay and who cannot sell on Amazon because their category is not offered. Etsy, is growing and will become a force in the next couple of years. Others will follow, though they will be mostly fixed price marketplaces. I think the era of the Auction is over -- it ended when Meg Whitman made the announcement that she would retire.

3P sellers/merchants will soon be in the drivers seat and if they get organized, look out because they will take over the world. (Okay that was a little much, but you get my point).

Just my 5 cents!

Wednesday, January 23, 2008

More, More Live Blogging

Sorry about that I had to take care of some business (40 oz. of coffee will do that)

So I missed some of the other questions. Bob Swan is saying that they will re-invest in the marketplace. G&A leverage (may mean layoffs).

Donahoe - Listings growth with multi-item listings will become for prevalent so they are going to concentrate on sold items. (Amen)

Q. on Demand even in spite of the new marketin campaign.

Donahoe - Scale of the sites traffic up up 7% - More talk about the Buyer Experience. Improve the ease and safety on eBay. Not much on marketing. More online then offline (TV)

Bob Swan talking about the lesson they learned from their Non-GMV business to come up with their guidance for 2008

That is the end of the call. More as I get the transcript.

Just my 5 cents!

More Live Blogging.

I'm still trying to get the hang of this. Blogger doesn't seem to be the best tool for live blogging a fluid event but its all I have right now.

Bob Swan is still speaking


  • Talking about PayPal and Skype. Of course the numbers are good.
  • Skype to Skype minutes were up 20% Y/Y Skype Out minutes increased 10% Y/Y
  • Share buyback - Bought 3.2 billion shares already and have approval to buyback an additional 2 billion shares.
  • FX really helped
  • 2008 Guidance is pretty conservative, expect good growth from PayPal, Skype and non-gmv but the growth will be off 2007 levels
  • Operating margin should be 32% in 2008
  • I will go over the details after I have a chance to review the transcript. I can't type fast enough to get it all.
  • $2 to $2.85 Billion in Revenue for the first quarter

Q&A

Scot Devitt

Q. Talk about eBay Express?

Meg talking about eBay Express and saying it has had a succesful year. eBay Express was the right strategy but not showing it to everybody who visits the site.. More eBay express.

Q. On the coming pricing Adjustments exclude Gallery

John Donahoe - Fee changes will affect both Fixed Price and Auctions

Question on S&H

On S&H they will incentivise sellers to improve speed and price of shipping. (Not much new here, If you have good shipping prices and fast shipping DSRs you will appear higher in search)

Q. Will the Find technology help with the increase in listings.

John is talking about Finding and Best Match. And they have run tests in Korea and in France to handle the increased listings from insertion reductuions.

Q. Reward Loyalty of Top Sellers

John speaking about making it easier for top buyers and PayPal coming in and providing guarantees.

Q. What are the early metrics on what they are seeing in the Best Match test.

Donahoe - Best Match is not a Silver bullet - In France they are seeing positive results on the France site. Roll-out will be aggressive but consious of making big changes to this huge eco-system.

Q. Will Listing Fees be Zero or just reduced. Any colr on the changes.

Donahoe - Listing fees will shift the balance but there will still be insertion fees. Also talking about low listing fees in stores and use this learning to adjust things in CORE.

Q. From Bob Peck are fees going to be sitewide or category specific?

Donahoe, the changes will be sitewide changes and will be announced next week. Each country may be different.

Live Blogging eBay Q4 Earnings Call

I'm going to try to live blog as the earnings call moves forward:

John Donahoe is speaking (eBay's Best Days are Ahead)


  • Continue expanding Trust and Safety initiative including user protection which may mean that PayPal will make it easier for buyers to get protection on their orders. (more details to followin the coming weeks)
  • Looks like fee announcements won't happen during this earnings call.
  • The great re-balancing of 2006 from Store to CORE has now morphed into the great re-balancing of 2008 from Auction to Fixed Price. (No mention of store)

Bob Swan is now speaking on Q4 numbers. Everyone expected good numbers for Q4. I'm most concerned of the future. As soon as they start talking about 2008 I'll be back.

  • Bob's talking about pricing right now and says they will announce changes in the next couple of weeks.
  • They will make Gallery more attractive but no details.
  • It looks like the details will have to wait until the 29th when eBay holds the eCommerce event for Top Sellers.

Its Official, Meg Leaving March 31st

Here is the announcement for the Associated Press.

Here is Meg's announcement to the community.

EBay CEO Confirms She's Leaving, to Be Replaced by Exec Donahoe

SAN FRANCISCO (AP) -- Meg Whitman will soon step down as chief executive of eBay Inc., the online auction company that went from wobbly startup to multibillion-dollar household name in her 10-year tenure.

Whitman, 51, will be succeeded by John Donahoe, 47, who has been heading eBay's core auction and e-commerce businesses. The transition will happen March 31, the company said Wednesday.

Whitman said she will remain on eBay's board of directors.

"With humor, smarts and unflappable determination, Meg took a small, barely known online auction site and helped it become an integral part of our lives. We're all enormously grateful that Meg dedicated herself to stewarding eBay through its 10 most formative years," said Pierre Omidyar, eBay's founder and chairman.

Donahoe came to eBay in 2005 from Bain & Co., where he had previously worked with Whitman.
Update: It appears that Bill Cobb has resigned as President of eBay North America, this is according to the PESA/ECMTA message board.

Update of the Update: Here is the press release on the re-organization.

FYI - Meg Will Be Interviewed on CNBC After the Bell

In case you are curious. Meg will be on CNBC shortly after the bell. I guess I should have used Twitter for this.

The Quiet Before the Storm!

Sorry, couldn't resist that title. I'm just sitting here twiddling my thumbs until there is some actual news. The time is over for speculation its time for facts.

Here are the questions I would like answered (as if anybody cared):

  • Is Meg actually planing her departure?
  • Will eBay institute category specific pricing?
  • What are the early results of their 5 category test of Best Match?
  • Will they go to Zero listing fees and a higher FVF in stores?
  • Will they go to a flat, low insertion fee and a higher FVF in core? A flat fee would allow for higher ASP items to be listed in CORE at Fixed Price.
  • Will they make Gallery free?

That's all I can think of right now on one cup of coffee so check back in later to see what else I've come up with.

Just my 5 cents.

Listen in on eBay's Earnings Conference Call

eBay will be holding their Q4 Earnings Call today at 2:00 PM PST. Click on this link to listen in. eBay's Q4 2007 Earnings Call In addition to a lot of financial information about the 4th Quarter of 07 eBay management will be discussing guidance for 2008 and answering questions of analysts. I can't wait to hear how they handle the first question about Meg retiring.

There should also be some more detail on the fee changes coming to the marketplace this year. It will be a long call and should be worth your time to listen in. If you don't have time I will provide a link to the conference transcript once it is available.

Part of me thinks there has been such a build-up to these announcements that they won't seem that big after we hear them.

Tuesday, January 22, 2008

Should Jeff Jordan Replace Meg not John Donahoe?

I'm just throwing this out there for what its worth. I would think that eBay Board of Directors might at least consider Jeff Jordan to replace Meg Whitman. I'm sure that John Donahoe is Meg's hand picked successor but I believe the board should at least consider Jeff as the next CEO of eBay, Inc.

Jeff Jordan has been away from eBay for close to 2 years and I'm sure he is happy running OpenTable but could he actually be the right guy to take over for Meg Whitman when she leaves the company. He has the resume for the job and at one time was the heir apparent.

Jeff ran eBay's North American marketplace business in the good days and helped expand PayPal away from eBay. He is both an insider and now an outsider with a deep understanding of what make eBay tick.

I think the board should at least consider Jeff for the position, but I'm not holding my breath.

Just my 5 cents!

Deutsche Bank Drops eBay Target Price from 30 to 24

Deutsche Bank maintains their Sell rating and had this to say about the Q4 Earnings Call.

4Q Preview

eBay needs to beat our 4Q rev/EPS estimate of $2.12Bn and $0.40 by $53mn in revs and $0.02 in EPS, due to the weaker dollar. With listings slightly shy of our 543mn forecast, we think that a $50mn beat may be tough. On the '08 outlook, we think the company needs to: (1) move to final value fees vs. the competition; (2) spend in advertising to drive future growth; and (3) reduce headcount to maintain its profit levels. However, the issues on broader consumer spending and weak customer metrics and US listing declines represent headwinds to an improving outlook.

eBay Korea provides insight into the US changes/impact in ‘08 While the rev/profit impact is unclear from a US fee change to commissions, we think that similar changes at eBay Korea in '06 should provide some perspective. eBay Korea growth/profit margins decelerated from 46%/26% in '05 to 2%/15% in '06 (post fee change) and 7%/3% in '07 YTD. We think eBay US margins could see a similar fate, given the greater competition in the US.

Tomorrow will be an interesting day.

Meg Has Apparently Decided to Retire

At least one of my 2008 predictions appears to be accurate. According the the Wall Street Journal, Meg Whitman will soon be making the announcement that she is leaving. With the "cat out of the bag", I would assume there will be a formal announcement at the Earnings Call tomorrow.

So tomorrow may just be the biggest eBay news day ever:
  • Q4 07' Earnings Conference Call (With Guidance for 2008)
  • 2008 Marketplace Changes (fees, Finding 2.0, Best Match)
  • Meg Whitman Retiring (Will it be Donahoe replacing her?)

I can't wait for tomorrow.

Monday, January 21, 2008

eBay Sellers Already Gaming Best Match

In the competitive world of online selling, sellers are constantly looking for a way to get an advantage. On eBay, this is called "gaming the system". I'm sure you've all heard stories of 1 penny BIN (Buy it Now) with 19.99 S&H, keyword spamming etc. Well, it didn't take long for sellers to find a way to "game" eBay's new "Best Match"

Click on the image for a better view or click on this link for the actual search.







The search terms that delivered these results were "kaline autograph". You will notice that the listing I have highlighted in yellow has 1 day and 10 hours left before it closes and with Best Match it has been moved up ahead of items that are closing within the next 8 - 10 hours. The words "Kaline" and "Autograph" do not show up in the title but when you click on the listing you can see that they are in the copy of the ad. The seller does use the + sign in the title and include popular athlete's names.

This listing appears to be moving up the list because of the number of pageviews (31) relative to the other listings in the search. In fact this listing is ahead of actual items with "Kaline Autograph" in the title.

I'm not sure exactly what elements of the listing helped it move up the sort list, but it appears FB (feedback) and DSR's are not yet part of best match as this seller has below avg. results in those areas.

The listing is for a "lot" of 1,000 sports cards and is not likely to get many bids because it is a confusing and poorly designed ad, but the seller was able to "game" the Best Match sort and show up much higher in search than other sellers who paid the same fee. In fact this listing was less expensive because it didn't even include a gallery photo.

Sellers will need to be prepared as their competitors become experts at BMO (Best Match Optimization). Your listing fees may not buy you as much exposure as you had hoped.

Thanks to etown99 from the eBay Stores board for finding this listing.

Update: Okay, I have to admit a mistake. The listing above is not an example of purposefully gaming the system, because the listing was created on the 15th, prior to Best Match being rolled out on the 16th. So unless the seller has ESP, he/she just normally lists items this way. Of course now they are glad they did.

The point of the post is still valid that sellers will try and find a way to game Best Match. Thanks to Itspostingtime on the eBay stores board for pointing out my error. I actually do appreciate that.

Just my 5 cents!

More On eBay's Best Match

I received an email from a seller that sells in one of the 5 categories where Best Match is now the default sort order. His sales have dropped 40% since Best Match was launched.

"We pay to have our items listed at a particular time and end at an exact time. But, WE PAY, regardless of a sale or not. If eBay is going to adopt this supposed “best match” then there should be no cost to list your item, just a FVF, but you couldn’t call It a FVF anymore, it would be more of a CPA. eBay is a Frankenstein now. Some Amazon, some craigslist and all the NO RESPONSIBILITY and NON PRO-ACTIVENESS of the traditional eBay. This is another example of rearranging the deck chairs on the Titanic.

Our sales have fallen 40% in the past 2 days."


Other sellers are stating similar trends and in fact a vendor who measures GMV, on a daily basis, is showing a drop in GMV in the categories with Best Match as the default (there is not enough data to say this is directly related).

One of my readers recently wrote a post entitled Decoding eBay's Best Match an interesting look at the algorithm behind eBay's Best Match, based on their patent application. It is an interesting read and something all sellers shold take a look at. Best Match is not likely to go away so Sellers should study it and find the best way to present their listings with this new sort order.

As he says in his post: Just remember, the Best Match search algorithm is about making eBay money. They want to feature the auctions that are most likely to result in a click, in a bid, and ultimately a purchase. So they want to put the auctions in front of the potential bidder that are most likely going to result in those actions.

Your objective now is to make sure that eBay puts your auctions at the top of their Best Match search results – so you, along with eBay, get the click, the bid, and the sale.


Unless eBay's metrics take a huge hit from this 5 category test, you can bet that Best Match will become the default sort, site wide. The sellers that find a way to improve their listings in this new environment will come out ahead in the end.

Big Week For eBay!

This week is a big week for eBay as they announce Q4 earnings on Weds. and hopefully share their plans for the year with the community. I'm not going to make any predictions but it will certainly be an interesting week.

Things to look for:
  • Follow the stock - eBay's share price is at a 52 week low, going into the earnings call, will it rebound after earnings?
  • What will eBay' 2008 guidance be?
  • Will the shift in fees from listing to FVF be drastic or minimal?
  • What are they going to do to increase buyer demand?
  • Is there a new marketing program to replace "Shop Victoriously"

It is going to be very interesting, so stay tuned.

Friday, January 18, 2008

eBay's Best Match Not Going Over Well.

We are all used to hearing eBay sellers complain about the latest eBay change, but now its the buyer's turn. Best Match rolled out as the default search in 5 eBay categories on the 16th:

Consumer Electronics
Computers & Networking
Cameras & Photos
Cell Phones & PDAs
Toys and Hobbies

It is still being called a test, so there is still hope that the change won't become permanent. eBay is conducting the test during a .20 cent listing promotion, I would guess so they can get enough data to make accurate assessments with high listing counts.

Change is never enjoyable and on eBay it is often protested, but buyers and sellers have a choice here. If you do not like "Best Match" then make a change to your defalt settings. Let your voice be heard by changing back to the search of your choice. If a large number of users change their default settings then eBay will be forced to re-think this. If only a small number of users change, then Best Match will be the default from here on out.

I don't like Best Match from a seller's perspective because it doesn't give the same exposure for the same fee, but unless it is an outright failure or there is a mass user revolt it will be the default serach from here on out. Users, will either need to adapt or move on.

Thursday, January 17, 2008

Best Match as Default, Now Official.

Even though most of the seller community knew about this change several days ago, eBay has made it official with the announcement that they are running a test in 5 categories. (dejavu all over again).

Hi everyone...I'm Julie Netzloff with eBay's Finding team. We've been working to improve how our Best Match sort works to help buyers find relevant items more quickly. In the next few days, we're going to run a test where Best Match will be the default sort order in the following five categories:

Consumer Electronics
Computers & Networking
Cameras & Photos
Cell Phones & PDAs
Toys and Hobbies


If you prefer to use a different sort order (such as "Time: Ending Soonest"), you can change it by using the Sort By drop-down menu at the top of the search results. If you've already set your sort order preference using the "Customize Display" link (found to the right of the Sort By drop-down), you won't be affected by this test.

There have been numerous complaints about Best Match, but eBay is determined to make it the default search on the site. Hey when you've bet the farm on Finding 2.0 you have to make it work. I have no problem with it if it works.

Just my 5 cents.

One More Week?

Well, eBay didn't announce their 2008 changes yesterday, like I thought, so I'm 0-1 in my predictions for 2008. The consensus is that they will announce the changes at the same time as they hold the Q4 Earnings call. Investors are just as interested about the changes as sellers are.

The two most blogged about projected changes are that eBay will offer bulk pricing discounts and category specific pricing. We will have to see what actually makes the announcement.

It is clear that this announcement to the community is one of eBay's most important in its history. We are all waiting to see what happens. Hopefully they have put together a plan that will once again make eBay a vibrant marketplace.

Wednesday, January 16, 2008

Anyone Have an Extra $50 Billion Laying Around?

Since eBay still hasn't made their "Big" announcement, I'm just sitting around the office thinking up stuff.

I'm looking at eBay's share price hitting a new 52 week low yesterday and wondering why a company like KKR, or one of the other biggies, doesn't swoop in and do an LBO (Leveraged Buy Out) of eBay.

For $50 billion in borrowed money, they could buy eBay, Inc.; spin off PayPal as its own public company; sell Skype to Google, Microsoft or even Baidu and either keep eBay's Marketplace business private or sell it to Yahoo or Amazon (my vote would be Amazon).

The company is sitting on over $4.5 billion in cash and generating over $2 billion a year in new cash. This seems like a no-brainer to me. Sure, the Credit Business is a little weak right now but with eBay's balance sheet to work with this seems like a sweet deal.

Anyone want to lend me $50 Billion?

If eBay management is not going to do this on their own, perhaps someone should do it for them.
Just my 5 cents!

Waiting, Waiting, Waiting!

My "Big" announcement call for today seems in jeopardy, with the announcement yesterday of the new 20 cent listing promo.

Maybe, I'm reading too much into this "Big" announcement. It is quite possible that they will just make some minor changes, announce more frequent listing sales and talk about the full release of "Finding 2.0" and there will be nothing "Big" about it. Sometimes the anticipation can be greater than the actual event.

If they do not announce anything substantive today, then look for an announcement next week along with the Earnings conference call.

In other news: Not much else to talk about today except for the stock market, economy, politics, world peace, and MLB Spring Training coming up so this may be my only post today.

Just my 5 cents!

Tuesday, January 15, 2008

My Favorite eBay Blogs!

Well of course my mostest favorite eBay related blog is the one you are reading, where I like to discuss eBay from the seller perspective. I've begun to cover Amazon more heavily also, as many sellers look to expand there. I like to have fun and speculate, so you won't see many technical or "How To" type posts on the blog. There is plenty of that information available from my other favorite blogs.

  • Auctionbytes.com - Ina Steiner has done a fantastic job covering eBay for many years and has both a news site Auctionbytes.com and a blog, where she can have more freedom to discuss issues. Auctionbytes.com is the #1 source for news about eBay and should be on everybody's reading list (employees, investors, vendors and sellers) I've also noticed that she is covering Amazon a little more. I'm not sure if this a trend or not but it will be good for the industry if she continues to grow her Amazon coverage. BTW, Auctionbytes also has David Steiner pulling stings :) in the background and he will occasionally post on the blog.
  • eBayStrategies - Of course many of you know this is Scot Wingo's blog (CEO of Channel Advisor) and he enjoys posting data on trends as well as the occasional rumor and speculation. There is rarely a dull moment over at the eBayStrategies blog.
  • Tamebay.com - Comes to us from across the pond and is run by Chris Dawson and Sue Bailey, both eBay power sellers. Chris is based in the UK and Sue is based in France. I love reading about the stuff that is happening in eBay's International markets and if there is news about eBay overseas, you will most likely find it at Tamebay. Dan Wilson, also posts "How To" articles about selling on eBay. Dan is a former eBay UK Community manager and has some great ideas.
  • OnlyeBay - OnlyeBay is sort of a mystery to me. The blogger is an investor in eBay and has a "long position", so the focus of the blog is on the positive things that eBay is doing, though there will occasionally be some questioning. It is a great read and has some valuable information for investors. I would recommend that my readers add OnlyeBay to their reading lists. Now if I could only figure out the blogger's identity.

Those are the eBay blogs I checkout each and everyday, sometimes several times a day but in addition to those there are many more great blogs out there. So check out these blogs as well:

There are many more but this will get you started. Hopefully soon, I will have a similar list of blogs focusing on Amazon.

Holiday Traffic - Amazon and eBay Neck and Neck

I wasn't going to write about this today because everybody else is doing it and I'm not sure I can add anything to the conversation, but it was either this or talk about the fact that eBay's share price may close at a 52-week low today, so I chose to write about Dec. Unique Visitor numbers.

It all started when Brad Stone of the New York Times wrote a blog post yesterday about how Amazon had edged out eBay as the most visited ecommerce site in Dec. This is big news, because Amazon had never beaten eBay in this metric before.

"... the latest audience figures from Nielsen Online confirm that the e-commerce traffic crown has changed heads. For the month of December, for the first time, more Americans clicked over to Amazon.com (59,624,000) than eBay (59,374,000).

Despite the slim margin between the two companies, eBay’s visitor count is particularly alarming. According to the Nielsen data, the number of visitors to eBay.com dropped 10 percent from December 2006 to December 2007.

Nielsen has not publicly distributed its December traffic data yet, but supplied the numbers to The New York Times upon request."

They may not have published the Dec numbers yet but they did for Nov., so let's compare Qtr over Qtr.

November - Unique Visitors (millions) Data from Internet Retailer
eBay - 59.04 dropped 8% Y/Y
Amazon - 53.63 grew 10% Y/Y

December - Unique Visitors (millions)
eBay - 59.37 - dropped 10% Y/Y
Amazon - 59.62 grew 18% Y/Y

eBay added 330,000 unique visitors from November to Dec while Amazon added nearly 6 million.

No matter how you spin this, Amazon passing eBay in unique visitors is a big deal. Especially when you see the growth month over month.

Monday, January 14, 2008

New eBay Website Highlighting Certified Providers

Sorry for that title, I couldn't figure out how to make it snappier. eBay's done a good thing for sellers today, with the announcement that they've launched a new website, to highlight their Certified Provider Program. A Certified Provider includes companies that provide tools for eBay sellers.

Here is the announcement from eBay:

... I'm here to introduce you to some of the features of the new Certified Provider Program website that we recently launched. The new site gives you even more information about third-party tools and solutions you might need to grow your business, plus it makes it easier to find the right providers. Sellers will find a wide selection of product demos, case studies and other materials from subject-matter experts that will help you finalize the solution set that's right for your business....

Its kind of a one stop shop for service providers, so if you sell on eBay and are looking to expand or become more efficient, check out the site. most of the servie providers are listed.

Just my 5 cents!