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Sat July 19 2008 16:41:30

Sellers Discuss eBay Earnings

By: Ina Steiner

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I just got feedback in the previous blog post that I should give people an opportunity to talk about eBay's second-quarter earnings. I'm listening! :) Here's the article I wrote, and you can find a link to the earnings call transcript at the very bottom of the article. There's some interesting factoids - for example, average selling prices are down - do you agree with eBay's assessment of why that is?

If you are interested in reading more about the Wall Street stock-price angle, just go to Google News or Yahoo News and search for eBay, there's plenty of articles with a stock focus, which you can also talk about here. Overstock also released earnings, and more to come.




Comments (39) | Permalink

Readers Comments

Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

by: concho

Sat Jul 19 18:52:00 2008

I think the stock dip and sell ratings following the announcement is mainly a no-confidence vote for Donahoe.

If he is doing the same (ourageously) poor job communicating with Wall Street that he is doing with eBay members, share holders probably see a trainwreck ahead.

The company beat most of the expectations, has about $3 per share in cash, no debt and a history of profits. The stock should have seen a ralley even in the current bear market.

The only conclusion I can reach is that Donahoe needs to GO!

Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

by: Patricia

Sat Jul 19 19:40:01 2008

I feel its more than a vote of no confidence.  Donahoe is steering the ship away from what made Ebay what it is and toward trying to make it over into something thats quite commonplace on the internet - like more retail....yawn...  I think wall street is beginning to see that.  Personally, I believe the man and his team need their heads examined....but then after 10 years on ebay, what do I know?  I only know that business for most ebay sellers is down - way way down and for the life of me I can't see where Donahoe is getting his revenue from...

These days I'm sticking with Etsy and trying build on that.

www.ACEOart.net

Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

by: Gary

Sat Jul 19 20:20:25 2008

My ebay bill has reached new lows, what was once a $2500 bill is now under $100 Many of my friends are having the same experience. On the upside, my Amazon bill is the highest it's ever been, I'm happy about that, Amazon makes me money! The buy.com deal is going to end up in disaster. Pierre prophetically had the eBola virus info displayed on the same domain as echobay. It's almost obscene how Pierre has flip-flopped on his level playing field ideas. I would have loved to see him trying sell this idea to rank and file employees in the halls of San Jose. I'm sure all the little rats there are trying to figure out how to keep their jobs now that they KNOW management can't be trusted at all.

Send JD back home to his mommy and daddy. Sadly eBay wins either way in the stock game, they get rich or they buy it back as cheaply as possible.


Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

by: tj

Sat Jul 19 22:53:55 2008

Can almost guarentee Microsoft will make a bid..eBay Inc is now very cheap in real terms..only $31 billion

We are all seeing the distruction of eBay by Management..how stupid are they?

Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

by: wphamilton

Sun Jul 20 01:20:05 2008

You asked ''average selling prices are down - do you agree with eBay's assessment of why that is?''

Since we've seen no data to suggest it, I am skeptical of the ''trading down'' and ''bad economy'' theories for the falling average selling price. However there are two things that we do have data for which we do know that could account for it: the new dynamics of pricing strategy due to the changes in fees, and the lower average number of looks per listing.

The backloaded listing fees, along with the listing fee discounts exclusively for traditionally low-margin items such as cd's, music and video games have resulted in a proliferation of lower tag items in these categories. Secondly, the math works out in the fee tranches so as to encourage breaking up the larger lots into more single-unit listings with lower price tags.  This difference is enormous in some categories.

The other factor is more simple to explain. The price you can get on any particular auction or fixed price listing depends most strongly of all on the number of times the listing gets eyes on it. Yet the total listings have increased, while the active users have remained almost the same and third party measures of site traffic (Alexa for instance) have shown general decreases. What this means is that the same number of people are seeing fewer pages among more listings - ie, fewer looks per listing. Fewer looks means lower average price.

The importance of those metrics cannot be overstated. Looks per listing can make or break individual sellers, or force them to dramatically alter their business model. The same could be said at the macro level and we should keep a sharp eye on this trend, if it exists.

Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

by: GazLanNaThai

Sun Jul 20 01:31:45 2008

Staying on topic with your original call for comments ...

Yes the economy and shrinking disposable income has some effect on ASP and GMV, but it's not the whole story.

Last years chop of east to west trans-Atlantic visibility, and the re-introduction of it this year for a fee, has seen a steady downward pressure on average number of bids per item and sell through rates (STR) on both sides of the pond.  Basically, fewer buyers are finding your unique and commodity items.  

Add to that the national differentiation of Best Match criteria (with DSRs of 3 x 4.8 and a 4.7 I am "standard" visibility on UK, but "raised" visibility on the US and other sites), plus the disfunctional New Search algorithms, and even more buyers cannot find your items.

What I find particularly disingenuous of eBay is the way that they fanfared the return of international visibility for a fee between their big 3 markets (UK, US, DE) and Canada, yet at the same time and without such a facility for them, I am seeing disproportionately huge climbs in STR to mainland European countries & Scandanavia, plus to Australia and East Asia from listings on dot com.

Clearly, the international visibility is only restricted between the most profitable marketplaces for eBay (those with the sellers who have marketing budgets to pay the extra fees), whilst it's visibility as of old, from the US site, to the small and less viable marketplaces ... but not from UK, DE, or CA.

I've also noticed a "wobbly growth" in sales from listings on AU and SG to the US & Canada, showing that they too have free international visibility outside of the fee-based scheme.

I cannot recommend highly enough that serious sellers investigate duplicating listings (for repeatable/commodity inventory) onto eBay's free-to-list sites such as Malaysia, Singapore, and the Phillipines.

There's no need to abandon eBay, just begin using it to your cost-adavantage - and if you gain even only one extra sale per month from each of those free sites, the no fees environment will have helped your bottom line.  Listing in Stores GTC, or Auction/BIN SMP "relist whether it sells or not" format will mean your only admin is processing sales.

Using those sites in that format will increase your exposure, traffic, and hopefully your sales, countering the fee-greed systems foisted on North Atlantic sellers.

... in case you're wondering why I share this tip?  I have an email on file, from the Head of eBay UK Trust and Safety, that one of the reasons I received a lifelong ban from eBay forums was due to evangelising those same fee-saving tips in the UK PowerSeller forum.  If eBay don't like us using their country-differences to our advantage and are willing to attempt gagging long-term customers from advising about it, then surely that makes it the exact way we should all be using those sites?  It obviously scares them for people to know about the opportunity and practice.

Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

This user has validated their user name. by: Anonymous

Sun Jul 20 02:58:15 2008

I heard them say that a bigger portion than normal, was from the Paypal side. That's because over the past couple months, ebay has picked up many more places to accept paypal (American Eagle, Blockbuster, Jet Blue, Online Poker among many others)

Many of these just happened, after the May 18th changes. I guess the saw more sellers leaving than normal and had to do SOMETHING to get the Q2 earnings up. They thought buy would help them out furing the strike, but Buy's sell through rate is hanging around 3%.

Then another funny thing I heard in the webcast was that subscriptions were up. That's ironic, didn't they have the big Skype glitch, where it charged millions of sellers for the service, that never ordered it.

And then the problem of when you closed your store, it didn't close the free subscriptions and started chargeing you for them. They got me for $24 over 2 months. They got my friend as well. I wonder how much money they made of that glitch.

If ebay hadn't made the changes they did, they would be one of the stocks soaring right now, in this hard econony, but no...they had to throw it all away.

Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

This user has validated their user name. by: Bill

Sun Jul 20 03:10:18 2008

One thing that I did after the earnings report was look at Buy.com sell through rate on 500 of its listings. I know this is a small amount but the thing that I noticed is that out of those 500 only 4 items sold and they were all for less than $10. The bottom line for eBay on its profit structure is to be able to get the most money out of the server space that they use. Since Buy is not paying to list (from what we have all heard through the grape vine) and if you extend those 4 items out of 500 to the the 500,000 plus items that means that they have sold 4,000 itmes at $9.00 each for a net of $4,320 a week for using 3% of the selling web space on eBay. I am sure that Wall Street sees and is well aware of that and they have to ask them selves what is going on? If you factor in the type of material they are selling (very marketable items) and figure that these items get 1/3rd of the search views they have to think that this company is going down the tubes with a lot of high priced oil for lubrication.

Bill

Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

This user has validated their user name. by: Ming the Merciless

Sun Jul 20 04:10:10 2008

Ebay is in worse trouble than reported.

Other online sites such as Victoria's Secret and J.C. Penney's are reporting a surge in sales which they attribute to people spending money online rather than on gas. Makes sense.

If Wall Street had an ounce of integrity, they would have made ebay a SELL six months ago before the stock plummeted to today's levels.

On the other hand, The Donna Ho may be more hoish that we thought. Could he be the front man to lower stock value prior to a Microsoft buyout?

Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

by: Randy Smythe

Sun Jul 20 11:09:01 2008

Amazon announces earnings this week and should beat the streets estimates. If they do, that throws the declining economy argument out the window.

Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

by: wphamilton

Sun Jul 20 15:57:16 2008

''One thing that I did after the earnings report was look at Buy.com sell through rate on 500 of its listings.''

-good idea, Bill. You can get an exact figure for buy from Sellerdome.com:

Sell through rate: 2.3%
Listings in 1 month: 1,699,397
Total items listed 1 month: 151,162,750
(One Hundred Fifty Million items, not a typo)
Total sales: $2,202,346

Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

by: J. R.

Sun Jul 20 17:35:28 2008

eBay Stock is at a 2 year low.  Read This...sounds like those Seller strikes and ''noise'' are making a difference.

http://news.moneycentral.msn.com/ticker/article.asp
x?Feed=AP&Date=20080717&ID=8908027&Symbol=EBAY

Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

by: Tina

Sun Jul 20 18:39:42 2008


I liked this part in moneycentral:

"eBay is trying to "alter the form, function and functionality of its core marketplace."

Been selling on ebay for 9 years and my earning went down 50% since JD took over..............

Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

by: Mr.Tim

Mon Jul 21 02:16:24 2008

Growth is the key to any company's future. EBay has no future, based on their total lack of growth. They claim a 1% increase in "active" users, but that's not really true. An active user to them is anyone who bid on even ONE item in the last quarter! What a joke! EBay can only juggle the numbers for so long. Eventually, every shareholder will see there is NO growth (and even a decline) in users and they will dump the stock ASAP.

The other problem is the average price of an item on eBay sold for 6% less this past quarter. Great news for sellers! They increased fees and items sold for less. Sounds like a bad deal to me. Add to that the low sell through rate and you will understand why sellers are leaving eBay in droves. And to eBay's dismay, they're running to Amazon. I'll bet Amazon posts some great numbers for the second quarter. All those angry eBay sellers will make Amazon number one and eBay will fade away into the sunset...

Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

by: tbt

Mon Jul 21 09:20:43 2008

What is striking, is Ebay’s inability to give small to medium sellers any assurances that the negative comments attributed to JD and other senior Ebay management are overplayed in the media. Everywhere in the press / web logs, it appears Ebay’s saying Auctions format selling is in its death throes, and that Ebay wish to be rid of the small to medium sized seller.

What to make of it? On the one hand they say the problem with lack of GMV growth is due to downsizing of spend by consumers - but on the other they are looking to kick  the very sellers  that could continue to grow in this environment (e.g. niche sellers of collectables, second hand items e.t.c.) off the site.

Growth is vital - but the policies put in place have caused mass resentment among established sellers - not because of resistance to change, but because it is abundantly clear that Ebay do not see small / medium sellers as part of Ebay's change in strategic direction. If this is not the case, then Ebay really must look at the way it communicates to it’s client base, and act quickly…..

Assuming the press coverage is right will the change to BIN / Large Seller venue work? Well early signs are not positive. Average Sell through Rate (ie number of listings that end in sales / total listings) are drifting down, the latest  Medved statistics indicate it is now below 40% overall.

Focussing on the much heralded Buy.com relationship, their STR is 2.3%, which alone must be materially contributing to Ebay's global STR rate decline.

With such a low STR it's difficult to see how Buy actually contributes positively to a buyer’s experience. It would appear that Buy is either listing stock very few people want, or that the price point for its products is too high.

Selling through Ebay adds an additional layer to Buy.com's sales costs, and having checked 10 items randomly this would appear to be reflected in uplifted prices. Given this, Buy (or any other corporate which has it’s own established website) will only take off on Ebay if the consumer believes there is a significant increase in buyer protection to not going direct to the vendors own website, or if buyers are indifferent to the increased cost, - not something to rely on in the present climate!

As for buyer protection - yes Paypal has a part to play, but a credit card payment through a recognized payment gateway offers the same level of protection - both from the point of view of transactional security, and the ability to charge back in the event of seller non performance.

Competitive Landscape and Ebay's USP

Powerseller disaffection with Ebay has certainly provided a fillip to other so called auction sites. Whilst their market penetration is still woeful, the upswing in listing #'s over the past couple of months has been nothing short of astonishing. Viable competition? Not yet - but Ebay would be foolish to ignore the trend.

Afterall these are head on competition for Ebay's new focus - BIN listings, and their fee structures work out far far cheaper for any but ''Diamond Level'' sellers on Ebay.

So we come back to Ebay's USP - which is an established, highly successful TRUE auction format, with sufficient buyers to create a market - quite simply there is no online competition that can hold a candle to this. But the current strategy appears to accept that Ebay should at best be turning their back on the “fleamarket”, recent fee changes appear to be geared towards BIN.

Paypal

Anyone who reads the blogs will have seen the ham-fisted attempt to impose Paypal as the sole payment option for transactions listed on Ebay Australia. Ebay (Paypal) do deserve some credit - they have been far more subtle in the UK (and I believe shortly in the US) where they now require Paypal to be listed as a payment option, and then position Paypal in checkout to appear to be the only option worth considering. This effectively creates a monopoly by the backdoor, as many competitors are barred from operating on the site.

I like Paypal as a product - albeit that for a small to medium seller it's horribly expensive. What will be interesting to see is if it can sustain it's growth. They have made some inroads into payment processing on corporate websites e.t.c. but the recent boost to Paypal earnings growth by creating a quasi monopoly across Ebay's global sites will only provide an uplift in the short term.

Going forwards growth will have to be generated by partnerships with global corporates - not only will growth be much harder to sustain, but the margin will inevitably come under pressure as Paypal goes head to head against other Payment service providers such as Worldpay, Google Checkout, and normal merchant providers....

Most importantly, Ebay appears to have lost sight of its own customer base. Yes addressing the needs of buyers was (and will continue to be) essential, but to do so in a way that alienates a significant proportion of your own established client base would appear to be commercial suicide.

New Search

Whilst there has been ''a lot of noise'' raised over revisions to the (UK) SNP programme + resultant dolphins, feedback changes e.t.c. this pales into insignificance when compared to the overwhelming negative feedback about ebay's new search. The lack of meaningful responses from ebay UK (where we have been suffering the New Search for sometime) is particularly concerning.

A search should find what a buyer wants with the minimum of effort, and the results should be well targeted to the search criteria applied. JD referring to the New Search as something that will raise GMV is (as it stands) frankly risible.

Under New Search buyers can not find what they want, because they are either drowning in a sea of irrelevant results, or walking away because the search is unintuitive, far too complex, lacks core functionality that was available in the previous search, and last but not least is littered with bugs.

Quite simply – if an experienced seller can not find their own product listed on Ebay – how on earth will anyone else. If you think this is an exaggeration, please look at the UK Q&A Board search threads for examples.

The search is the most vital tool to Ebay's Core Marketplace - and in it's current form it's shocking they would consider releasing it into the live environment – it is not even fit for Beta testing.

Ebay need to move swiftly to undo the damage they have done, and improve the communication to their client base.  Failure to do so will see a continuing reduction in small to medium sellers on the site, taking with them the offbeat, quirky, or unique items upon which ebay was built.

These listings may be offset by attracting large corporate sellers, but if you apply Buy.com’s  2.3% STR% as a benchmark for new corporate sellers,  you would need 17.4 x the number of current listings to achieve the same number of sales as the current average of appx 40%!

Similar sized Corporate sellers would inevitably receive listing fee and FVF discounts broadly in line with the Buy.com agreement – eg Diamond Seller “+” so not only are you going to have to achieve exponential growth in listings to maintain a similar GMV,  the margin made on a similar this will be under severe pressure.

To reposition Ebay from an auction venue to a fixed price corporate retail vendor site appears to be very high risk. Not only have previous attempts failed – e.g. Ebay Marketplace nosedived, you are also head to head against very well established competition such as Amazon, and worst of all you are doing it on their own terms. Not so long ago Amazon tried to launch an auction format and failed – do Ebay really want to throw this advantage away??

Maybe JD and the new management team have it right - maybe, I am too close to this to see the bigger picture - after all I am (sorry should I say was) a small seller. But in the welter of policy changes imposed since the start of the year Ebay has failed to observe a few tennets that all well run businesses abide by

Keep it Simple.
Stick to the knitting.
Know your client needs (both Buyers ans sellers), and continuously review to make you’re your product responds to them.

Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

by: Mike

Mon Jul 21 10:38:46 2008

First and foremost, I think the problem with eBay is two fold:

1) They keep changing everything, which is annoying to both buyers and sellers.  Does Best Buy constantly change the look of its store so that every time a customer walks in, all the displays are rearranged?  Of course not.  But eBay just loves to fix things that aren't broken.

2) They've spent years chasing away sellers with increased fees (despite the huge amount of growth on the site which, if anything, should have indicated lowering fees) and have now joined the fee issue with demanding changes combined with flagging sales.  Nothing was wrong with eBay, but they just kept trying to ''fix'' things.

And through all this, eBay hasn't done ANYTHING to help sellers or to make them want to sell on eBay.  Between the fees, the changes, the lowered sales, and the increased numbers of NPB...it's as if they're trying to chase away sellers and all mystified that everyone is upset.

In short, eBay is dying.  It's profits are bolstered by it's other companies.  Like Philip Morris, they've seen the writing on the wall and have spent time and huge amounts of money (our money) diversifying.  They would do far better to launch a marketing campaign designed at bringing back buyers and once again making eBay a household name than trying to fix things that aren't broken.

And I'm probably also among the minority that doesn't care a lick about the whole PayPal issue.  If they want to go to a PayPal-only system, then fine.  HOWEVER they need to set things up so that buyers have an absolute commitment to paying.  Once they bid and win, we (the sellers) get paid immediately.  End of story.  I am so sick of my inventory sitting in limbo waiting on buyers to make good on their ''contract'' and pay, only to get away with NOT paying and still be able to leave me a negative feedback!!!  eBay makes millions of dollars on the fees we pay on products never paid for.  This needs to end...but the only way I can see of making it happen is by requiring every buyer to have a credit card or PayPal account on file (and it must be active to bid).  No more checks or money orders.  Let's come into the 21st century and create a real marketplace rather than a junky fleamarket full of scammers.

Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

by: Elizabeth

Mon Jul 21 11:16:32 2008

To this,  "And I'm probably also among the minority that doesn't care a lick about the whole PayPal issue.  If they want to go to a PayPal-only system, then fine.  HOWEVER they need to set things up so that buyers have an absolute commitment to paying.  Once they bid and win, we (the sellers) get paid immediately.  End of story.  I am so sick of my inventory sitting in limbo waiting on buyers to make good on their ''contract'' and pay, only to get away with NOT paying and still be able to leave me a negative feedback!!!  eBay makes millions of dollars on the fees we pay on products never paid for.  This needs to end...but the only way I can see of making it happen is by requiring every buyer to have a credit card or PayPal account on file (and it must be active to bid).  No more checks or money orders.  Let's come into the 21st century and create a real marketplace rather than a junky fleamarket full of scammers. "  I say AMEN AMEN!!  

They keep telling us sellers, the buyers want free shipping like on Amazon.  Guess what? I want guaranteed payment like on Amazon. I'll trade!

Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

by: xcuse me?

Mon Jul 21 11:21:18 2008

I was with you Mike (above comment) until your last line labeling some of us as "junky fleamarket" people.

Us junky fleamarket people are what drove the excitement and fun of Ebay that gave you the chance to sell your junky new stuff, reproductions, and knock-offs.

Everything else you said was spot on, but remember how Ebay grew and why.

Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

by: Mike

Mon Jul 21 11:28:29 2008

Elizabeth...you go, girl!

eBay keeps taking and taking and taking...it's time they give a little.  Instead of ''do this or else'', how about ''do this and we'll give you this for your trouble''.

They keep missing the point of what making a better site is all about.  It's not giving away coupons (which can't be used on any third-party checkout system) or about making sellers jump through hoops.

It's about attracting more buyers to a professional market, not a fleamarket where everyone thinks they can bid willy-nilly and play around rather than actually doing some shopping.

eBay needs an image makeover with the buying public.  Most people are fed up with the whole auction-image.  eBay is known for scams, hidden pricing, knockoffs, and a general lack of professionalism.  THOSE are the things it needs to target.

Unfortunately, their strategy to date has been simply to target sellers and make them do all the heavy lifting and bear all the risk while eBay rakes in the fees.

Sellers Discuss eBay Earnings   Sellers Discuss eBay Earnings

by: Mike

Mon Jul 21 11:48:26 2008

xcuse me...it's true that many sellers are of the scamming fleamarket variety.  eBay needs to get rid of that image (and sellers) if they want to move forward.  The ''fleamarket crowd'' I am referring to are those sellers with cheap, used goods, knockoffs, and counterfeits.  They don't do a service to eBay. eBay's image has suffered because of this perception of a big scammy fleamarket full of used junk - fake Rolexes, counterfeit Coach wallets, dubbed DVD's and software, knockoff sunglasses, etc., etc. when we know that's the furthest thing from the truth (though it still exists).

And let's not confuse those sellers with the collectables people, who are the actual group that built eBay back in ''the day''.  The whole auction experience is a dead industry.  Amazon's success is proof that people want to go online, find a legitimate product, buy it with a minimum of hassle, and have every expectation of receiving said product.  eBay has not fostered that image.  Buyers still think it's some kind of fleamarket where they can play at shopping rather than do any real shopping.  eBay is big enough now and it's sunk low enough in the scams/fakes/knockoffs arena that it really needs to clean it up. They do an egregiously poor job of policing themselves and this scammy image persists to the detriment of all.

I would say they need to make a separate site for the fleamarket crowd and a site for the ''New In Box'' market, but they failed miserably at eBay Express, so that's obviously not the answer.

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