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Tue Feb 8 2011 22:14:39

One Year Later: How Have eBay Changes Impacted You?

By: Ina Steiner

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It's been almost one year since eBay.com placed, in effect, "Stores in Core," and made radical changes to its fee structure (link). On March 30, 2010, eBay eliminated Store Inventory Format, converting those listings to regular Fixed Price listings. It also rolled out separate fee structures for Store subscribers versus non-Store sellers along with category-based pricing.

Citigroup Investment Research Managing Director Mark Mahaney issued a report in advance of attending eBay's Analyst Day on Thursday. One of his questions for eBay is what additional steps can it can take to improve the Marketplace Buyer and Seller experience.

In discussing the series of changes eBay made to its Marketplace over the past two years, he summarizes what he calls two of most important changes:

- "Reduced or Eliminated Seller Fees: In an effort to better align eBay's success with Sellers, eBay has eliminated Listings fees for Auction-style listings with a start price of $0.99 or less and has reduced to as low as $0.03 per item the Listing fees for Fixed-Price listings."

- "Enhanced Search Results: In an effort to provide more robust and relevant Search results, eBay has again included Store listings in Core search results. In addition, eBay has worked to make the entire product Search experience on eBay more intuitive and efficient."

How would you summarize the effect of eBay's March 2010 changes on your business over the past year? And if you could attend Analyst Day, what would you ask eBay's management?

Mark Mahaney, Citigroup Investment Research
The Top 10 Questions For Investor Day (abbreviated):
1) What is the long-term growth and margin outlook for the Marketplace segment?
2) What steps can eBay take to further improve the Marketplace Buyer & Seller experience?
3) How can eBay defend/improve its Marketplace positioning in International markets?
4) What is the long-term growth and margin outlook for the Payments segment?
5) What are the key levers behind Payment's 60% Gross Margin and 20% Operating Margin?
6) What is the potential extent of synergies between the Marketplace and Payments segments?
7) What are the key growth drivers for eBay's Marketing Services segment?
8) What's is eBay's strategy for benefitting from secular trends in Mobile Internet, Local Targeting, and Social Media?
9) What's eBay going to do with all that cash?
10) What is eBay's current M&A strategy?

Colin Sebastian, Lazard Capital Markets LLC
Top 10 questions for management (abbreviated):
1) When will the US Marketplace stabilize its e-commerce share?
2) Is eBay prepared to resume broader consumer engagement/advertising in the US?
3) What differentiates eBay's success in the UK from the US?
4) What is included in upcoming rounds of Marketplace changes?
5) Why is eBay's early lead in M-commerce sustainable?
6) What are expectations for normalized PayPal take-rates and margins?
7) Can PayPal become a meaningful player in the Bricks-and-Mortar channel?
8) What is eBay's China strategy?
9) Where will overall margins stabilize over time?
10) Any changes to the capital structure and uses of cash/acquisition strategy?





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One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

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

Tue Feb 8 22:45:25 2011

It makes no difference whatsoever what any of us would ask The Ho.

We know what the analysts pretend not to know which is that The Ho lies. But these analysts live in a pretend world, too. They pretend to believe him, print what he says, and then their Wall Street investment firms manipulate stock to conform with the pretend world they all live in that we the taxpayers have so conveniently financed.

Mark Mahaney's comments concretely demonstrate just how ignorant these analysts are when it comes to understanding the unique dynamics that drive (or more recently) don't drive the marketplace.

It IS monkeys.

Monkeys who throw crap against the wall, see what sticks, and then rearrange it in random (double secret proprietary algorithms and all that mathematical hocus pocus) ways hoping to create a Salvadore Daliesque mural that some gullible art critic will pronounce as a masterpiece and some idiot will buy.

The problem is that ebay users aren't buying the prettied up crap in any form, but the analysts sure are.

You can bet that something big is in the works. Otherwise, why would ebay stock have increased in value more than 10% since their dismally anemic earnings report.

Also don't forget that Mahaney is a Citigroup poster child for the corporation dominated society we've become.

Citigroup is the investment you'll recall that issued a double secret memo a few years ago advising what they call the "plutonomy" of multi millionaires and billionaires that the only thing standing in the way of their total domination of the US economy is the one man, one vote "problem."

This is why Republicans have devised so many voter suppression schemes and why no one should trust anything Wall Street and its minions have to say.

And that includes anything The Ho might say and anything the little hos might print about ebafia.

One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

by: andy

Tue Feb 8 23:00:19 2011

I don't know how is related to the core/other changes but in September last year our sales dropped like a rock. We were several pages down in search where we used to be in the top like the last couple of years. I panicked and spoke to eBay (yea right!). The search got back to a normal (top) rating later. Since September my eBay sales have dropped to 2008 level while Amazon have been increasing. I now have about 65% sales on Amazon. It used to be 65% on eBay. Trying to find a pattern/logic/reasoning beats me.  

One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

by: Rich

Tue Feb 8 23:08:07 2011

For me, the huge fee hike of last April for my store has ruined my profits and forced me to do less and less Ebay.  Instead of Ebay and Paypal taking 25% which was already ridiculous; they now pay 35% and there is nothing I can do to lower the %.  Media final value fee rose from 12 to 15% and Paypal is 2.9% plus 30 cents, so even without the store fee and per item per listing fee; I'm looking at ebay and paypal taking a combined 20%.  The monthly fee tripled from $16 to $50 which is an oputrageous and greedy fee hike and the per item per month fee rose from 3 cents up to 5 cents(66% jump).  So instead of writing up 200-300 new listings every month; I write up about 30 new listings per month and periodically close my store when I do construction work.  I'm setting up Amazon store and hoping it will work.  Because I sell so little I also rarely buy anywhere(I used to buy a lot).  In the category I sell in, I charted the numbers from last April 1st and the total listings from April are down 15%. Just 10 sellers have stores of 10,000 or more items in the category I sell in; as opposed to 17 from last April.  So what's the bottom line? Ebay marketplace will continue to see little growth until the greedy people at the top stop raping sellers

One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

by: Rick1313

Tue Feb 8 23:35:49 2011

I would want to question Mr. Mahaney at this Analyst Day more than eBay.

His ''two of the most important changes'' are (deliberately?) misleading.

They read more like an eBay propaganda press release than a factual representation of the changes in 2010.

Like to go more into it and give my Top-10 questions to eBay, but it will have to wait for tomorrow as I have a story to tell over on the Letters board that I want to get out of the way.

Maybe I'll even throw in a Top-10 list to Citigroup Investment Services....free of charge of course.

One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

by: Patricia This user has validated their user name.

Wed Feb 9 00:14:04 2011

If you want to know what I think...just read Ming's post.  He nailed my thoughts.  I just know that every day I care (and think) about Ebay less and less.  I don't buy there and now I seldom even list there I'm far too busy working the other venues that have both some traffic and some sales for me.

One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

by: Ebay's Slow Death

Wed Feb 9 03:29:03 2011

I too agree with Ming! He said it perfectly!

Donahoe and the analysts certainly do live in a separate (dream) world than the Sellers and Buyers on Ebay.

I use the free 100 any-starting-price listings on Ebay, and have the items transferred to Bonanza. I sell hardly anything on Ebay anymore, so why take the time to list there?  It is simply a waste of time. And, as mentioned already, I buy very little there now. The Sellers are dying. It is painful to watch.

I got an e-mail from Goodwill today, so went to look at their auctions again.  They are doing great. People are bidding high for items you probably couldn't even get one bid for on Ebay. Also, Goodwill charges awfully high shipping. If you charged that much on Ebay, your Shipping DSR would get whacked real fast. So auctions aren't dead, except on Ebay.  I think both Buyers and Sellers have abandoned the site. Most are disgusted. I know I am.

Ebay is simply not worth my time and trouble any longer. Better to list on Bonanza or elsewhere, where it costs very little.

Apparently, Ebay is still making lots of money. But, I can't figure out where it is coming from other than PayPal.

I closed my Ebay store several months after the April 1st dump. I went from selling 5-10 items a day to almost 0.  I tried everything I could think of, but nothing would help my sales. Finally, I gave up. I know it happened to a lot of other Sellers also.

I read the analysts' crap, and am certain those guys make up the business sounding words, but none of it is based on the real world. I guess they think it makes them sound intelligent.

Donahoe is the king of nonsense business speak!  He will probably be spewing it voraciously at the analysts' meeting. Stay tuned....

One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

This user has validated their user name. by: Ina

Wed Feb 9 03:40:55 2011

eBay is going to outline another 3-year plan at Analyst Day! This one for online payments, says BusinessWeek:

http://bit.ly/hAqMgL

One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

by: Digby
Web Site

Wed Feb 9 04:51:01 2011

Yes I consider my self to be reasonably intelligent and I know how business works, as I used to sell business software.

But of those last 20 questions I cannot understand half of them.
As others have said it is just business speak which means nothing.

Ask them some real questions!
Like
1 "How can they compete against the ecommerce market which seems to be growing steadily."
2 "Are they happy with JD's 3 year turnaround plan?"
3 "Do they see their business as fixed price ? and if so why do they offer free auction listings?"
4 "When will Paypal sell off ebay?"


One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

by: coconut

Wed Feb 9 05:58:07 2011

It means more money for me.

I haven't listed an auction style listing in a year. Why should I????

All my listings are 0.05 cents for store Fixed Price that all show up in Core. Sales have been great.

If you look at all the diamond sellers they don't list anything but fixed price. Why pay high fees to list in Auction Format when it doesn't sell. List in Fixed.

One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

by: just one question

Wed Feb 9 06:28:29 2011

I would ask this question:

Since ebay moved store listings into the core, effectively adding 100 million+ listings to the core, why has growth only increased a dismal 4%?

One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

by: old timer

Wed Feb 9 08:09:29 2011

The effect on my business? Well, I can't blame the eBay changes of a year ago for ALL of the challenges in my business. The poor economy has also hurt, although other on-line operations (ie Amazon) seem to be a lot less affected than eBay by the "economy".

But here is what I do know:

1. Since the changes were instituted my eBay sales dropped off a cliff while my costs soared. So rather than pour my money into an under-performing "venue" (eBay), I had to take drastic action. I have cut my eBay store listings by over 90% from nearly 1,000 to well under 100. I also take advantage of the free auction listings to list auctions under another non-store ID.

2. I have moved the bulk of my inventory to other venues. Do they get the same traffic as "old eBay"? Of course not, but they do generate better sales for these items than the "new eBay" was providing. And at far lower costs. eBay used to be 100% of my on-line sales. Now it's less than 20% and dropping. Partly because I have shifted my focus, but also because eBay simply doesn't work as well for me now.

3. I still use eBay, but now I stress the word "use". As I mentioned above, in the the past I used eBay exclusively for my on-line sales (and purchases). Now I primarily "use" eBay as an advertising venue to drive customers and sales to my other venues. Admittedly it's been a slow process, but it at least has seen positive growth, unlike my experience with eBay.

So to answer your question of how have eBay changes impacted me: they have encouraged to move beyond eBay. Thank you JD, your "disruptive innovation" program has benefited me, just not to the benefit of eBay.

One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

by: Rich

Wed Feb 9 08:49:38 2011

Coconut; nice plug for Ebay but the question is how have changesd affected people.  And the big store owner change is a tripling of monthly subscription from $16 up to $50 and a 66% increase from 3 cents per item per month up to 5 cents per item per month.  This fee hike has ruined a lot of ebay store profits.  And someone like you who thinks a 5 cents listing fee is a big savings; is not paying attention because you get the 5 cents but lay out $50 for it before you even make a sale.  And your commision is jacked up for having a store from 9% up to either 12% or 15%.  And to use promotions; you can't use your store account, but instead a new account which will have very low feedback. The fee hike changes have stunted growth in Ebay marketplace.  Only due to Paypal growth is Ebay stock performing well

One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

This user has validated their user name. by: Philip Cohen

Wed Feb 9 09:10:16 2011

I recently read an article that mentioned the “Dunning-Kruger effect”, which states that there is a cognitive bias in which unskilled people make poor decisions and reach erroneous conclusions, but their incompetence denies them the metacognitive ability to appreciate their mistakes. Or, as Charles Darwin put it, “Ignorance more frequently begets confidence than does knowledge.”

Now I understand how a headless turkey like John Donahoe can continue to display such confidence in his own very obvious lack of ability.

eBay/PayPal/Donahoe: Dead Men Walking.

One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

by: joelhellmann

Wed Feb 9 09:42:27 2011

The question I would ask
has this background:

A year ago my wife and I were selling $28,000-30,000 per month on Ebay, with a 12 year history and a feedback rating of 39,500 and paying Ebay $5,000 per month in fees. Now since Black Thursday in Nov. we are not allowed to list on Ebay because of one month of marginally high annononous DSR's.Now we are on two other sites selling the same $28,000-$30,000 a month and paying a total fee OF only $17.00 per month. ($200 per year) Our customers, hundreds, have followed us buying not just from us but more items from Ebay's competitors. Some have started selling on the new low cost sites. It was indeed scaryin Nov. and we lost 2 weeks income and had a bit of a rough transition period,  but our bottom line as of Jan. is up. so a belated thank you to Ebay.

But my question is to investors: How can it be good for a company to alienate long term clients who pay $60,000 per year in revenues with little or no cost and force them to go to competitors. In any business anywhere how can this be good business?

No Matter how big Ebay with this model will fail.

One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

by: livelihood not hobby

Wed Feb 9 10:26:51 2011

Question for eBay management - in full view of stockholders and the press -

Would you agree to be judged for the performance of your job at eBay and your career based upon losing everything (including NO Golden Parachute) if even the tiniest fraction above 1 percent (1%, 1 in 100) investors or sellers on eBay (your actual customers) believe you aren't "above standard" as they view it at that moment in time?

(Congrats., you are already gone!)

One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

by: Rick1313

Wed Feb 9 10:35:41 2011

Well, now that I have the Slackergirl23 story off my dinner plate and February is showing itself as being barren of buyers for my items for sale, I will now proceed to the next served course...

How did the changes affect my business?

I looked at it from the viewpoint of what I made before the change and what I'll make after the change.

When the new fee structure was announced, I took my latest invoice (Jan/2010) and applied the exact same activity to Apr/2010, which would be the first full month under the new fees.

I listed only on eBay.com (USA-based site) and only in Store Inventory Format (SIF).

With the conversion of SIF to Fixed Price Format (FPF), having to upgrade my store subscription to avoid the 20 cents listing fee for Basic Store and the new Final Value Fee (FVF) table, my April billing came out to 38% more than my January billing.

So I would have to make up that difference and more to just get back to the profit margin I had in January.

Every other seller I knew also said that the massive fee hike would be, by far, strictly to eBay's benefit and not theirs as movement of their items into core does not really give them better exposure as the vast majority of items they are selling (what you are selling and how you write out your title are the two big factors on the exposure question of the changeover) show up on the first page unless the 30+ rule kicked in for auction and FPF listings (SIF would not show, and buyer had to click on a link to see eBay store items).

Another seller I know lost TRS status this fall because of the retroactive aspect of the new open case policy.

eBay was fine with how he was performing and giving him the 20% discount on FVF until they activated the program and basically said, ''Sorry, we changed our mind and decided those open cases you had earlier in the year, that didn't affect your superior performance evaluation, is sign that you are, in fact, not doing a job worthy of having the TRS badge and 20% discount. So, no soup for you!''.

Without the TRS badge, how many sales is he loosing to buyers who just buy from (eBay.com gives a TRS only listings search option) and look at TRS sellers or, if they have a choice, they take the TRS seller over non-TRS seller? And there is also the loss 15% discount. 20% if you also lost Power Seller status.

This is a stat no non-TRS seller will ever know.

Next course, Citigroup (well done)...

One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

by: buck efay

Wed Feb 9 11:09:47 2011

Ebay change of demanding a monthly fee with no guarantee they wouldn't try & shunt me into a higher priced listing if my DSRs take a hit from an UNVERIFIED BUM buyer caused me to reexamine my selling on ebay. I figured just to break even on the listing fees, it would cost me over $150 a month JUST TO GET BACK TO GO! I realized I could have FREE LISTINGS in many other sites, and pay the venue SUBSTANTIALLY LESS if I moved to Amazon.Now I have over 5000 items on there for $40 a month and dozens of sales a day. Google Checkout steering me traffic to my website is awesome too. The only way I bother with Ebay now is the 100 free a month. Good job Fong Donafu. Took this silver powerseller that paid Ebay $25-40K a year down to about $200 oin fees, LOL! Took my 65% STR down to 9%, which ain't worth paying listing fees for! GREAT JOB DONAFU!

One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

by: Patricia This user has validated their user name.

Wed Feb 9 11:26:03 2011

Just to clarify - stockholders could care less.  They short Ebay stock which means they buy low and sell as soon as it goes up a bit. They're making their money that way and very few of them hold Ebay stock for the long term.  This is why the stockholders could care less what is going on at Ebay.

One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

by: Ron

Wed Feb 9 11:26:10 2011

Hi Ina,

My sales have tanked in a serious way since stores were folded into core search results.  I sell mostly unique antiques and collectibles by auction, so my items have been buried in search.  It's so bad that I've had to basically curtail my eBay activities after selling there for 13 years as a Gold Powerseller, that is, until recently, when my STRs and auction price results have become pitiful.  There's no doubt that the store in core move was done simply to advantage the Diamond sellers.

I don't have 10 questions, but I do have 4 very relevant ones.  I've yet to see an analyst ask these types of questions that are based on strategic plans for long term differentiation and revenue growth.

Here are my questions:

1. eBay marketplaces had shown double digit growth before the 3 year disruptive innovation plan.  Recently it has dropped to single digit growth while your competition is achieving high double digit growth.  Would you consider the 3-year plan to have been a failure? And what type of growth do you foresee over the next 3 years?


2. You say that by placing Store results into core you have provided more robust and relevant Search results. EBay was once known as a place where one could find “It”, otherwise meant to be products that couldn’t be found elsewhere.  By sublimating those unique items with millions of standardized items that can be found elsewhere on the internet, are you not concerned that the eBay brand has been altered in a way that will impact future revenues?


3. EBay had once been totally dominant as an auction website that was populated mostly by small sellers.  Since the 3-year plan was put into place, and an emphasis put on attracting large retailers to the site, we’ve seen the rise of multiple competitive websites, such as Etsy, Bonanza, Artfire etc that are geared towards small sellers.  Are you concerned that you’ve lost much of your potential growth to competitors by changing your orientation and consequently, your value proposition?


4. EBay once had a clearly differentiated marketplace, where sellers and buyers interacted in a social environment.  The new strategy has altered the marketplace to one where there is more of a retailer/buyer relationship, very much like any other e-commerce website, except without standardized processes such as a shopping cart.  Do you feel that eBay has sacrificed its original premise and, in turn, its competitive advantage?  And, if not, what do you feel is eBay’s sustainable competitive advantage as it now stands?

The questions basically all touch on the same point, which concerns itself with the uniqueness and desirability of a corporation's product/service offering and how differentiated and protected is that offering.

I'd love to hear John Donahoe answer the above questions.  I wonder if he ever even considered them when formulating his 3 year plan.

One Year Later: How Have eBay Changes Impacted You?   One Year Later: How Have eBay Changes Impacted You?

by: John

Wed Feb 9 12:13:41 2011

Here is something new all should consider about how changes impact you will it help or hurt....

eBay Inc. to Host 2011 Analyst Day

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