Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Thu Mar 5 2015 11:20:56

PayPal President Reveals What eBay CEO Wouldn't Say

By: Ina Steiner

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Who's right and who is wrong about eBay holding back PayPal's growth, eBay CEO John Donahoe, or PayPal new president Dan Schulman?

Yesterday, Schulman said certain companies have been loath to work with PayPal "because we were part of eBay and they considered eBay to be a competitor," and he said once the spin is done, PayPal would be a neutral third party to merchants. That's a significant revelation.

But Donahoe was adamant a year ago that PayPal was stronger with eBay. "No other payments competitor has achieved PayPal's success - because no other competitor has a commerce platform like eBay. In fact, today we see more and more commerce and payments competitors trying to replicate the eBay and PayPal model. We are seeing a convergence of commerce and payments businesses, not a separation."

Donahoe had gone on to give three reasons why eBay helped PayPal.

One: eBay accelerates PayPal's success.
Two: eBay data makes PayPal smarter.
And three: eBay funds PayPal's growth.

It's certainly clear that PayPal derives a significant amount of revenues from eBay - in its Form 10 filing with the SEC, PayPal said its business could be harmed if its relationship with eBay changes.

Commenting on this morning's story about Schulman's remarks, a reader wrote, "Calling out what is now your biggest client for holding you back publicly is not always a real bright move." He continued, "It's all nice when people say "PayPal on its own is worth more than the whole eBay." This may or may not be true, but how much less is PayPal worth if eBay went away, closed tomorrow?"

eBay and PayPal will be forced to work together and share data with each other after the breakup due to agreements they are putting in place now in order to protect that revenue. So will eBay competitors feel any differently about working with PayPal? It sure sounds like PayPal is trying to have its cake and eat it too.




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Readers Comments

Perminate Link for PayPal President Reveals What eBay CEO Wouldn't Say   PayPal President Reveals What eBay CEO Wouldn't Say

by: moto-science This user has validated their user name.

Thu Mar 5 11:44:50 2015

Here's what he didn't say, the close association with Ebay and their horrible customer service is also hurting paypal.

Perminate Link for PayPal President Reveals What eBay CEO Wouldn't Say   PayPal President Reveals What eBay CEO Wouldn't Say

by: Steevo This user has validated their user name.

Thu Mar 5 12:01:29 2015

Yeah, none of that is exactly a surprise.  

No one is going be enthusiastic about dealing with Paypal when they were owned by ebay, a direct competitor.  

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by: gizmo This user has validated their user name.

Thu Mar 5 12:03:25 2015

Paypal is the smart one , Id get away from deadbay too. Oh! , for the most part I have. Deadbay made their bed ,  tierd of being assoc. with crooks.

I hope paypal puts a hurting on deadbay , The way they have wronged the sellers , they deserve much worse.

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by: Patricia This user has validated their user name.

Thu Mar 5 12:55:16 2015

Time will tell but I think Paypal's business will be just fine without eBay.  I see Amazon waiting right around the corner waiting to deal with Paypal.

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This user has validated their user name. by: iheartjacksparrow

Thu Mar 5 13:17:29 2015

Unless eBay offers additional payment options, such as additional payment processors or "paper" payments, I don't see how the eBay/Pay Pal relationship would change in the eyes of any company.

And I agree with the comment in the article that that PayPal is worth more than all of eBay since eBay doesn't own any merchandise. If all the sellers decided to leave tomorrow, eBay shares would be worthless.  

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by: comments This user has validated their user name.

Thu Mar 5 13:48:35 2015

JD did everything in his power to stunt ebays growth. Ebay could still be a mega powerhouse. Instead they took all the value out of ebay items. All the sellers of low cost items are not banned or limited. The revised fee killed off the value pricing in big ticket items. Also with return defects now it is almost like you are breaking the rules if you are selling high end collectables. Those items frequently returned since buyers are understandably picky when shelling out hundreds or thousands of dollars. Yet those sellers are held to the same standards are held to the same standards as people selling NIB items. These products are not equal! This is not even considered.

Paypal is going to sink after the split. If this new guy comes in as CEO and does not drastically start dropping all the counterproductive policies and clean house of current management then ebay is not going to have any sales for paypal to process payments for.  

Perminate Link for PayPal President Reveals What eBay CEO Wouldn't Say   PayPal President Reveals What eBay CEO Wouldn't Say

by: ignatz This user has validated their user name.

Thu Mar 5 14:05:48 2015

Amazon will never offer PayPal.  There's not a thing in the world PayPal offers that Amazon couldn't implement in under a year if it wanted to.  Why would it want to give away a chunk of its profits to a company that is still tied at the hip to ebay, and will be for the foreseeable future (in renewable 5-year spurts!)?
And it's funny how much they stress mobile payments when it only represents 25% of their business.  Yes, it's growing. But if Apple is serious about ApplePay, PayPal will see that growth shrivel up and blow away.

Perminate Link for PayPal President Reveals What eBay CEO Wouldn't Say   PayPal President Reveals What eBay CEO Wouldn't Say

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

Thu Mar 5 14:16:30 2015

They amazing disconnect goes on and on and on.

Most sellers hate ebay and PayPal because they're both covered with and continue to ooze sleaze and slime.

Regulatory compliance? Only because this BANK isn't regulated like a bank but rather a private playground money machine for billionaires.

We;'re ging to be a lot more pro PayPal and pro ebay propaganda from within and without ebay and PayPal in the coming months to mitigate the acts that The Ho royally screwed up Carol Icahn's investment.

The situation at ebay is far worse than you know, Carl!



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by: Volvo351 This user has validated their user name.

Thu Mar 5 14:24:17 2015

PayPig to be "neutral 3rd party?"  Dream On!  At the outset, they would only arbitrate "SNAD" complaints if the item sold thru fleaBay.  Then, they started giving scammers the seller's money back regardless of the "platform" on which the item was originally listed.  This included nominally face-to-face sites like What's-His-Name's List.  Since listings on C/L expire weekly, a seller had no "evidence" to dispute a scam claim filed a week later.  Result: it became EXTREMELY dangerous to accept PayPig, even away from fleaBay.  

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by: Volvo351 This user has validated their user name.

Thu Mar 5 14:30:13 2015

As Ming stated, we're in for more propaganda and outright LIES from the Two-Headed Monster, fleaBay/PayPig.  How long 'til someone ponies up at least $7B [it has $6B in CASH - thanks to The Hoe!] and the "spin-off" is completed? How much longer do fleaBay paying customers [the sellers] have to put up with The Hoe's nonsense?  Will a new CEO make this site "just a venue" where we can operate our independent businesses without unwarranted interference?  Will he/she roll back FVF's to a sane level?  Will site PROMOTION resume?  

Perminate Link for PayPal President Reveals What eBay CEO Wouldn't Say   PayPal President Reveals What eBay CEO Wouldn't Say

by: Lamprey This user has validated their user name.

Thu Mar 5 14:57:41 2015

I see ebay as sandbagging sales for well over a year in anticipation of this split with PayPal - this is part of what Cassini was about (Carl Icahn just jumped on board onto a process already started).  I run two stores on ebay and am throttled to within a narrow range in sales every month for both stores combined.  The excuse, of course, would be liability for ebay AND PayPal combined....the real reason imo, is to set up easy sales comps after the split.  Any successful lawsuit out of this will come from shareholders during this pre-split period.  

Perminate Link for PayPal President Reveals What eBay CEO Wouldn't Say   PayPal President Reveals What eBay CEO Wouldn't Say

This user has validated their user name. by: Rexford

Thu Mar 5 15:04:05 2015

Ask any small seller who sells on eBay and they will tell you that eBay is holding them back.

They will also tell you that this was not the case before Donahoe took the reins at eBay.

Perminate Link for PayPal President Reveals What eBay CEO Wouldn't Say   PayPal President Reveals What eBay CEO Wouldn't Say

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

Thu Mar 5 15:05:25 2015

“PayPal has been held back by eBay”?—LOL—Let’s see how much eBay has held “PreyPal” back when and if, in the probably unlikely event, eBay allows competing payments processors onto the eBay marketplace, or heaven forbid, eBay ever removes “PreyPal” as a payment option from its marketplace …

“He also offered reassurance to those who might be worried about the threat Apple Pay could pose to PayPal.”—LOL—I’m not an Apple fanboy but I have no doubt that Apple Pay will hurt PayPal “mobile”; but, ultimately, “PreyPal” will be buried alive by the likes of the new Samsung Pay / MasterPass / Visa Checkout operations, in association with the world’s retail banks …

“… with one billion of its four billion transactions in 2014 coming from mobile.”—PayPal has elsewhere already admitted that their ongoing attempts at breaking into “mobile” payments have not been successful and yet Schulman is here claiming that “mobile” transactions represent one-quarter of PayPal’s total transactions …

“brand that consumers trust”—LOL—do a Google search …

“customer service”—LOL—another Google search …

“regulatory compliance”—LOL—As, generally speaking, only a licensed money transmitter—not a licensed financial institution—PayPal may often unlawfully hold payees’ funds for lengthy periods of time …

“Schulman also referenced the recent layoffs at PayPal”—Yeah, things are going so well we thought we would axe ~1000 from PayPal (eBay's CFO Robert Swan said, of the 2400 to go, cuts would be higher on the Marketplaces side and a little bit lower on the PayPal side.) …

“There have been certain partners that have been loath to work with us because we were part of eBay and they considered eBay to be a competitor, …”—Disingenuous nonsense! What sort of company, that might now want to partner with PayPal, would have previously considered eBay a “competitor”? The reality is, this separation is a “divorce” of convenience, it’s not a real divorce …

The whole of this presentation has been a typical disingenuous pitch to investors; hopefully not too many will be conned into buying into this clunky intermediary operation …

Fortunately, for anyone with any direct experience of eBay Inc., it’s very easy to tell when an eBay or "PreyPal" spokesperson is being disingenuous—their lips are moving! ...

The eBay executive suite—where the incompetent mingle with the disingenuous, the malevolent and the outright criminal, and the just plain stupid ... http://bit.ly/11F2eas

Perminate Link for PayPal President Reveals What eBay CEO Wouldn't Say   PayPal President Reveals What eBay CEO Wouldn't Say

by: Volvo351 This user has validated their user name.

Thu Mar 5 15:22:37 2015

@Rexford

JD sucked up to his Big Box retailers and threw the entire customer base [the seller membership] Under the Bus.  He and his hoity-toity MBA were simply too good for the "flea market atmosphere" that had created the "very successful past" that he was willing to flush down the ol' Hopper.  The corrupt BoD kept throwing millions at him so failure had no consequences.

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by: Volvo351 This user has validated their user name.

Thu Mar 5 15:29:06 2015

@Lamprey

If I read your post correctly, you posit that JD is severely throttling sales now, and planning to engineer a big bump after the PayPig spinoff. This would presumably "prove" the wisdom of his strategy and justify all the $MM's wasted on this PoS.  

Only problem is, where's the bump going to come from?  He's driven away hundreds of thousands of reliable sellers, and crippled the rest.  We aren't listing as many items as before due to Hiss Poor sell-thru.  We avoid high dollar items b/c of scams and rip-off fees.  He can't turn around those attitudes on a dime, as this kind of scheme would require.

The $23MM "retention" will prove a complete waste of dough, as has every dollar paid to this waste of oxygen we call The Hoe.

Perminate Link for PayPal President Reveals What eBay CEO Wouldn't Say   PayPal President Reveals What eBay CEO Wouldn't Say

This user has validated their user name. by: Ric

Thu Mar 5 17:42:23 2015

Not to put too fine a point on it., but this statement and others like it lay bare the massive inadequacies and misjudgements of soon to be former eBay CEO John Donahoe.

Sellers have been saying it almost since JD's first day at the helm but, as usual under Donahoe, nobody wanted to hear what sellers had to say

The pathetic truth about Donahoe's too numerous to count miscalculations are being exposed and will come home to roost in a bad way for eBay in the near term.

In the long term, if eBay has any chance of returning to it's past levels of performance, the company needs to reach out to sellers, solicit their input and focus on what sellers need and want.

eBay tuned out sellers when Donahoe declared sellers were "noise".  It turns out that the "noise" has their own best interests at heart, and what would have worked for sellers would have worked for eBay.

eBay has been promising sellers for all too long that things will get better, but the company has failed miserably in it's efforts.

The only way to turn this around - the only way eBay's marketplace can survive will be for the corporate cultures at eBay to undergo a complete reversal. The many concerns of sellers must be placed ahead of the disastrous course the company has embarked upon this last decade.

Perminate Link for PayPal President Reveals What eBay CEO Wouldn't Say   PayPal President Reveals What eBay CEO Wouldn't Say

by: Lamprey This user has validated their user name.

Thu Mar 5 18:32:06 2015

Well, I'm just trying to figure out why a company would logically forgo revenues in the short run and handsomely pay their top executive for poor performance.  It does make sense...if you're willing to ''follow the money'' - in this case, post split. I could be wrong...we'll see.
Oh, I'm probably in the minority here, but in my opinion - even with the damage done to ebay marketplace over the past few years, the wide moat is still in that side of the business if they are will to take it.  PayPal has REAL competition breathing down their neck now (ApplePay, AliPay, etc.).  I also sell on Amazon, so I do see where ebay's real strength still is - and is not.

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by: Lamprey This user has validated their user name.

Thu Mar 5 19:20:14 2015

As a follow-up...it's no secret what Bain culture is about.  This break-up was probably part of the plan years ago -- of course, no one was expecting Apple to jump into the payments processing business!

Perminate Link for PayPal President Reveals What eBay CEO Wouldn't Say   PayPal President Reveals What eBay CEO Wouldn't Say

by: pace306 This user has validated their user name.

Thu Mar 5 20:55:44 2015

DUH, eBay holds back ANYONE and EVERYONE thats associated with it.

JD is King Midas in reverse - he turns gold (old eBay) into lead (new eBay).

eBay never HELPED Paypal, eBay used Paypal as the bad cop in its game of good cop/bad cop with sellers. They were then FREE to claim that they were the good guys, the ones that stuck up for sellers, the ones that generated all the cash. In reality, it was all misdirection.

EVERY poster here knows the stick comes from San Jose (eBay) and not Paypal.

Paypal (as most here have said over and over) are ONLY as good as VIsa and Mastercard let them be.

Paypal is a pyramid scam to start with. Paypal takes in X number of dollars and HOPES that its payouts wont exceed that amount. Every year that it does, it claims a profit.

What do you think the 180 day return BS is all about? Its not about sellers OR buyers - PLEASE - if you think Paypal is nutral and cares about either - your crazy. Paypal does what the cc companies tell it to and when the HUGE amount of chargebacks started growing by the THOUSANDS, something had to be done. Thats why when you call Paypal - the FIRST question they ask is "sir is this an EBAY transaction"? They too know the stink from San Jose.

CHargebacks cost money and the 180 dsay BS lowers theri exposure and costs PERIOD.

If Visa/Mastercard told them to jump off a bridge and that it would lower rates - they would. Legalities and loyalties be damned.

eBay holds everyone back, because the top brass hold the company back. JD should be arrested and led off in chains for all the crap hes pulled. Certainly, he hasnt enriched the company like Jeff Bezos did !

The Spring US Seller Update is the test - lets see what the DUMMY Wenig can do to revitalize eBay.

I think we all know - his ONLY move is to raise fees - hes a one trick pony.

Perminate Link for PayPal President Reveals What eBay CEO Wouldn't Say   PayPal President Reveals What eBay CEO Wouldn't Say

This user has validated their user name. by: Unicorns and Rainbows

Thu Mar 5 23:02:39 2015

Ina: "So will eBay competitors feel any differently about working with PayPal? It sure sounds like PayPal is trying to have its cake and eat it too."

Of course they won't feel any better!  The "Agreements" basically leave the same data mining / data sharing situation that exists today in place for at least another 5 years.

Unlike most people, I've always believed it is PayPal that holds eBay back... many buyers won't use PayPal, many sellers won't accept it.  

The fundamental problem with PayPal (besides their ridiculous anti-seller policies designed to protect PayPal from rampant online fraud) is that they are a useless hold-over from the days when everyone was afraid to enter a credit card number on a computer.  The future is direct credit card payments, like Amazon or Etsy Direct Checkout.  

So they both (Donahue and Schulman) are wrong.  

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