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Sun Apr 29 2018 09:39:14

Wall Street Starts Seeing through eBay Smoke and Mirrors

By: Reader

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Dear Ina,
It appears as though at least one Wall Street analyst is beginning to see past the smoke and mirrors of eBay CEO's Devin Wenig. (Link to SeekingAlpha.com article.) This analyst is now seeing eBay in much the same way many small sellers have been seeing eBay over the past few years.

Key observations:

* The company's latest Q1 results reveal a platform that's struggling to be relevant to users and poor forward-looking guidance that indicates management's uncertainty about the future.

* It costs nothing to use eBay as a buyer, yet eBay's active buyer pool absolutely pales in comparison to Amazon. There is no better indication that eBay's platform no longer jives with the modern consumer.

*... for a company that's posting low single-digit growth, contracting profit margins, and has little hope of being relevant in five years, eBay is more of a value trap.

* eBay still relies heavily on its core Marketplace business to drive results, but looking at the low user growth and just 1% growth in sold items, it doesn't seem the product is capable of appealing to today's buyers.

* eBay's widespread reputation for charging high seller fees also has alienated a large part of the supply side of eBay's marketplace.

* eBay is attempting to leverage AI technologies to improve the marketplace search functions on the site, but it's unclear whether this alone can bring back a swath of users.

* Acquisitions and buybacks can only help the optics for so long - the company does heavy $10.7 billion of cash on its balance sheet, but that's balanced by an almost equal ($9.2 billion) load of debt. Investments in product development are a good attempt at driving organic growth, but it's doubtful that eBay can return to double-digit user and GMV growth.

*eBay's Q1 results reveal a company that's struggling to remain relevant and is having only modest success at growing its user base and GMV.

* It's difficult to envision this company still being healthy in five years. eBay already has tried many different measures to revitalize itself, all to mixed results.

Small sellers, the canaries in the eBay coal mine, have been pointing out many of these observations since John Donahoe ran the company. Wall Street generally continued to drink the kool aid passed out in quarterly reports by the company's CEO. 

It appears that now the company is going to be challenged by Wall Street to actually grow and perform instead of relying on promises of improvement based on ill conceived marketplace changes as those many so called 'improvements' have consistently failed to produce any significant improvement in GMV growth.

Regards,
Ric

Comments (48) | Leave Comment | Permalink
Readers Comments

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

This user has validated their user name. by: mcfiver

Mon Apr 30 03:24:14 2018

Awesome letter, awesome points, absolutely dead-on. Bravo!!!

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

This user has validated their user name. by: DeathFromAbove

Mon Apr 30 03:54:29 2018

Seems like Devin Wenig has to go. He tried, and failed. Instead of looking within, he looked to hammer his customers (sellers) with even more liability and expense to try and prop it up while desperately praying one of the shotgun approach "disruptive" ideas might work.  What a terrible leader - probably not so great of a person either - notice how he never talks to his customers, but only wall street?  He could treat us like his army of awesome contracted employees, incentivize us like his friends in the silicon valley posh campus that have degrees but no relevant work or life experience - to brainstorm destructive ideas all day.  Just take, take, take, take from your only valuable asset.  Yeah, that's some REAL long term planning - more like CASH IN before you parachute out of the GulfStream onto GM's roof.

Pitchforks and torches would be how it would go down in 1865 - but in modern times someone like this gets his own secret service and private plane, and is accountable to no one but stock investors (himself).  I guess that's what halving the TRS+ discount helped pay for.

I hope whoever is next is 60+, and has 'old school' thought about keeping his/her real customers happy - oh and some morality and decency.

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: Chicago48 This user has validated their user name.

Mon Apr 30 05:55:39 2018

I just wrote my 58th letter to the EB executives that they MUST do something about payments.  What I mean is this.  When I accept a best offer, I should not have to send an invoice to the buyer (or go through 4 screens to accept the offer).  That money should be charged immediately, like they do at Posh.  But I have to wait and wait for the payment.  When a buyer places a high bid and wins, sellers should not have to wait for the buyer to pay.  But we wait and wait.
This way of waiting for payment is an old model going back decades, whereas the newer ecommerce platforms get the money immediately.
I'm sure executives know this and let's hope they're working to fix it.

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: Chicago48 This user has validated their user name.

Mon Apr 30 06:06:35 2018

"It costs nothing to use eBay as a buyer, yet eBay's active buyer pool absolutely pales in comparison to Amazon. There is no better indication that eBay's platform no longer jives with the modern consumer. "
^^
1- Today's consumer has no allegiance to any brand.  They just want the product to work and be cost-efficient.  I do believe consumers are willing to pay a little more for a worthwhile product.  With every Ebay product I ship out, I put a business card and a Thank you note for supporting the little seller like me.
2 - Ebay needs a "gotcha" like AMZ....or they need to hire some "think out the box" workers.  Who would think that AMZ prime would be the honey draw and suck up all the consumers?  I've written everywhere that Ebay bought 2 businesses it did nothing with - a) Half.com, which should have converted into a ebook and/or music-movie streaming site along with hard copies.  and b) Ebay classifieds for local sales.  The company buys other sites and doesn't know what to do with it.

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

This user has validated their user name. by: Rexford

Mon Apr 30 06:42:00 2018

Any sane group of C-level leaders would read this and immediately realize "we are losing our customers" (i.e., their sellers).  eBay, as always, will blame their sellers.  They will learn nothing from this.  They do not wish to remember what once made them successful.  They will only study the other platforms (you know, the ones where the rats who left the sinking ship went to) and try to emulate.  They will double down on using Amazon's playbook in hopes of being bought by them.

What this article really signals is that DEVIN WENIG HAS TO GO!  And hopefully he takes Griff and the rest of these platform destroying leaders with him.

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: JQ This user has validated their user name.

Mon Apr 30 06:57:27 2018

Sellers on eBay have know for the last four years that management has been undermining the site's original foundations while hoping to transform it into something quite different. The problem is, their vision of the future was always quite murky, and their pathway to get to it involved thugishly tossing its long term buyer and seller bases under the bus.

I have been surprised management has been able to keep the site profitable for investors (if not for sellers) but, like all long time users, I knew all they had were hollow profits paid out as virtual bribes to investors financed by sacrificing any long term prospects of holding their old user community together. Most of that old community, the people who actually made eBay the enormous success it was for its first 15 years, have been alienated and/or driven away.

EBay has very little foundation to rest on now, and no coherent goal other than being a more annoying and inconsistent version of Amazon. Which is exactly what eBay users have been saying quite publicly for the last 5+ years.

Donahoe used to claim he wanted to get eBay away from it's "flea market" image. Which always piss*d off the tens of millions of people who loved to buy and sell on the site. What he and his protege Wenig have produced is a site that no longer looks like a friendly user-driven e-commerce site and more like a depressed strip mall populated by dollar stores and discount chains.

It's all a very depressing situation for those of us who worked hard for years to create the site that Donahoe and Wenig destroyed without ever understanding its actual identity and value. And sadly, those two clowns and their yes-men enablers have been walking away with tens of millions of dollars stolen from the same sellers they have been destroying.

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: Pangie777 This user has validated their user name.

Mon Apr 30 07:32:10 2018

Maybe Devin Wenig (and entourage), have taken their selling philosophy from Homer Simpson.

Said to a distraught Lisa:

"You tried your best and you failed. Miserably. So, the moral of the story is, 'Don't Try'."

 

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

This user has validated their user name. by: RKTOYS

Mon Apr 30 07:57:15 2018

That's how business culture is though.  Failure is rewarded and bright lights snuffed out.  People keep acting like GM is bring fooled into taking this loser.  They're not.  Their board is full of people just like Wenig.  All corporate boards are.  Like George Carlin said, it's a big club and you ain't in it.

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: 1st Armored Div. 1971-1973 This user has validated their user name.

Mon Apr 30 08:22:40 2018

Fix the "One Size Does Not Fit All" attitude. Ebay needs to be broken up by the sales model. Separate commodity sellers from OOAK "One of a kind" sellers for a start.

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: Barbbie This user has validated their user name.

Mon Apr 30 09:02:27 2018

Hopefully, someone will attempt to fix it now.
Sad that it has come to this.

It made me thing of years ago when I worked downtown, restaurants that were successful that we would go to pretty much daily would be sold and change hands and before you know it, you would be out there looking for a new place to go because the menu changed. What kind of dummy pays top dollar for a successful going business with standing to the door lines and then completely changes the menu... Same with ebay, formerly successful company that they are planning on making a completely different one than the one we used to like.
I do not want another amazon, I do not need another amazon. I like choosing the seller and seeing the seller's words, not someone else's description that may or may not still sell the item. Just stop before the 5 year prediction becomes a reality!

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

This user has validated their user name. by: Bidonmine

Mon Apr 30 09:14:03 2018

I have been selling on Ebay since the first year of Ebay's existence. An easy fix would be to go back to the search functions they had before Best Match. It seems that no one complained about their items being seen or what was selling back then. They should also make-up with Google and all the other search engines and spend a buck to have everything showing up their as well (as it used to, those many years ago).
Happy sellers will drive eBay, but the powers that be do not understand this simple concept.

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: JoelHellmann This user has validated their user name.

Mon Apr 30 09:51:37 2018

I wrote all this after the Nov 4 2010 move by Ebay to Kill tens of thousands of sellers due to a metric that was totally flawed. I was perhaps the largest seller that this hit. I paid $5000 Per month in Ebay fees, and I was thrown off because 2.5@% of my customers didn't like that they had to pay the shipping they agreed to. I wrote then that any company that behaves like this will go out of business. Ebay was first and had a huge advantage. and they pissed it all away. They can fake numbers for a while, but the writing is on the wall. Ebay was great. and it was killed by bad arrogant management policies.

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: wilburnet This user has validated their user name.

Mon Apr 30 10:56:25 2018

Very interesting read. Its all hilarious that Ebays life support could be turned off forever in 5 years. Maybe Ebay cheerleaders already know this but are in denial ?

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: epuise This user has validated their user name.

Mon Apr 30 11:07:44 2018

and still... THIS Corp. - that promotes Chinese Sellers & OUTSOURCES Customer Service... got a U.S. TAX CUT from 35% to 21%... and THIS CEO - gets huge pay... ALSO at a CUT RATE... while small sellers can't pay basic bills... unreal... WAKE UP PEOPLE

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: ebayout This user has validated their user name.

Mon Apr 30 11:36:49 2018

Try to imagine the ebay War Room...the floors are covered in spaghetti that didn't stick.
The time for ebay to be successful by being "clever" is so long gone...they keep stepping over dollars to pick up pennies.

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: Mark4 This user has validated their user name.

Mon Apr 30 11:58:53 2018

Surprised it's taken wall street this long to wake up.  

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

This user has validated their user name. by: Rexford

Mon Apr 30 13:35:09 2018

The ONLY thing that will save this company is for eBay to figure out a way for sellers to make money again.  Hiding sellers some or most of the time clearly isn't working.  If sellers could make money like they used to, they might actually spend some of it on eBay.  They would once again have a thriving ecosystem.  And bring back the diversity of the product mix.  The "dollar store" comment above is very accurate.

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: pace306 This user has validated their user name.

Mon Apr 30 14:47:34 2018

This article wont be eBays demise - or even DWs.

Next SellerDowndate will have fee increases - to help create new revenue. Most eBay rates are still below Amazons, matching them or making them %1 less will "again prove to eBay (itself)" that they are Amazons competition.

The "surface area" of ads will increase and will sponsored listings - regular sellers will go from 2nd to 3rd class citizens.

DONT be suprised when the buy boxes are DOMINATED by the sponsored listings - the rest of the listings will "follow" on page 2 or 3 (just so eBay can show they "heard sellers cries and are increasing visibility of said listings".

eBay (again) will give special attention to brands and retailers - dont believe the Target defection to be any more then a bump in the road for ebay. The lived with out buy.com aka Rakuten, they lived just fine with out Macys etc  - they will live "just fine without Target".

Bed Bath and Beyond is failing (sorry Lori)(shark tank) - Im sure that some brain dead eBay person will work on some kind of deal OR create something similar with someone else.

eBay will use the Adyen forced payment processor to "save money" on processing cards - should be 1-1.5% in savings and of course eBay will keep keep the float as long as possible. Thats alot of money to keep and show as NEW revenue.

eBay will also use their new control over funds to force refunds, find against sellers %99 of the time, and will generally continue to bully sellers when possible.

"That" makes the site "safer", "more profitable" etc.

GM is betting that Fords exit from making cars (keeping SUVs and trucks) will save them - REGARDLESS of what DW does. Plus DW wont have more power then then as an advisor - not even a mentally challenged monkey would let him make a decision on what car ro make (it would be like Homer making a car on the Simpsons).

Its great that SOMEONE finally recognized what we all knew/know for the past 10 yrs - but until CNBC etcget it on their Power Lunch show ... investors will stay with eBay - for its slow and steady growth ...

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: ebayout This user has validated their user name.

Mon Apr 30 15:16:30 2018

How long can "slow" growth and NO dividends fan stockholder enthusiasm?
Makes a CD look positively alluring...and no broker fee.

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: Whatever This user has validated their user name.

Mon Apr 30 15:53:52 2018

Why does everyone talk about the Hoe - it all started with Whitman - once a corporation starts paying a CEO millions of dollars it's just a matter of time. And a CEO lawyer jesus = there's a disaster just waiting to happen.  Sorry to see the old gal go completely down the drain but it is what it is.  Most good and honest sellers have another venue or several if they need to survive. Amazing it took Wall St so danged long to catch on. April has been a total disaster for me selling wise.  I just keep moving inventory to the website. Sad isn't it? Why do you think Wenig took a chair at GM? dah. First shot across the bow.

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