One thing consistently on the mind of eBay users is the website's fee structures. Since last year, users have been openly voicing their disappointment with what they consider to be abnormally high selling fees, and it seems like Donahoe will quickly look to address these concerns.
Donahoe said that within a few weeks, we will be seeing a brand new fee structure from eBay. In response to what users are demanding, eBay is planning to lower its upfront listing fees, but at the same time will be raising final selling fees. These final fees are only paid once an item has been successfully sold, and I am sure that users will not like to hear this too much, but they should be happy to hear that the initial listing fees are going to be reduced.
Another big change for eBay will be the emphasis the site places on fixed-price items. Historically, eBay has mostly been about one simple thing: user-to-user auctions. Now that the company finds itself in some steep competition with rival Amazon.com (NASDAQ: AMZN), the company has decided to put more emphasis on its fixed-price items, bringing a much greater "Amazon-like" experience to eBay.
While the new changes may ring positively for eBay users, it will more than likely lead to lower revenues for the company in the short term. As a result, the company was forced to lower its guidance for the current quarter as well as its full year 2008 outlook, which has resulted in shares falling in today's session. The stock traded down to a new 52-week low of $25.75 earlier in the session, but has bounced a bit from the lows up to $26.70, which is down 7.6% with about an hour left in the trading session.
Looking down the road, it is anyone's guess how the new changes will impact eBay's business. I assume that the lower initial listing fees should result in more listings on the site, but will it be enough to get eBay back to its glory days? Time will tell, and until we get more details on the upcoming fee structure, it's just way too early to predict what reaction eBay users will have to the new changes.
Other changes that some industry insiders are calling for Donahoe to consider are structural changes to the company. Will Donahoe look at the possibility of selling off Skype? How about the option of spinning of its popular PayPal business into a separate company? Both of these options are choices that Donahoe will undoubtedly be forced to consider once he takes over the reins a few months from now.
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer