This is the fourth in a four part series which I hope gives buyers, sellers, shareholders and dare I say management a platform for discussion.
This week I envisioned an eBay (NASADQ: EBAY) without Skype, eBay Motors and Paypal. Everything goes to the highest bidder, excluding handling and delivery of course.
While EBay might benefit from selling Skype and Motors, considering they might be worth more to others like Cisco Systems (NASDAQ: CSCO) and AutoNation Inc. (NYSE:AN), it should not sell PayPal unless it is contemplating a merger, since the acquiring company most likely would want PayPal to be an integral part of any deal.
Ebay is going through some growing pains right now but it is still a primary center of activity on the web. Although there are many disgruntled sellers that have left the site or been forced off because of the constant changes in the rules, it really has only one main rival and that is Amazon.com (NASDAQ: AMZN).
Over the course of time, these sites will become more alike than they are different. Amazon evolved from an on-line book seller into the largest retailer on the web. Ebay has evolved from a mom and pop auction and trading site to an outlet for selling everything under the sun. And the barriers to entry seem high for a third player in this space, although the market has been surprised before.
It seems to me that eBay has done a poor job of interfacing with the disenchanted. On the other hand eBay is not a baby sitter for these businesses. If the business is not viable on eBay then perhaps it might be viable on another site. If it is not viable on another site, well, then maybe it is not really viable, or it's viability has diminished. The frequent users of eBay that I have spoken to think the site has become "cleaner and easier to use". But that is only a small sampling and may prove nothing.
Despite all the criticism being flung at eBAy it remains a strong business. I would even argue that ebay, right now, is a far better investment than it's rival Amazon.
Ebay is trading at a P/E ratio of 7.7 while Amazon is trading at a P/E of 29, ridiculous by my book; see Amazon downgraded by Citi -- call me at $30.
eBay has acquired other companies over the years that have contributed to its bottom line and overall growth. These include Half.com, Rent.com, Shopping.com, Stub-Hub and StumbleUpon. This process will not stop. Every company goes through growing pains and eBay is much less traditional than Amazon in a very tough market place.
The following are links to the first three stories
- Serious Money: eBay should auction off Skype
- Serious Money: eBay should auction off eBay Motors
- Serious Money: eBay auction off PayPal -- create bidding war
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of EBAY.











Reader Comments (Page 1 of 1)
11-14-2008 @ 5:42PM
Tim said...
Ebay is experiencing growing pains alright. They've lost millions of sellers and buyers & their stock is trading at $12 a share. Just like millions of people, I'll never return. It's now useless.
11-14-2008 @ 5:51PM
william lindblad said...
"It seems to me that eBay has done a poor job of interfacing with the disenchanted."
Sheldon, that is one hell of a short statement dealing with an extremely complicated subject. If you or I had to deal with all of the complaint potential I think that a contrary view would be in order.
Just "who" is disenchanted? The big selling "marketplace" dealers are one. Ebay raised fees and changed the buyer seller/complaint/rating rules. When someone does not pay you cannot post "negative" comment. Good/Bad? It is an area that also can easily be abused, hence they appear to be taking a middle ground.
I am sure the fraudulent crowd will never be content, unless they are ripping someone off. Ebay goes after them, but they are hard to catch. It is an area built on trust and if a seller has a solid reputation, they will sell. Ebay is going to survive as long as they have sufficient COH to weather this storm.
I don't know of any time in human history where trade stopped.
11-14-2008 @ 5:56PM
Sheldon L said...
Will,
The brevity of the statement comes from having posted thousands of words on the subject and participating in the dialogue for quite some time.
Nonetheless -- point taken ;-)
11-14-2008 @ 8:29PM
Lynne said...
Ebay is going down further in price than it has been in 8 years. What part of that do we not understand?
The entire marketplace has been invaded by cheap asian imports, in the retail sector, and no one is purchasing the junk. Instead, ebay announces to these sellers that they should be lowering their prices at least 15 times a month. It is totally insane!
Sellers are outsourcing junk from other countries that ebay referred them to, then they criticize the seller for charging a fair price and shipping. Ebay treats it's sellers like idiots. As if they should be selling for a profit of $.05 a piece. Yeah...sure..
They need to get rid of that new CEO. He has no idea what he is doing. He hates auctions, he hates "used" items, and he hates what he calls "noisy flea market sellers". He's made so many impulsive and ridiculous policy changes it's already becoming a big joke on the net.
Make John Donahoe go away. Ebay was fine the way it was. Get rid of that Scott Wingo and his stupid marketing ideas as well. He's been one of the disruptive demons of the company.They will both be causing the complete destruction of the core marketplace, if they haven't already.
11-14-2008 @ 11:25PM
Loathe Ebay said...
My point of view is that if all those greedy buyers which happen to be sellers under another name would have stopped ripping people off, ya know the illegal's, the ones who collect from every source of OUR US Gov't and sit home and scheme and destroy their competition, some people know what I mean to say. I would say it, but it will not be printed. Comprende? They caused so much aggravation by always complaining they are minorities and so on. They have destroyed me as a seller. Now what am I to do, let them go on and sell with any problems? Yeah sure I will. I have lost thousands of dollars because little Juan thru the toy down a flight of steps 7 weeks after receiving it and mamsita threatened me with calls to my home, etc. But she can sell her outlet crap on there, yeah...well I don't think so. After replacing it, then the whole country that came here with her, started the same nonsense. They must think an educated experienced seller can not decipher their lino, they can't SPELL! That's how I find them and they can't TYPE. But the whole country comes after the seller (me) with every excuse they can muster. What are they doing in my country anyway. Go back to Mexico.
11-15-2008 @ 7:55AM
Virgil Bierschwale said...
I recently wrote the CEO of ebay an email telling him how to fix the system so that people like me that refuse to do business with ebay will come back.
Never heard a response, but I write that off to the ivory tower mentality that is destroying our country.
Here is the problem with ebay.
I listed my laptop last year for sell and three times I received a notice that it was sold and that I had been paid via paypal.
So I checked and there was no money there because it had been some type of nigerian scam, so I relisted it after notifying ebay.
They charged me 3 selling commissions even though it has never sold and it took most of a year to get it straightened out, so I refuse to do business with them.
The solution to get people like me to business with them is very simple.
Any bidder who is bidding on an item must have that much, or more cash in their paypal account as this will immediately stop the scammers.
Virgil
http://www.KeepAmericaAtWork.com
11-15-2008 @ 9:53AM
Leah said...
EBay has made some serious changes in the last year, one right after another. It doesn’t really bear a resemblance to what it once was. While these changes were meant to be positive and good for the members and to clean the place up it has in fact created a free for all for all sorts of scams.
Sellers now have to cater to everyone, the honest and dishonest alike and it seems that the dishonest are more plentiful than not.
The police changes do not apply to all sellers equally nor does it apply to all buyers equally. A visit to eBay’s community boards would be quiet an eye opener for most. There are some real shocking truths to be found there.
The word disgruntled seems a bit harsh to me in this article, I was a seller but disgruntled seems to place me as a scorned member which I am not. I on the other hand am concerned about the imbalances at eBay which has put the sellers at risk of dishonest people all over the world. This is a real concern for most people who are members of eBay and sell. I have discontinued selling my belonging on the site because of these concerns.
I again invite people who read and visit this Blog to visit eBay’s community boards to help understand what the people are truly facing there who are members of eBay.
11-15-2008 @ 9:37AM
James said...
Ebay still accepts checks or money orders for sellers fees, but tells sellers that they cant accept checks or money orders from their buyers. This has cost me $ and I have stopped listing after 10 years. auctions8.com is free. Free stores forever for the first 1000 I hope it catches on.
11-15-2008 @ 10:52AM
Brenda said...
I don't have one of those high-falutin' business degrees, but it seems to me that continually kicking the teeth in of the folks who pay you fees is not good business sense. Nor is suspending those fee-paying customers because of the feedback of a buyer who has not paid the customer or your business one red cent.
This has nothing to do with whether an individual's business is "viable" on eBay or not. This has to do with ever increasing fees for no guaranteed exposure. This has to do with value for the money paid. The Best Match search has ruined the website. It used to be that everyone was guaranteed at least a little first page exposure when Ending Soonest was the default. Now (despite what eBay says to the contrary), the search is skewed in favor of Diamond Powersellers and other high-volume sellers. The small sellers of the unique things that made eBay what it was no longer have a chance-they're being buried on page 47, they've found that out and they're establishing themselves elsewhere. Why on earth would people continue to throw money at eBay and get nothing in return?
eBay seems to be banking on the idea that they can do almost the same volume of business with only large sellers, but the unique items were what made them unique as well. If they only have the same product as every other site on the web, there's no real reason to go there. Prices are lower other places where sellers don't have to pay the outrageous fees.
11-15-2008 @ 11:02AM
Tippie said...
Why are we all wasting our time talking about eBay anyway? ebay stock price speaks volumes! eBay stock down to $12.00 Bucks! Lol.
Another few months and eBay will be at $6.00 bucks Just sit back and wait!
No one is buying this dog except eBay themselves.
11-15-2008 @ 12:23PM
David said...
Paypal IS NOT an escrow service. repeat, IS NOT an escrow service. They pass your money thru to the seller and if it is fraud, you lose. Paypal IS NOT an escrow service.
11-15-2008 @ 8:25PM
Richard said...
i left ebay because their rules changed every week and their software was very unstable and operated differently each time you used it. their fees have gone through the roof
11-15-2008 @ 10:23PM
Daniel said...
eBay has also made many changes to their affiliate program this year that has many of their affiliates upset. Some disgruntled eBay affiliates have left eBay and started their own specialty auction sites. Most of these people are professional Web developers who made their living driving search engine traffic to eBay. Now they are stealing eBay sellers and buyers for their specific niche.
Individually they are no threat to eBay, but collectively, they may end up taking a bite out of eBay's future business.
11-15-2008 @ 10:45PM
Marshall Mitchell said...
One of the new rules is very unfair to the Sellers. Why can a Buyer give negative feedback, but the Sellers cannot? The Sellers are charged for all the fees on a transaction/listing/sales fees, etc. but we don't have the same privilege as the Buyers who are NOT paying any fees to buy on Ebay. Seems to me the SELLERS are the ones keeping Ebay in business. My last auction, two items were sold but NOT PAID and Ebay did nothing about it. A Buyer who will not communicate about an item, but, still can give you negative feedback. The new RULES stink. Also the old foremat was much easier to work with.
11-23-2008 @ 12:53PM
legendsofbatman said...
EBay is recession-proof. DO NOT BUY the lies from Donahoe and company. Ebay is NOT suffering from the economy. Ebay is suffering from it's own greed, and inability to listen to the ENTIRE clientel.
While you might argue ebay is a better investment, I'd argue that ebay is NOT worth much at all.
You're dealing with a company that REFUSES to acknowledge the people who pay their salaries. Ie, while they want sellers to provide flawless customer service, THEY REFUSE TO do the same!
Mr. Liber, are you aware of the entire DSR scam?
Here ebay CLAIMS to offer discounts IF you can maintain near impossible to acheive. It is NOT a matter of great customer service. It's a matter of fraud. A seller can offer shipping costs at or below actual costs, and STILL receive a 1. HOW IS THIS MY FAULT? I dont set the postage rates! But, the ONLY way to maintain any decent DSR is to receive a 5.
Here's ebay's standards when you rate a seller:
5. Good Seller.
4. Bad Seller.
3. Really Bad Seller.
2. Horrible Seller.
1. Really Horrible Seller.
Sellers receiving a 4.2 or less will be reprimanded by ebay.
Understand, this system is very arbitrary, and has little or nothing to do with customer service. Yet, sellers are damaged by uninformed buyers; or, buyers who wish to scam people.
I did some research, and discovered that ebay, known for its "level playing field" has trashed that idea, when they made backroom deals with buy.com (ebay user ID: Buy).
From March 2nd-May 31st 2008, I found this information from Terapeak.com (a partner site with ebay, in tracking sales information):
Seller: Buy
Dates: March 2, 2008-May 31, 2008
Total Items Listed: 2,708,987
Total sales: $3,924,907
Successful listings: 64,638
Total Items Offered: 249,431,285
Sell through rate: 2.39%
Average Sale: $44.43
MINIMUM listing fee, including dutch auctions: $24,943,128.50 (Based on the lowest fee of .10 per listing, and offering Media Mail. Does not include higher listing fees, or other promotional listing fees, or Final Value Fees, which would increase the fees dramnatically).
Basically, ebay gave away $25 MILLION to gain $165,000 in Final Value Fees, if they even charged that!
I can't say ebay is commiting legal fraud; but, do you REALLY think it's wise to invest money in a company that
1. Pisses off thousands of customers.
2. Spends more money in fighting the boycott efforts than to attempt to come to some resolution?
3. Lies to the media AND investors, by padding ebay listings with fake listings (as was done during the Feb. 18-25th boycott, when a "glitch" allowed incompatible listings to suddenly appear on ebay? Yet, ironically, compatible listings didnt?)
4. Tells the world the spiral plunge on the market is due to a bad economy, when in fact, this is when ebay should THRIVING!
5. Pays out $10M in settlements to be able to continue to illegally hold money.
6. Forces people to use PayPal while pretending it is for safety, when the truth is, so ebay can gain more money. IF it were REALLY to offer safe buying experiences, then ebay would offer PayPal for free to sellers. Instead, they use this as a ruse to create an illegal monopoly.
7. Sues their partners, for doing the SAME thing they did? (Ebay sued Craig's List for making changes that left them out. Sounds exactly like what ebay did to their sellers this year, to me!)
In other words, Ebay is a very hostile investment, in my opinion.
Tim
http://forums.delphiforums.com/boycottebay/start
http://myspace.com/boycottebay
11-16-2008 @ 7:56PM
JOHN BREWER said...
I used to love ebay but their profitering got out of hand and no body wants anything to with selling the genuine found articles anymore not if they want to make any money for themselves ebay got greedy and now they will pay for it
I dont understand why they ever sold stock when they could have been private billionares .
Now they just suck.
11-17-2008 @ 10:49AM
gerald said...
Ebay executives got just what they deserved. I quit EBAY just like thousands of others. IT was all about greed and over charging on fees and screwing with payments and the feed back forum. Good bye EBAY.
11-21-2008 @ 9:54PM
Mechelle said...
"Despite all the criticism being flung at eBAy it remains a strong business. I would even argue that ebay, right now, is a far better investment than it's rival Amazon."
So how much money did you invest in ebay since you wrote this article?
How much were you stuck with before you wrote this and the previous 3 related articles?
Please show how confident you really are in the solvency of this catastrophic ruination of the eBay marketplace by the dimwit CEO eBay stock?
Can I assume you are a full time user of the marketplace? In other words do you spend everyday all day dealing with the marketplace? No, of course not if you did you wouldn't have written such BS. Why don't you source some merchandise subscribe to a store on eBay list about 900 products and hit the go button? Do that for a few months and tell me how much you are willing to invest in this sure thing eBay stock. Rather how much and how quickly you unloaded the garbage after you began to experience the new eBay.
2-10-2009 @ 10:35PM
RCWorks said...
Yes I was an eBay seller complete with an eBay store. I ran it for about 5 years. Every time I turned around fees went up. I am a seller of a unique item but only 50% of my sales came from eBay, I started raising my ebay store prices to reflect the added cost of doing business on eBay and my customers started following me back to my own online store hosted on my own server.
I gave up eBay about a year ago, things I do not miss include paying fees, maintaining an extra store and having a competitor making complaints causing my listings to get pulled once in a while.
eBay gave me a start, I outgrew the need to be bullied and abused by a site that should be helping out rather than hindering.
I sell R/C Wing Kits and other foam plane kits of hobby shop quality... bringing me to yet another thing I don't miss... Those with no knowledge comparing my goods to cheap Chinese junk. Our kits are CNC cut here in America, not mass molded in China with poor quality control.
If eBay got their sh*t in one bag again I might return. As it stands I am happy without eBay.