Building eBay 2.0

[maggie777]

http://money.cnn.com/magazines/fortune/f...ahoo_quote

Building eBay 2.0
Clobbered by Wall Street. Fierce competition from Google. Meg Whitman's had a rough couple years. Fortune's Adam Lashinsky finds out how she's trying to turn eBay from ultra-hot to built-to-last.

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During an hour-long touch-all-bases interview she discusses everything from eBay's controversial acquisition of Internet phone-calling startup Skype ("I'm more excited about this today than a year ago," she says) to her management philosophy ("It's okay to make mistakes as long as you fix them quickly"  ). Whitman says

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Donahoe, until now largely a behind-the-scenes player, has emerged as eBay's CEO-in-waiting. At 46, he's the walking embodiment of large-scale corporate America.  :blinkie:    A former worldwide managing director of Bain & Co

[thentavius]

I still think "skype" sounds like another word for "ripoff" "skank" "shark" or "snipe" or "gyp" (no cruelty intended).

"Man, I got SO skyped today. Somebody beat me to the last burrito in the lunch line."

"Man, oh, man! They want $4.00 a gallon for gas? What a skype!"

[stardust]

;D

[Jen]

It is all too easy to confuse the success of a marketplace with the success of their sellers.  Apparently eBay has been making this more and more clear lately.  What is good for eBay is bad for their sellers.  The estimated growth of 27% for eBay in the next year will not be matched by the growth of seller's businesses by 27%.  Maybe a loss of 27%, but not gain for the individual sellers.

[myfavorites4u]

Apparently wall street only cares about growth.  Not about sellers success.

So, if everyone has to list 30 to 40% more items to maintain the same income (what I've seen happening in my categories) the Ebay will sustain the 30%+ growth they are looking for.

Am I totally off base here?

If I have a 60% sell through I might even list 30% less.  I would be more successful but Ebay numbers would drop and wall street would be unhappy.

Maybe I'm over simplifying this whole thing.  But, rolling blackouts and hiding items (along with sloooowwww indexing) have all contributed to the decrease in sales.  Meaning you either leave or increase the listings.  When I increase the listings Ebay makes more and I make less.

[amy]

So, if everyone has to list 30 to 40% more items to maintain the same income (what I've seen happening in my categories)

You must have a good category if it's only 30%-40% more.  ;D  In the main category we sold in on eBay from 2001-2004 the number of items you had to sell to maintain the same income (profits) literally doubled every year during that time frame. If you were listing 200 items in 2001 you had to list 700 in early 2004 to achieve the same profits.

So, if everyone has to list 30 to 40% more items to maintain the same income (what I've seen happening in my categories) the Ebay will sustain the 30%+ growth they are looking for.

It would give them the 30% growth in listing numbers (provided sellers listed more and didn't close up shop) but it wouldn't give them the same growth in FVF's.

[thentavius]

Ross dug up a good Bloggingstocks Blog that further explores the new Building eBay 2.0 announcement:

Original thread at TRS:
http://www.therossshow.com/showthread.php?t=5873

Excerpt from the blog:

Back in August, I suggested that we should perhaps start looking at eBay differently. It is a mature company, I argued, and hence would probably require different valuation methods, lower multiples, etc. At the same time, I noted, the market has a tendency to get there naturally.

Today, Fortune ran a fascinating article about eBay Inc. (NASDAQ: EBAY), the issues it is facing and its management team. The article naturally focuses on eBay's CEO, Meg Whitman, and on eBay's new president of its marketplaces business, John Donahoe, believed to be Whitman's successor.

eBay's share price has been halved from its December 2004 high of $59, as investors are concerned mostly with the slowing growth rates. While growth rates have been most concerning in eBay's core auction business, the Skype acquisition is also a focus, especially as the promised synergies haven't materialized yet. There is also the fierce competition in Asia, and let's not forget, several key people leaving.

Many note, quite accurately too, that eBay is a highly profitable company with enviable operating margins and still high growth. But most, even eBay's management, realize that the company is changing as it is entering the "grownup" realm of large and mature corporations, where size and age could potentially drag it down.

Even the choice of successor to Whitman seems to affirm the point; Donahoe is described as the ultimate large company CEO, with many of the stereotypical features. And Donahoe understands that operating a mature company requires patience, and that what happened in the first ten years of the company would most likely be vastly different than what the next ten years hold. Even when he alluded to rumors of what's happening in China, he said that eBay is considering strategic alternatives that could help the company succeed over the next 5-10 year period.

What I had a hard time with was actually Whitman's vision for the future. She sees critical synergies among eBay's properties, especially as follows: "that eBay buyers and sellers will talk over Skype (generating ad revenue for eBay); that Skype callers will use PayPal to pay for their calls (the ones that aren't free, that is); and that Skype will encourage PayPal's expanding cross-border remittance business. It's all part of a plan to define eBay 2.0."

I sure hope she's right because a) that would make the Skype acquisition worth while and b) that would indeed fuel some sustainable growth figures.

As of now, eBay shares are up 5% to $29.59 on no news. I expect we would hear something very soon.

The rest of the blog: http://www.bloggingstocks.com/2006/10/04...ys-future/