eBay is going down.
The collapse of its stock price may be followed by the collapse of the entire company. Certainly a fire sale is in the offing.
I can say this with some certainty because eBay has bought itself an enormous political problem with Skype, a fight it can't win because of its diminishing goodwill.
Ross Armstrong was the first to Clue me in on this. He's a senior research analyst for Info-Tech in Canada, which just published a paper telling corporations in no uncertain terms to turn Skype off. It's insecure, it's like peer-to-peer, the report said.
It e-mailed Armstrong, and we had a nice virtual discussion about it. "Skype is now where IM was a few years ago; that is, a blossoming technology with tremendous potential, but with disclosed vulnerabilities that could pose a risk to the enterprise unless it is controlled, not just by technology, but also by policies and acceptable use," he wrote. " So why did eBay buy it? "I don't think eBay even knows..." he wrote back.
Even if Skype were problem free eBay would still face an enormous political battle to get it accepted. Foreign regulators are now working on technical solutions that prevent it from being used (along with peer-to-peer technolgies) and U.S. broadband operators are now demanding control of their networks in order to keep their customers from using it, too.
In fighting this political battle, however, eBay puts its whole company on the line, its entire reputation, and it must stand with people who are, on the whole, out of power. They may have moral and technological right on their side, but this is not the position you like your company in when you've just paid 60 times earnings for the ride. It's like paying for a ride on a cruise ship and suddenly finding yourself alongside the Somali pirates, told to man a gun.
Then we come to eBay's internal problems. Its market reputation has been suffering ever since it bought Paypal, frankly. Each time it allows the auction of something dicey it gets hammered, and each time it bans an auction, or someone is ripped-off in one, it gets hammered. The company just doesn't have enough cops on its internal beat to keep its users safe from one another.
For evidence, we come to eBay's latest ad campaign. Without trying to critique the "It" ads, which assert that whatever "it" is they have "it," let me cut to the chase and ask, "why is this trip necessary?" Amazon doesn't advertise. Google doesn't advertise. You advertise in order to gain new customers, Why is it doing that if it has a "natural monopoly," as MarketWatch claimed just last month.
Let's add it up. You've got a company facing increased churn, a steadily-declining public image, a political battle, and with a 60x stock to protect. I don't think George W. Bush has so many problems.
Dana Blankenhorn has been a business journalist for over 25 years and has covered the online world professionally since 1985. He founded the "Interactive Age Daily" for CMP Media, and has written for the Chicago Tribune, Advertising Age, and dozens of other publications over the years.
1. Jesse Kopelman on November 11, 2005 03:25 PM writes...
The people who want corporations to turn off Skype are the same people who wanted corporations to turn off WiFi, not provide Internet access to general employees, not move from dumb terminals to PCs, etc. Then there are the analysts who's business it is to sell reports and the best way to sell them is to have some new threat that people need to be made aware of. Fear is a powerful motivator. Nothing comes for free. Any new technology poses security challenges and the question is whether or not they are outweighed by productivitiy gains. I work with someone who was able to go from a $200/month to $100/month cell plan because of Skype and with the savings he added unlimmited EVDO and further increased his productivity.
Permalink to Comment2. David Hakala on November 11, 2005 10:12 PM writes...
Skype is eBay's answer to Google AdSense. Every Skype screen will bear paid ads.
eBay and PayPal need to fire all of their "Trust & Safety" people and get out of the police business. Neither has the power or skill to do it properly.
As for "It," eBay sellers demand a big ad campaign prior to Christmas. They are eBay's customers. Buyers ride for free.
Permalink to Comment3. Jeff on November 12, 2005 12:07 AM writes...
And you didn't even touch on the competetive pressures (real or imagined) eBay faces from Google and Overstock.
Permalink to Comment4. Brad Hutchings on November 12, 2005 01:28 AM writes...
Egads Dana. There are hundreds of thousands of people making a living off of selling stuff on eBay now. While you point to "failures" like Skype, you fail to point out wild successes like eBay Motors that is quickly edging into connecting buyers and sellers of used cars on the net the way automakers wish they could with new cars (but are limited because of various state auto dealership laws and strong dealer lobbies). All the local auto auctions are tying into eBay Motors now. Gets them more potential customers and better prices. It's totally win-win. Skype was chump change, and was probably a strategic buy whose reason won't be clear for a year or two. I doubt it's a straight ad play or a foray into telecom, probably more of a platform thing that will make sense later. PayPal, despite all its problems, is still the easiest way for anyone with a bank account to accept payment online. When combined with any of the popular shopping cart apps, it is as near zero-friction to sell with and buy from as anyone could wish. There is a premium on eBay's P/E, but no sign that earnings will do anything but continue to grow, so if the stock price is going to collapse, then the premium is the thing that has to collapse. Three years out, if the price of EBAY doesn't climb out of the 40s, the P/E will be within the range of normal companies. At $45, it still looks like a good value to a lot of people on fool.com.
Permalink to Comment5. Tim on November 12, 2005 11:03 AM writes...
I too believe ebay is on it’s way down.
Been following all their blunders since they acquired PayPal and see no REAL effort from ebays management
to try and turn anything around.
Great article BTW.
Permalink to Comment6. Ebay Seller on November 12, 2005 07:22 PM writes...
I've been selling on Ebay since 1998 and I can tell you its gone down from what it was. Too many glitches, too many fraudulent sellers and too many deadbeat bidders. Ebay management is dictatorial - its their way or the highway and they toss away buyers and sellers like there will be a constant supply of them...guess what? the supply is dwindling and people are going back to brick and mortar stores. Ebay needs to advertise - with its current condition its "out of sight out of mind". Ebay needs a good reverse-flush - get some people in there who are "people oriented". We aren't just facts and figures and we don't pay fees just to make ebay look good - its a two way street!
Permalink to Comment7. Ebay Seller on November 12, 2005 07:23 PM writes...
I've been selling on Ebay since 1998 and I can tell you its gone down from what it was. Too many glitches, too many fraudulent sellers and too many deadbeat bidders. Ebay management is dictatorial - its their way or the highway and they toss away buyers and sellers like there will be a constant supply of them...guess what? the supply is dwindling and people are going back to brick and mortar stores. Ebay needs to advertise - with its current condition its "out of sight out of mind". Ebay needs a good reverse-flush - get some people in there who are "people oriented". We aren't just facts and figures and we don't pay fees just to make ebay look good - its a two way street!
Permalink to Comment8. EMRhelp.org on November 13, 2005 04:44 PM writes...
Um ?
I thought the reason ebay bought Skype was to allow buyers to "voice call" sellers if they had questions. Seems like a good idea to me.
My mom might buy something on ebay if she could talk to someone, "does that sweater come in Greeen ?". "Will those speakers work with my grandson's Ipod ?"
The end of ebay because of security concerns over Skype ? Get real. I love forward thinkers but the story doesnt add up to me. I'm just not seeing it.
If anything, it might be the reverse. Customers asking questions by VOIPing Ebay sellers by quickly clicking on things - SEEMS LIKE a winner to me.
If I was perusing an item on ebay but just wanted to ask a few questions, felt it would take too long to type it out, or was just a bit shy to ask the question, I might not hesitate it quickly VOIP the seller and throw my question out there. Just like I do in the stores.
Don't you understand that with VOIPing to ebay, you are going to literally eliminate the computer ? I could read an ad in the paper and it could say buy Viagra Soft Tabs 100 for $10 bucks, VOIP viagrasoft@ebay.com for details. All the ordering could be done via the phone. No computer.
The end of ebay because of Skype ?
GET REAL.
I can't wait to come back to this article in 2 years and see how things ended up. The chances of Skype worsening ebay's stock is slim to nil.
Permalink to Comment9. Meri on November 13, 2005 05:07 PM writes...
Interestingly, Amazon does advertise in the UK. Alongside eBay and now a whole new raft of Microsoft ads, it's quite interesting to see the "clicks" pushing in traditional media.
Permalink to Comment10. Julian Bond on November 14, 2005 04:04 AM writes...
Excuse my cynicism, but who paid Info-Tech to write that research report? It wouldn't have been a Telco by any chance?
Purely judging by the number of FUD research reports appearing that say that Skype is a danger to corporates, we can clearly see that it's working and has a whole bunch of encumbents scared.
Permalink to Comment11. bill gates on November 14, 2005 04:56 AM writes...
what a koot! hahahah!
Permalink to Comment12. Meg on November 14, 2005 11:19 AM writes...
This is what they have been saying at www.powersellersunite.com since the fee hike
Permalink to Comment13. Ebay Seller on November 14, 2005 11:57 AM writes...
Seems to me we had something to put into our auctions and you could ring up the seller and ask your question....BUT...it failed because most sellers do not sit by their phones waiting for calls. This was a free program (would have turned into a pay program if it was successful). This may be okay for the powersellers who do Ebay exclusively for a living but the majority of sellers are still small by comparison and have jobs besides their Ebay sales.
Permalink to Comment14. eBay PowerSeller on November 14, 2005 12:41 PM writes...
A better target for eBay criticism would be ProStores, which is their attempt at hosting off-eBay commerce sites. Have no idea how much they paid for that, but it is a joke! They have fundamental design issues with their database, which they have admitted to me. All ProStores have been down on many occassions, and the backend administration functions are also regularly unavailable.
Regarding Skype, I think a lot of computer users are more comfortable sending an e-mail than they are talking to a live person. I have a toll-free number published in my listings and I rarely get a call, and have never received one from a prospective buyer. Also, there is no paper trail for disputes if a deal goes bad, unless eBay plans to record all Skype converstations.
Permalink to Comment15. Kevin on November 14, 2005 01:58 PM writes...
I am a Platinum level PowerSeller. Most of the larger sellers do not even answer questions from buyers. If someone emails me, "Will these speakers work with my iPod?" I would ignore it and delete it. Buyers with questions like that rarely buy anyway. They're out there lookey-looing and not terribly interested in an actual sale.
Because if you are serious about wanting something, you already know what it is and how it works. Any of the larger sellers on eBay already knows this.
Permalink to Comment16. paypaler on November 14, 2005 05:08 PM writes...
ebay purchase of paypal bad?!!??
Permalink to Commentlets see, now ebay makes money when you sell something AND
when you buy it with paypal. what's wrong ???
17. Bidofthis on November 14, 2005 07:39 PM writes...
eBay messed up the Billpoint opportunity. When eBay turned off Billpoint's ability to post store links within a website for transactions (i.e. outside of the eBay platform) they made a terrible strategic mistake.
X.com/Paypal was empowering the seller (and still does) while eBay tried to restrict it through Billpoint (Like the Amazon payments only restriction).
Moreover they could have bought Paypal/X.com for pennies and pickles (I think I just coined that term) if they were acquired in the first or second quarter of 2000.
Paypal is/was a must have acquisition but eBay delayed knee jerk reaction cost them a bundle.
I was keeping a count on auctions using Paypal which documented Paypal's meteoric rise and consequently I think eBay limited their search engine results days after i posted results near the Millions:
Feb 29, 2000
285,293 items found for "paypal".
47,973 items found for "x.com ".
2,632 items found for "xcom "
Mar 2, 2000
PAYPAL eBay COUNT 303,546!
Why doesn't eBay just buy their competition?
Mar 3, 2000
Paypal now claims on it's website that "Now the #1 payment service on eBay"
Mar 9, 2000
eBay Paypal count: 403,476 items found for "paypal"
that's almost 10% of all the listings
Mar 23, 2000 8:12 PM
IMHO ebay is making a big mistake with the planned rollout of Billpoint.....
628,573 items found for "paypal"
Apr 3, 2000
719,522 items found for "paypal"
Apr 9, 2000
820,425 tems found for "paypal"
Apr 27, 2000
1,079,478 Results on eBay via AuctionWatch
Granted Paypal/X.com was initially playing the float instead of charging sellers fees and giving away $10 for referrals which was NOT a longterm business model.
Permalink to Comment18. florida on November 15, 2005 12:11 AM writes...
Talk about doom and gloom. Strategy is not this author's strongpoint. You should have seen the agencies and foreign countries that were trying to stop PayPal from entering. The litigation and policy issues alone were enough to make most mortal companies run in fear, but PayPal is now what you call an international cash cow.
Permalink to Comment19. Dave on November 17, 2005 03:23 PM writes...
I have no idea if Skype will have any major effect on eBay... What I do know, is that eBay has changed dramatically over the last 5 years or so. I doubt it's going anywhere anytime soon, but it's certainly not what it was in it's glory days. I think the 'buy it now' feature was one of many bad ideas that have been applied in the last 5 years. All it does is clog the entire system up with repetitious sales from people trying to unload cheap merchandise acquired from liquidation sales, and other junk. It's disenchanting to quality buyers, and as far as I can tell, has driven the majority of good buyers (people with real money) away from the site. The site has become the Internet equivalent of a 2AM infomercial... Try selling some $19.95 piece of crap, and your good... Try selling anything of real value or quality, and you get zip. Quality products that use to get dozens of bids and a fair price, now get some joker bidding a buck fifty or something. The quality buyers just aren't there. I knew the eBay craze was over when people started doing all the "Make a Living from eBay' type books and seminars... As soon as you get that class of people involved, it's all down hill. The novelty has worn off, and the people with the real bucks are shopping someplace else... Someplace that isn't crawling with junk peddlers and scam artists.
Permalink to Comment20. K.Ericsson on November 22, 2005 01:23 PM writes...
I would question about considering Ebay’s recent aquisition of Skype.
Permalink to CommentSkype is still dependent on external and small voice engine provider and nothing prevents Microsoft or Google or any other company to buy Skype voice engine provider, since eBay have not bought it together with Skype… The issue for Skype - will be in very uncomfortable position to rely on its rival (Microsoft or Google) voice technology license going forward.
21. Cathi on November 26, 2005 03:59 PM writes...
I just got ripped off for the first time on Ebay, and it was an eye-opening experience. I read their policies on recovering money from ripoffs, and my situation doesn't even qualify as it was under $25. To top it off, the guy who ripped me off was listed, as of this Friday, November 25, 2005, as "not a registered user" anymore. So I am totally screwed and out the money, and I don't know about anyone else, but $21 is a lot of money when your entire monthly income is $579 because you're on SSI.
Permalink to Comment22. Rex on December 22, 2005 11:22 AM writes...
E-Bay- “Words from the people who MAKE E-bay – THE SELLERSâ€
I guess ill throw my two cents in, I am one of many who really make E-bay, I am a seller on e-bay. Without sellers on e-bay there would be no e-bay. I would like to point that out as I think that E-bay feels its there lame AD campaigns, goofy looking web site, and horrible service that makes there website what it is. In fact, E-bay is nothing more than the sellers it has using there services. Naturally without buyers, the sellers would all leave, and then you would truly have the collapse of E-bay. With that said here are some sad but true FACTS about E-bay.
E-bay/PayPal is known to create more than 60% of the problems from what I have witnessed. For example if a sellers account becomes “Unregistered†as a result of non-payment of sellers fee’s, everyone whom has purchased from this seller is now at risk because the seller can no longer access any information about sales, even if the item sold the day before the account suspension. This is a form of extortion that E-bay likes to use, to strong arm people into paying sellers fee’s that they may be in the middle of disputing, or otherwise un-liable for.
Also it’s important to know that E-bay/PayPal likes to play middle man, but yet they will step away from a problem as if they were not involved. What I mean is that if something sells they are right there with there hand out, if there is a problem on the other hand, they will try and avoid handling it. A good example of this is there phone support, or should I say lack of phone support. I find it funny that they can find the time to call me personally to tell me about a listing sale they are running, yet are unable to help in that capacity when it comes to a problem. See the bottom line is that they try to use a “Stonewall†approach to resolve there problems, and they don’t really care who has to wait or how long they have to wait so long as the problem is resolved by them getting paid.
E-bay/PayPal truly does not care about its members or sellers, they are as some said “A cash cow†and any details or problems along the way must be submitted in e-mail where as you must wait 48-72 hours to get a response. You can only imagine how long it takes to resolve a single problem. What’s worse is you never speak with the same person, and they will 90% of the time send you back some sort of form mail response.
Another big problem with E-bay is that they really enjoy running in the gray area of the law, and they will trample anyone rights they must in order to remain that way. PayPal is another whom likes to operate in this gray area. They like to front like a bank, when in fact they are not. Did you know that PayPal does not send out earning statements at the end of the year? Did you know that they do not send you a statement saying how much “Cash Back†you got on all your purchases? Did you know that even when sent a formal letter from the IRS to release all my sales information they still refuse?
I have a boat load of proof and would just love to find an attorney in California who would take my case, after all that’s where they have to be sued… Even if you live in Michigan, and do business in Michigan, you have to sue them in California. I bet that saves them a lot of problems.
As you can see I am not very happy with the company that I have to pay almost $200 a month to in final value fees. That’s not even including the money that PayPal takes, but as I said, they won’t release that information.
A word to the wise, E-bay or PayPal could give a hoot about you, or your rights. They like many other companies whom are ready to be taken down a peg or two have forgotten about the people who put them up there. If you are considering using e-bay for business take heed this warning, you put yourself at risk to be extorted. And keep every single piece of information on YOUR computer otherwise you will be a VERY sorry person.
Yes I admit I still use E-bay/PayPal. And yes it makes me sick. I wish someone would come along with a better way.
Permalink to Comment23. EbayRefugee on January 8, 2006 02:15 PM writes...
Ebay is an easy target just like any corporation of monolithic proportions. Their strength is in their numbers. With millions of registered users, the company barely notices the thousands of users who drop out.
Think of Microsoft and all the many complaints about their software programs through the years. Have the complaints altered Bill Gates' bottom-line? Maybe he's only worth $50 billion instead of $100 billion, but his company still retains the lions' share of the software market. I have been told that Linux is a viable solution to Windows: but will Linux architecture ever replace Windows in the mainstream? Linux users could mount a revolution from now till kingdom- come and never dethrone the rulers in Redmond, Washington.
Our company recently fled from the spooky world of ebay because their guardians treated us with contempt. We had pushed several hundred thousand dollars through Paypal's Point of Sale system during the past two years. But it wouldn't have mattered if our sales had been in the millions: ebay is governed by stony-hearted automatons who have no ownership position in the company and therefore put up a front similar to David Spade's "No" persona in TV commercials. These automatons are not skilled in good old fashioned customer service, but instead, seem to gleefully delight in exercising their arbitrary despotic decisions.
The founder of ebay and his wife have long been in a position of immunity to the outside forces that might tarnish ebay's reputation. They can freely donate gifts of $100 million or more to charitable causes and never be deprived of food on their table. This is the reward of striking it big in the corporate world. The "Mom & Pop" mentality of running a bricks and mortar store in a local community is foreign to the minds of the czars of capitalism. They don't have to face their customers day by day; making sure to give the customers a friendly greeting when the customers walk in, and tell the customers to come back when wishing them good day. No one will ever leave Feedback of any consequence for these corporate monarchs, because the system is not set up that way.
I like ebaysucks, and feel it is a great place to dish out dirt. But in the end, I realize that the dirt will vaporize into dust and disappear into oblivion.
By the way, for anyone interested, you can read about our break with ebay by visiting this link on our website:
"Ebay the Great i am"
www.southgatecoins.com
P.S. - You can read about a horrific experience we had with an ebay member in the article, "Fiendish Foe Infiltrates Our Ebay Feedback Form". The article is in our archives on our website.
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