posted on March 8, 2001 06:20:56 AM
Meg was on Charlie Rose which aired 3-7-01 on PBS - here are some of her quips:
Regarding collectables- small part of our business; we are moving from collectables to practicables.
Regarding eBay as a fleamarket- Meg almost jumped from her chair when Charlie referred to eBay as a fleamarket. She broke in with- we are a facilitator of trade. eBay wants to be an international brand for trade, and wants to also move further into the sale of services by users.
Another interesting note regarding eBay's competition- eBay has 80% of the online auction market, and views their competition as B&M vendors. eBay is also exicted about fixed price sales, Meg gushed over half.com- but she has to, it was her acquisition.
As I have eluded to earlier, eBay can not attract and maintain big corporations with a flea market image or functionality.
Other interesting notes- some individual on eBay is doing $1 million a month in sales and has hired 20 people. She didn't say what they were selling.
I agree everyone has to adapt, that's part of maintenance and survival in any endeavor, but you also have to realize that the small seller is becomming the tail and will not wag the dog. But don't think for a minute that eBay can not make it impossible for small sellers to use eBay. If the big corps bring in 85% of projected revenue and do not want a fleamarket venue, then that is what will happen. Futhermore, as more and more corporations come to the venue, the realestate at eBay will become premium, and priced accordingly.
The reason a small seller can not coexist with large corporations is the same reason small sellers aren't on Madison Ave, or have huge office buildings in Manhattan- the big corps will cause the price of entry and doing business along side them prohibitivly expensive.
Do you really think that a listing fee for a $100 collectable widgit will remain the same when that space can be used by a corp selling a $150,000 widgit ? It is the same pricinple as comparing a Super Bowl 30 second commercial spot with a local TV station commercial spot- the cost is vastly different. And don't think that the scale of an internet venue is endless and therefore the real estate [server space] will remain cheap- Amazon auctions showed just how wrong that notion is- the competition is not actually for space, but for eyeballs, and the eyeballs will be pointed to where eBay makes its best revenues.
eBay is leveraging the buyers we brought in and is heading towards being a Super Bowl venue. There is no way the real estate [listing space] prices will remain as low as they are, you will be in as escalating bidding war for prime active space with these big corps.
I think the best analogy is that eBay is being "gentryfied", and I have never seen the low income people in these areas coexist with the wealthy coming in and buying up the real estate.
posted on March 8, 2001 06:38:10 AM
Oh I'm hanging- I just want you all to be ready for the pole we're hanging from to be greased.
"Nothing has happened yet" ? We just saw our first fee increase.
I can also see graduated search engine fees- featured search listings.
Partitioning the site, not by product, but by amount of monthly sales and fee amounts.
I can make 2 predictions that will undoubtably come to pass- eBay will change, and that change will be in reaction to where eBay derives its best revenue returns. Small sellers are not of the later.
[ edited by reamond on Mar 8, 2001 06:48 AM ]
[ edited by reamond on Mar 8, 2001 06:49 AM ]
posted on March 8, 2001 07:22:21 AM
The only problem with partitioning the site is finding the small seller site. Amazon auctions showed how that works - I sell on Amazon too and if I didn't have it bookmarked, I couldn't find the auction site at Amazon.
But Amazon remedied the problem of not finding the auction site - you can list your items right on the main corporate site- but for much higher FV fees.
The lower priced widgits will disappear due to higher listimg fees.
posted on March 8, 2001 07:37:52 AM
So what if eBay were to alienate the small sellers and cater only to corporations and professional dealers?
Seems to me like it would do a lot to help their bad reputation concerning fraud, with the bulk of their listings coming from companies like Disney and Sun, etc. Vero type issues should decrease as well.
Their requirements to provide technical support and customer service would streamline and be less demanding.
In short, they would increase their volume and bottom line while lowering expenses on a 'per auction' basis.
posted on March 8, 2001 07:57:06 AM
Reamond...nothing you quoted from Meg's interview says the small seller isn't wanted.
To expand, ebay has to look beyond collectibles.
And not being categorized as a fleamarket does not mean the small sellers are not wanted...I just don't see the conclusion your drawing.
And wanting to also have fixed price sales too doesn't mean the small seller is unwelcome.
Also, the internet isn't Madison Ave. There is a finite amount of space on Madison Ave, so the more people that want that as their business address the more expensive the real estate gets (supply and demand)...but the internet and ebay isn't finite, it can always accomodate one more and one more again so the upward pressure on "rent" isn't a real factor.
I will agree that as ebay courts the "big guys" one enticement they will offer the big guys is lower fees but it doesn't follow that they will raise fees for everyone else.
There was an article that Radh linked to months ago that was very interesting. It talked about why the large companies were not succeeding in internet commerce while the small guy was. It had to do with the ability of the small guy to change directions quickly and being able to judge the market faster. The big guys can't do that as well.
I agree that ebay is changing, and I agree some of the current sellers won't be here down the line. What I don't agree with is the idea that ebay is trying to get rid of the small seller. It is the small seller who supplies the variety and it is the variety that draws the buyers and I think the ebay management knows that. We are the bait that draws the buyers. I don't mind being bait for the bigger guys because enough buyers will buy my merchandise to make me profitable...so after that buyer buys my next Rose Bowl program they can then go to Pennys and buy the new pair of jeans they need.
Those who sell new merchandise (not liquidated merchandise) will find it harder to compete with the big guys. Those of who sell used merchandise or unique items (crafts and art) or other items the big guys don't sell will not be hurt.
Some sellers will be knocked out of the tree as this shake out continues...heck, it could be me. The smart ones will survive. But those who are knocked out will not have been targeted by ebay for execution...they will fall because they couldn't adapt.
I do believe things are changing, I do believe ebay wants to bring in bigger players, I just don't believe ebay is also ready to give the ax to the small seller. Ebay is greedy in one respect...they want it all, the big guy AND the little guy. They want the world wide comsumer to come to ebay to buy EVERYTHING...Sun's computers, Pennys clothes, my Rose Bowl program....everything. And the big guys can't supply everything, some of it will be supplied by us little guys. We just have to be flexible enough to find the merchandise the big guys don't sell.
I don't get it. You haven't said a single positive thing on this thread regarding small sellers and their relationship with eBay, and I've disagreed with you several times. Finally, I give in and agree with you that the outlook is bleak, and what do you do... you disagree!!! by saying:
Not doomed if prepared.
Earlier however, you said:
You think you can run with the big dogs? They'll eat you alive.
posted on March 8, 2001 08:18:00 AM
Good Morning everyone, I see this thread is still alive and kicking. As I read the postings it has become aware that ebay might do away with the little seller. I sure hope not but, do you think they will do like half.com and make a site just for smalls? I can't imagine that the large seller can make much of a profit in the auction business so ebay will have to go with a fixed amount and then they will charge, not a modest amount, but rather a larger amount for the BIN. Now think about this, eToys has gone out of business and I really doubt that the new clothing business is booming. So eventually the big guys will leave and we'll still be here hoping that ebay will bring their listing price down. (said with fingers crossed and tongue in cheek)
posted on March 8, 2001 08:28:51 AM
Who really cares what folks think of eBay as? Flea market extraordinare, retail outlet, online mall, great collections, all of the above.
Buyers are always looking for places to find what they want. They will return to the places where they find what they want.
The small sellers of contemporary retail items will be squeezed out wherever they may happen to set up shop. It isn't eBay doing the squeezing at the local flea market when you are offering stuff that is readily available at the local mall or on the internet via direct sales.
If you want to place your business on a sound footing then figure out what you can offer that is relatively unique. If you have those types of items then you have killed two birds with one stone. You have something that is worth more because the demand potentially outstrips the supply. And you have something that differentiates you from the competition of the big dawgs.
I think eBay probably sees the small sellers as "pickers". But instead of selling the items itself, eBay stays clear of all the problems that presents by allowing the "pickers" to sell what they find.
If eBay is consciously trying to get rid of small sellers it is not quality small sellers it is targeting. It is hoping to get rid of the sellers who otherwise would still be back at the local flea market selling the rolls of duct tape; the cheapo screwdriver and wrench sets; last month's issue of beanie babies; the recent Mickey D giveaways; the "spring cleaning" detritus from folks' cupboards, garages and basements; the romance paperbacks.
Ebay doesn't want that stuff and for the most part the only reason any of it sells on eBay is because some people are too lazy to get off their butts and go to the local flea markets, garage sales and the like.
[ edited by codasaurus on Mar 8, 2001 08:30 AM ]
posted on March 8, 2001 09:04:38 AM
"Getting rid of" small sellers is not the intent. It is market forces that will do it.
How many eBay customer service personel does it take to serve 10,000 samll sellers with $2 million sales a month ? How many customer service personel does it take to serve Sun that does over $2 million a month ? The competition is not just for buyers dollars.
Now where do you think fees will be increased to cover these costs? On Sun or Disney?
By comparison, the small seller will be seen as a cost center with lower returns than the huge sellers. This is a normal business evolution.
Small sellers will always be welcome, but the cost of doing business on eBay will increase to cover the higher costs associated with small sellers, in effect shuting the small sellers out. Even if the fee increases are across the board, the larger sellers with absorb these increases far easier than a small seller.
Look at it this way, if you had a choice of going to work for 2 identical companies, one paid you $50,000 a year and one paid you $30,000 a year, which are you going to work for?
Or look at it another way- you are renting a property. One prospective renter has 3 large dogs and 4 cats- do you charge extra for the pets? Would you charge extra for a widow with no pets? Do you charge extra for the pets because you hate animals?
It's business- many of you seem to take it emotionally or personally.
The sky is not falling- at least not all at once. But do expect regular fee increases without service increases. It is inevitable.
posted on March 8, 2001 09:13:46 AM
"By 2006 she says she wants them to top $3 billion. Analysts say she'll have to attract a large stable of corporate customers, successfully expand the eBay concept internationally, and substantially increase eBay's listing fees. Right now eBay charges 5% on the first $25, 2.5% on the next $975, and 1.25% thereafter; the question is how high those percentages can go. Says Safa Rashtchy, an analyst at U.S. Bancorp Piper Jaffray: "There is a potential that sellers will reach a threshold of tolerance" and go back to old ways of selling."
With all the eBay cheerleading that goes on many dont realize the impact this will have. She pretty much guarantees alot more fee increases, and combined with the higher shipping costs there is no way small time sellers can compete. I predict another fee hike this year, and if sellers were smart they would stick together like they did when Yahoo started fee hikes. Trying to combine small sellers vs. mass merchants is like mixing oil and water. A couple more fee hikes, and the cheerleaders will be few and far between.
posted on March 8, 2001 09:14:43 AMLook at it this way, if you had a choice of going to work for 2 identical companies, one paid you $50,000 a year and one paid you $30,000 a year, which are you going to work for?
This is an either/or question. Allowing big or small sellers on eBay isn't. There is room for both.
But do expect regular fee increases without service increases.
That applies almost everywhere- it's not just an eBay phenomenon. I pay more today for a gallon of gas than I did last year, but the gas is no better. I pay more for medical insurance today than I did last year, but the coverage is no more extensive. I could go on, but I'm sure you get the idea.
posted on March 8, 2001 09:21:53 AM
I understand them very well.
What you fail to see or understand in your examples is that when gas prices went up, some people curtalied their driving or spending somewhere else. When health insurance goes up, some people can no longer afford it, or must cut back somewhere else. You just haven't been priced out of the market yet.
You seem to think price increases have no effect on anything, when indeed they do.
posted on March 8, 2001 09:35:07 AM
Chum- You are exactly right. I think no one else can understand those huge numbers- from $400 million in revenue to $3 billion. That is a over a 600% increase in 5 years.
50% of Americans are already online, and with our aging demograghics, that isn't going up too much more in 5 years. PC sales are in the toilet.
Where does this revenue come from? Jam 25 million more small seller listings into the system?
Listing fees will be as much as $1.50 a day in 5 years if the market holds.
posted on March 8, 2001 09:35:54 AMYou seem to think price increases have no effect on anything, when indeed they do.
I never said any such thing. People adjust to changing situations- it's not hard to see that.
Maybe it will remain cost effective for small sellers to sell through eBay, maybe not. Maybe only for some small sellers, not all.
People have been complaining about declining bids, how sales used to be better in "the old days", and how eBay is just not the same as it used to be ever since I came to this message board. Life goes on.
posted on March 8, 2001 10:03:24 AMPeople have been complaining about declining bids, how sales used to be better in "the old days",and how eBay is just not the same as it used to be ever since I came to this message board. Life goes on.
Ain't that the truth .........
And Chum, please don't confuse a "realist" with a "cheerleader". I expect fee raises on eBay, just as I expected that the once FREE sites like AW would eventually replace FREE with FEE.
If eBay outprices themselves for enough small sellers, there will be another site waiting to take over.
posted on March 8, 2001 11:43:58 AM
And to think it's the little guy that gets all of these company going, and when they make it big, they forget where they came from. The greed factor!!!
posted on March 8, 2001 12:20:02 PM
You know...there is a difference between ebay having a deliberate plan to push the small seller out and small sellers dropping by the wayside because they are no longer profitable as inflation increases their costs.
Most of the posters who have lamented the plight of the small seller on ebay have been quite adamant in saying ebay has a deliberate corporate "plan" to get rid of the small seller. They see the natural rise in costs as being part of ebay's sinister "plan"...they keep saying ebay doesn't want us anymore, they only want the big guys.
I don't agree with that conclusion.
I also question the idea that ebay will cater to the big guys at the smaller seller's expense. It is very possible that ebay will subsidize the small seller by bringing in the big guys. Without the millions big guys can bring in ebay would have to raise fees quite substantially, which would drive off many of the small sellers who would no longer be profitable. Without the variety the small sellers bring to the site the buyers would stop coming...no buyers and the big guys have no one to sell to. Ebay needs the small seller and they know it.
Bringing in the big guys may be a way to guarantee the little guy will be able to stay
(its always better to see the glass half full instead of half empty!)
posted on March 8, 2001 01:09:59 PM
I found another article that is quite interesting. Seems like Meg is planning international fees to help the site incase of US slowdown.
"But buyer beware: this valuation call depends on whether an investor believes EBay can accomplish its goals.
One concern is how will EBay perform when the economy picks up and high-ticket artwork, antiques and fad-items take off. EBay may not be positioned to capitalize during the boom times. "They haven't been successful in high-end arts and antiques," said Tim Albright, an analyst at Salomon Smith Barney.
Additionally, EBay hasn't gotten much traction beyond smaller items. EBay's estimated average selling price is between $20 and $40, based on its gross merchandise sales, items listed and the percent of listed items sold."
If they are not successful with antiques then that is an indication of whats to come. It shall be interesting to watch
posted on March 8, 2001 02:41:53 PM
Some folks assume that eBay meeting its revenue increase projections is a foregone conclusion.
What happens if in a year from now, eBay is not on track to meet the estimates?
Think Meg is smart enough to take eBay to the point she has but not smart enough to back off should the plan not seem to be working as expected?
eBay will only continue to court large retail type concerns if the economics make sense. And if the economic model that Meg has laid out for eBay is grossly miscalculated then expect to see it changed. And for eBay to take a plummeling on Wall Street.
posted on March 8, 2001 04:01:44 PM
ZDII Inter@ctive Investor reports the P/E ratio as 250 following today's close. That, I believe, makes eBay stock even more vunable if the company does not meet the projected growth/earnings.
