posted on January 3, 2001 04:39:12 PM new
I've been thinking about this fee thing a lot. It simply does not make one bit of sense. This will almost certainly destroy the auction site. And the really crazy thing is that they could have gone to FVF's -- even high FVF's like 10% -- and still retained the majority of their sellers.
Surely the people at Yahoo understand the basic economics at work here. Yahoo -- the company in general, not just the auction site -- has been incredibly shrewd in the past about understanding value and knowing which of their services people will be willing to pay for.
And I think they know exactly what they are doing here.
They are making the company more attractive for a takeover by Ebay. Yahoo is in trouble financially. Big trouble. A buy out looks like a very good outcome at this point, and, as has been mentioned in stories posted here, Ebay is the number one prospect as a buyer for Yahoo.
But if Ebay were to buy Yahoo and they still had free listings, it would look bad for Ebay when they eliminated Yahoo auctions and replaced it with their own fee-based service.
Moreover, Yahoo auction has never been able to fully capitalize on the enormous traffic from the directory site. The analysts will report the merger as a "good fit" because Yahoo auctions will be "struggling" (due to the fees.)
I know it sounds crazy, but nothing else makes sense.
posted on January 3, 2001 05:03:49 PM new
I think you have the wrong word it's not conspiracy it's recession and the collapse of e-commerce. If the economy does not turn around soon I look for the number of auction sites to be down to 2 or 3 int the fvery new future. The credit card sites are already feeling the crunch and backers are running in droves to get clear of the vacuum that is left behind. Thats just my feelings and I could be and hope I am wrong.
posted on January 3, 2001 05:06:36 PM new
More than a few things about these fees "make sense." I'll list two.
#1. This is being done for the stockholders who know ZERO about online auctions, and for the Wall St. ANALysts who know LESS than zero. These people only "know" that sellers are getting a free ride on Yahoo, they know nothing about sell rate (or lack thereof). Ergo, they see that so many hundreds of thousands of auctions were listed last year, they see that people are paying eBay to list, and eBay is profitable, and then they think that it would have been/will be GREAT for the revenue stream if there had been/are fees. And you know something, IT'S ALREADY WORKED. Henry Blodgett, the ANALyst who covers the Web for Merrill Lynch, has already applauded the move (he's not the only Wall St. leech to do so), and he's said it will have a pronounced positive effect on Yahoo's bottom line. In case you don't know, Blodgett is the genius who issued strong buy or buy recommendations for Amazon at $110, $73, $54, $37, etc, in the past year. Amazon closed today at about $17, so you can see how much he knows about stocks, do you think he has a CLUE about online auctions?
#2. This is the best way to phase out auctions. It beats the H**L out of just canceling the venue- make a little cash for a while with a LOT fewer sellers and items, then they don't have to anger so many people who have ALREADY left, and they can say "we really tried." What do they have to lose, really? If they're not going to take auctions seriously and improve the site in a way that will allow and promote a good amount of sell-through, and REALLY try to give ePay a run for their money, they might as well make some money for a while, why not? A remote possibility, but I think a possibility.
[ edited by tentwentytwo on Jan 3, 2001 05:08 PM ]
posted on January 3, 2001 05:09:47 PM newI think you have the wrong word it's not conspiracy it's recession and the collapse of e-commerce.
Sure, that's part of it. Clearly, the economic downturn is the reason that Yahoo is looking for new revenue streams.
But charging listing fees just does not make sense. They could have instituted fees in so many ways -- final value fees being the most apparent. Other options would not have affected the site so drastically.
I think it's pretty clear from the reaction here that this is going to completely destroy Yahoo auctions. And I think the people at Yahoo are smart enough to understand that.
So that leaves only one possibility -- that the intent here actually was to devestate the auction site.
And, of course, that would certainly not make sense if it weren't for the possibility of a merger with Ebay.
Honestly, if I were a Yahoo stock holder, I think I would be contacting the SEC right now. Something fishy is going on.
posted on January 3, 2001 05:20:54 PM new
tentwentytwo, You make some excellent points.
#1. This is being done for the stockholders who know ZERO about online auctions, and for the Wall St. ANALysts who know LESS than zero.
Maybe, but if so, it's very bad strategy. It may help the stock in the short run, but it will be a VERY short run. Next month when the number of listings has dropped by 90% and the bidders have disappeared, it will produce more than enough bad press to outweigh the short term advantages.
#2. This is the best way to phase out auctions.
That's possible. But, again, it would be bad strategy I think. Sure, the auction site is not making money now. But neither are many other parts of Yahoo. At least the auction site had the potential to become profitable in the forseeable future -- maybe a year or two down the road if they had played their cards right.
posted on January 3, 2001 05:22:24 PM new
Here's just one of the news articles regarding this insane maneuver. I have only 2 things to say about it.
#1. Gimme what Blodgett is smoking.
AND
#2. Why isn't this guy in jail? He has an ABYSMAL record of stock picking, and what stocks do you think he recommends? Ifya guessed that he recommends stocks that his employer Merrill Lynch has a vested interest in either as an underwriter of an offering or otherwise, I would say "BINGO."
Enjoy.
Yahoo Auction Fees May Bring in $80 Mln, Analyst Says
Santa Clara, Jan. 3 (Bloomberg) -- Yahoo! Inc., the most-used Web site for searching the Internet, may bring in between $30 million and $80 million in revenue this year from new fees it will charge users of its online auctions, an analyst said.
Merrill Lynch & Co. analyst Henry Blodget, in a note to clients, projected that the fees could account for between 3 percent and 5 percent of Yahoo's revenue this year. He estimated that Yahoo's total revenue will be about $1.4 billion.
Yahoo said yesterday that it will charge between 20 cents and $2.25 a listing for customers who post items for sale on Yahoo Auctions, beginning Jan. 10. The fees will be set on a sliding scale, based on the opening bid prices for auction items and the minimum prices that sellers are willing to accept. More than 3 million items are listed for sale on Yahoo Auctions.
``The reason the fees are important in the bigger picture is that Yahoo, in our view, must continue to diversify its revenue streams, which we are confident that it can do,'' Blodget wrote. He rates Yahoo shares a ``buy.''
posted on January 3, 2001 05:25:00 PM new
You are probably right about the move to close it down to help the merger and the lawyers I am sure have already made quite sure it is quite legal and proper. Legal yes moraly correct no. What do stock holders know about this business or the buyers and sellers who use it. What do you think ebay's fees will go to when they are the only real player around. (all the rest I doubt get 1/10th the business combined). The sad truth is with a shrinking market there will just be less sites and higher fees. Look what happened to Flee Markets and Swap Meets. I think its time to grab your butt and hang on for the bumpy ride we are about to go on.
posted on January 3, 2001 05:34:19 PM new
HAHAHAHA and FURTHERMORE, since Blodgett says that this idiocy will put 30-80 MILLION into Yahoo's revenue stream this year, I need someone to figure out how this miracle will happen. Let's assume every auction generates a $2 listing fee, which won't happen (obviously), the people with the higher-priced items aren't going to come here in droves to list stuff that has virtually no chance of selling. MMM, then Bludgeonette is assuming that there will be 15 MILLION of those auctions on Yahoo in the next year. 15 MILLION. Uh huh. And that's BEST CASE, and LOWEST ESTIMATE, at $2 a pop, which everyone here knows won't happen, and everyone at Yahoo also knows won't happen.
Could you even IMAGINE in what drug-induced haze he made a high estimate of 80 MILLION???
The chances of 15 million auctions being listed at a flat fee per auction in the next year are about the same as me winning the next 10 jackpots in the California Lottery.
posted on January 3, 2001 05:37:33 PM newYahoo! Inc., the most-used Web site for searching the Internet, may bring in between $30 million and $80 million in revenue this year from new fees it will charge users of its online auctions, an analyst said.
OK, let's look at the numbers here. We'll take the lower number -- $30 million.
And let's say that the average fee collected will be 50 cents (I suspect it will actually be somewhat lower, but I'm being very generous in the assumptions here.)
So, that would mean that they would have to have 60 million auctions listed over the course of the year.
And let's say the average auction length will be 7 days (again I think it will be longer because nearly everyone will choose 10 day auctions.) So, being generous, that means Yahoo would have to have 420 million "auction days." But let's give them the benefit of the doubt and round it down to 365 million.
That means that at any one time, there would have to be 1 million auctions listed.
They currently have 4 million listed. So that means that even with a best case scenario, even to reach the low end figure, they would have to retain at least 25% of their current auction listings. And though that might be realistic for the first month of two of fees, it would not happen in a vacuum. If Yahoo loses 75% of the listings, they will eventually lose a similar percentage of the bidders. It's clearly a downward spiral. There is simply no way they will be able to sustain 1 million listings beyond the first quarter.
posted on January 3, 2001 08:52:16 PM new
Last year there was a rumor that eGREED was going to buy Yahoo. Last Spring, Yahoo's CEO promised that Yahoo auctions would ALWAYS be free (it appears they have been taking lying lessons from eGREED)
I believe the new listing and FVF is because there is a deal in the works to sell Yahoo to eGREED. I will be looking for another auction site. I am very angry with eGREED because of the reserve fees, increase in listing fees, no free relist, and their new policy that you can't sell an item on-line (even on another auction site) if it was listed on eGREED and did not sell (your account will be terminated)
posted on January 3, 2001 09:18:55 PM new
Here's the deal though. I am not necessarily defending Yahoo, just playing devil's advocate:
Say they lose 90% of their business, they are still going to be more profitable than they are now. They aren't charging anything for their service now (well, there are extras that can be paid)
Fewer auctions will bring in revenue, and use less computing power. It could possibly kill their auction business in the long run if they spiral down to no sellers and no bidders, but in the short term it will show profit, and with their stock tanked, that is important.
I'd rather pay a percentage of lots sold, but that would bring in less revenue. Face it, most lots do NOT sell on Yahoo. Right now, on-line advertising is not bringing in money, so they need to find a way to raise revenue.
On a much smaller scale, I started a stamp collecting portal web site at the end of 1999, and offered dealers a free web site and services for a year. I signed up over 100 dealers. Traffic is not where I wanted it to be, and I contemplated extending the free period. However, I ultimately decided that it is better to lose 80% of the dealers and get some revenue, then to keep 100% and have no revenue. I figured that no matter what I did, I would not keep a certain percentage of the people anyway, they were strictly there for the free ride.
While I did not promise free service forever, and was upfront about charges that would be coming in a year if they continued (unlike yahoo, which promised free auctions) I'm happy with the decision that I made. From that perspective, I understand Yahoo's decision.
My biggest complaint is that Yahoo *DID* promise free auctions forever. I am very angry they made this promise and now they think nothing about changing their mind and charging fees. I made decisions based on this commitment. I already am paying Yahoo $100. - $200. to feature my auctions and will not pay the listing and FVFs on top of that. I relied on their promise- no one forced them to make it.
I am fearful that this is one step towards selling Yahoo to eGREED (ebay) and I won't do business on eGREED because of their fees and policies (I am still a member and had auctions there in December - I did not do well but the same items sold when I relisted them on Yahoo)
posted on January 3, 2001 10:05:34 PM new
I am getting sick of companies promising free stuff forever, then backing down. Let's see:
Yahoo
NetZero
Paypal
One other service I had, was a free voicemail system. Well, guess what, they started charging. Maybe companies will think twice about the free forever stuff. It really makes them look bad!
posted on January 4, 2001 02:15:38 AM new
cardmall, what you don't seem to understand is that this won't kill Yahoo Auction EVENTUALLY, it will kill it ALMOST IMMEDIATELY.
Right now, with FREE listings, many dealers don't sell enough on Yahoo to justify the TIME AND EFFORT they spend listing....so they give it up and sell on eGreed or elsewhere. 99% of the sellers who DO stick it out on Yahoo don't sell quickly enough and with enough profit to pay the fees Yahoo has proposed.
When free listings and feedback credit Wallet dollars run out, Yahoo Auction listing numbers will drop by 95-98%, NOT by just 90%. I don't forsee a long death spiral to the Auction here---I forsee a very, very quick, painful death that will cause Yahoo stock to quickly LOSE whatever gain it's picking up now with this fee announcement.
For whatever reason (to facilitate an eGreed buyout or to prop up their stock short-term while gracefully bowing out of the auction portion of their business), it DOES seem that Yahoo has done this to kill their own auction. If they HAVEN'T, and they TRULY BELIEVE SELLERS WILL PAY THOSE FEES, then they are bigger fools than I ever could have imagined.
How could the Auction have brought in revenue and continued to thrive?
1) FVFs with some necessary customer support
OR
2) listing fees on a much, much smaller scale (like 5-10 cents or a flat monthly fee)
OR
3) the listing fees they proposed with UNLIMITED FREE RELISTS until the item sells.
With other *reasonable* options open to them, why did they choose high listing fees that don't even refund the RELIST FEE if the item sells the second time, around LIKE EBAY DOES???
And why, when sellers have BEGGED THEM REPEATEDLY for four months to restore the former "time ending" default listing order, have they not done so???
And why, when sellers have pleaded for a revamp of Yahoo Auction's pathetic category structure, have the requests fallen on deaf ears???
I've thought they were stubborn and misinformed and inexperienced and "clueless". Now I believe everything they've done in the past few months to harm the Auction was deliberate and calculated and devious, in an attempt to drive the sellers away.
The fact that Yahoo Auction has managed to grow IN SPITE OF the detrimental things they've done these last few months shows just how very NEEDED they were as an alternative to eBay. That need will multiply ten-fold when Yahoo Auction is gone and eGreed gouges their sellers ever more and more and more.
It's too bad. Corporate America fouls everything it touches, including e-commerce.
[ edited by granee on Jan 4, 2001 02:26 AM ]
posted on January 4, 2001 05:14:31 AM new
Granee wrote-
<<<It's too bad. Corporate America fouls everything it touches, including e-commerce.>>>
I have to strongly second that, and make an addition, and a slight modification-
It's too bad. Corporate America fouls almost everything it touches, including e-commerce. The Wall Street segment of Corporate America fouls even more of everything it touches, ESPECIALLY E-Commerce.
