posted on January 7, 2001 11:45:49 AM new
Recently brokerage firm reports have stated that Yahoo!Auctions are basing their forecasts on a 50% decline in listings from 3.0 million to 1.5 million when listing fees are implemented this coming week.
Henry Blodget, analyst for Merrill Lynch, came out with a statement that Yahoo!Inc. would see revenues of $30 to $80 million, but two days later ... oops ... did not really look at Yahoo!Auctions ... did not research that there's also country-specific auctions ... well ... anyway ... looks like revenues will only be $16 to $30 million.
But he's apparently basing his work on Yahoo!Auctions having 1.5 million listings initially.
Timothy Koogle, Chairman and CEO of Yahoo!Inc., however, was interviewed by ZDNet UK on October 7, 1999:
"Koogle also said it could start charging a fee for its auctions, something eBay has had success with. Yahoo auctions are nearing critical mass with 900,000 listings. Koogle said moves to grab more of the transactional pie are under review. "We are on the path to flipping that switch," said Koogle."
So perhaps Yahoo!Inc. itself is looking at 900,000 listings; one might conclude that their internal forecasts are based on a 70% decline in listings in a worst-case scenario.
And what about this from the Yahoo!Chat of January 4, 2001:
"stamp_rock asks: Is this completely a decision by the auctions division, or compelled by upper corporate policy?
y_auctions_guest: This is absolutely a decision by the Auctions team and we are dedicated to improving our site.
y_auctions_guest: it is absolutely supported by the entire company and the executive team."
So who decided to implement listings fees. Koogle? Upper management? Or Yahoo!Auctions? Lower management?
I never cease to be amazed at corporate shenanigans. And brokerage firm analysts incapable of performing elementary research into a company. And media reporters that cannot do the little big of digging necessary to write an balanced article about a company.
posted on January 7, 2001 11:54:48 AM new
An excellent point on the level at which this decision was made. If it was made by the Auctions division, I think that it was made for personal interest. Yahoo employees have seen the value of their options drop to virtually zero. I suspect that any bonus are based on the performance of your division. So the auction people think, "Hey, if we can bring in 20 or 30 mil in revenue next year, we will all get big fat bonus checks." They really don't care if they devestate the auction site, because they don't plan on sticking around much longer anyway.
As for critical mass, I suspect they believe that it is 1 million auctions, and I think they are probably about right (critical mass here being the number of auctions you need sufficient enough to draw a regular number of bidders.) But I really don't see them being able to retain that many listings. In fact, in six months, I would be very surprised if they have half that number.
posted on January 7, 2001 12:15:23 PM new
They may have their 900,000 auctions but they won't be paid for.
They will be paid for with credits, and the way it is going, by the time the credits run out, bidders/buyers will be scarcer then hen's teeth, and only the supremely foolish will pay to list Yahoo.
Ebay is the only entity that can get away with charging a front end fee.
Yahoo, like half.com, and Amazon must allow people to list for free and wait for buyers to come along. They are seriously delusional to think otherwise.
I left Amazon completely Jan 1 2000 and did not look back until "Marketplace". I listed some pricey books and and sold about 20 of them (prices to $200 - Amazon gets roughly $40 of that), and it has taken 6-8 weeks.
If they charged me so much as a DIME the books would have been on half.com.
Instead they got several hundred dollars out of me last 60 days.
Good for Amazon, good for VeryModern.
This is the only way to go.
posted on January 7, 2001 12:22:36 PM new
The forcast was mentioned in another post and I can't follow the math.
1 milliom auctions posted for 10 days at 20 cents equals $200,000.
Approx. 30 - 10 day periods remain in the year after the free listing period ends.
That totals $6,000,000. The term "net revenues" was used so I assume this number has to be corrected for expenses.
Higher listing fees would apply to items with larger opening bids plus reserve fees would also increase this number.
The use of YWallet credits would not generate actual revenue. NPB refunds will reduce net fees.
Feature fees are already being collected and I would expect their total would decline as the total number of listings decline. The percentage of feature fee refunds might also be expect to increase as the sell rate percentage improves on a much smaller base of selected items.
Page views would decline as auction numbers decrease resulting in lower ad revenue.
Any estimate by me is at best speculation but some number in the net 2 or 3 million range seems reasonable.
I would think a FVF, maybe a one time initial listing fee and the goodwill of users would far exceed the potential of the fee approach they have adopted.
What do I know? I'm just one of the tens of thousands of small sellers that have been the only group to have consistently made money in ecommerce.
It's not like I've had millions of investors dollars or other outside income streams to build "sites of the new economy".
posted on January 7, 2001 12:56:08 PM new
I dont get there plan either but I gave up trying to figure them out I am gona focus on what I do here.
I will continue listing limitedly my Higher starting bid items that have proven record of sales the rest will move to some free listing sight none honestly look like they have quick promise most are new and untried have to just trust one and list there till it gets moveing would help if all yahoo sellers would get togeather go to one site but this dont seem to be happening.
I am confused and upset yahoo is goneing to start chargeing fees but I cant see the logic in punishing anyone for trying to make a return on there work after all as a seller in the end that is my goal as well.
I havea feeling once listing thin bids will move back up where they should be for yahoo or better I also feel all this shouting is going to draw people in to see what is going on some curiousity seekers to will bid.
posted on January 7, 2001 03:51:10 PM newThat totals $6,000,000. The term "net revenues" was used so I assume this number has to be corrected for expenses.
I think that, especially when you consider the reserve fees, the average price per listing will be about 50 cents, raising the gross estimate to more like 15 mil.
But you are totally right about NPB's, and particularly about the decrease in revenue from feature auctions. And, even though the banner listings on the auctions are considered "junk" and really don't bring in much money, the decrease is something they woudl have to take into consideration.
And, of course, for a while a lot of those fees won't bring in any actual revenue because they will be covered by credits.
But even if they are able to net 10 mil this year, which I seriously doubt, they will have begun the downward spiral. Number of listings decrease. Bidders can't find what they want. Number of bidders decrease. Fewer bidders means more sellers drop out. The cycle continues.
And Yahoo has acknowledged that there is a "critical mass" required for the site to sustain itself. By pointing this out, it is clear that they understand that if they go below that "critical mass" the site will simply die off. Yet that is exactly what they are planning on doing. It just doesn't make sense.
posted on January 7, 2001 05:22:20 PM new
As so clearly stated above by dimview and reston_ray, I think that financial analysts have grossly overestimated the amount of revenue that the listing fee will generate for Yahoo! Auctions over the next year. It also seems to be the general consensus on this board and in the chat transcripts that sellers would have been willing to accept a reasonable final value fee and that the institution of such a fee would have resulted in significantly more revenue for Yahoo! than the currently planned listing fee.
This being said, it seems ludicrous for Yahoo! to go with the listing fee if their sole intention is to generate as much revenue as possible. What if -- and I know this is hard to believe -- but what if Yahoo! is telling the truth and they are not doing this to make money, but that they really think it will improve the overall auction experience. I happen to be of that opinion, so it seems reasonable to me.
What do you guys think? Either way, I guess we'll all find out in a few weeks, should be interesting...
posted on January 7, 2001 05:27:19 PM newwhat if Yahoo! is telling the truth and they are not doing this to make money, but that they really think it will improve the overall auction experience.
It all gets back to the "critical mass" idea discussed above. If Yahoo falls below the critical mass point of about 1 million auctions, they will slip into a downward spiral.
Maybe they really believe that they can maintain 1 million auctions, but I really doubt it.
posted on January 7, 2001 05:32:30 PM new
must be nice to afford to make "operational inefficiencies" like this... perhaps one day i will be able to make errors start charging promising customers just to look at my auctions!! hahaha
In the name of "Progress"... plus to able to afford the listing fees... on auctions sites that just don't have a good buyer base!!!
[ edited by PreciousMinutes on Jan 7, 2001 05:35 PM ]
posted on January 7, 2001 05:43:31 PM new
we would stay in business about as long as an auction site that charges buyers a finder's fee for what ever they bid on!!
posted on January 7, 2001 05:50:29 PM new
jerzyboy - I agree with you, that they may be being very candid about their motive but if this is the case, they are deeply in denial and have seriously overestimated themselves.
They are *not* "Ebay 2, The Sequel".
"Auctions" which is what they are trying to promote are out of favor with buyers who want to use the internet as a utility, not bid things to ridiculous levels because it is "fun". You only need look around you (in any direction) to see that the climate this January is very different from last. The collective mood has shifted and it won't be going back the way it was anytime soon.
More likely, they simply want to shed the low end, but what they will find out is that there is nothing left. The middle class supports everyone, it always has. Matter of fact, the *high* end has already left ebay and I guarantee you they are not headed to Yahoo.
posted on January 7, 2001 05:51:27 PM newwhat if Yahoo! is telling the truth and they are not doing this to make money, but that they really think it will improve the overall auction experience.
I have little trouble believing this, but it will fail. For fee paid online auctions go to ebay. Their lead is firm. For a second rate also ran, check out amazon.
posted on January 7, 2001 06:26:05 PM new
Actually the graduated scale hints that income generation was part of the equation. To chase away the very low end and very unrealistic, a flat rate would be about as good.
[ edited by figmente on Jan 7, 2001 06:38 PM ]
posted on January 7, 2001 07:25:42 PM new
Excellent point, figmente. A flat 20 cents would have accomplished the same thing on the low end. Actually, it would be much more effective in improving the overall quality of the site because if would eliminate the low end and barely effect the high end. Then, when warrrented, they could introduce a graduated scale incrementally.
I really wonder how much thought was put in to this. I find it hard to believe that they just missed all of this.
posted on January 7, 2001 07:33:01 PM new
Yahoo has a good Buyer Base, .... Ya'all get with it, ..... a good buyer base,... equals... > = = higher profit, equals... > = = = = > LESS BACKOUT BIDDERS............. SEE Ya'ALL...!!!!!..............!
posted on January 7, 2001 07:49:09 PM new
For encouraging low openings, the graduated scale means open at 9.95 rather than 10.00, etc., but not much more.
posted on January 7, 2001 07:55:02 PM newa graduated scale and reserve fees also encourage lower starting bids
That might be true in some cases -- for example, if I am going to sell a particular digital camera on Ebay, I know that it will close for about the same price, regardless of my minimum opening bid. So I list it for $1 to save on listing fees (and in hopes of starting a small bidding war.) The problem is that on Yahoo, this approach doesn't necessarily work. If I start it at $1, the price might never get driven up.
Yahoo has a good Buyer Base
Yes, but soon those buyers will begin to find that they can never find what they are looking for at Yahoo, due to the low number of listings. Soon, they won't bother. They'll just go to Ebay.
posted on January 7, 2001 09:22:25 PM newYes, but soon those buyers will begin to find that they can never find what they are looking for at Yahoo, due to the low number of listings. Soon, they won't bother. They'll just go to Ebay.
Ok, lets run run with that reasoning. If that is true (due to the low number of listings. Soon, they won't bother.), what incentive do bidders have to go to any of the other FREE sites with minimal listings that everyone is promoting? There isn't any. They can go to Ebay and find what they are looking for.
posted on January 7, 2001 09:47:03 PM newwhat incentive do bidders have to go to any of the other FREE sites with minimal listings that everyone is promoting? There isn't any.
That's exactly right. As I see it, there are a couple of possiblities.
One is a site/sites that have built in traffic that they can draw from. This would be the Fairmarket network (Lycos, Excite, MSN, plus many, many others). They attract bidders from the enormous traffic that these sites already have. So far, Fairmarket has not been too successful, but now they may be able to turn that around.
Another alternative is taking advertising into your own hands -- not relying on the site's traffic, but generating your own traffic through advertising. This is normally a logistical nightmare, but Lowestbids.com seems to have a good system to assit sellers in purchasing advertising. However, even though their advertising is inexpensive, I am not convinced that it would be cost effective.
Otherwise, I really don't see how any of the other sites have any hopes of attract a sufficient number of bidders to maintain a viable general interest auction site.
posted on January 7, 2001 10:22:52 PM new
outoftheblue,
The incentive that bidders will have to go to the smaller FREE sites is the SAME INCENTIVE they had for coming to Yahoo until now----slightly lower prices (because the sellers aren't paying listing and commission fees), less competition from other bidders, the "BUY PRICE" which enables them to purchase on-the-spot, and hospitable sellers.
The bidders CAN "go to eBay and find what they are looking for", but the rarer items there will go for premium prices, and the more common items will *generally* be priced higher (or with ridiculously high shipping and handling charges) to cover eBay's fees.
There is ALSO the element of "warmy fuzzies" that buyers get from the friendly, hospitable people who sell to them----which is becoming harder and harder to find on eBay. Just go look at the "terms" stated in auction listings (especially from Power Sellers). So MANY of them sound like they want to pick a fight with you before you ever place a bid, much less get involved with them. Some practically SCREAM "ALL SALES FINAL" and "YOU WILL BE REPORTED IF YOU FAIL TO PAY" and "NO REFUNDS FOR BUYER'S REMORSE", etc.
So many eBay sellers also cheat their buyers with omissions of damage & defects and deliberate misrepresentation of their items, that there are many people who refuse to buy there anymore. Yahoo sellers have largely been fostering the sense of "community" and "warm fuzzies" with their buyers that eBay USED to have.
Those are just SOME of the reasons smaller online auctions can and will be able to compete with eBay (if we give them our listings).....as Yahoo was beginning to do.
Why none of Yahoo's number crunchers bothered to look at THE AMOUNT OF TIME IT TAKES THE TYPICAL ITEM TO SELL when formulating their fee structure I'll never understand. All they needed to think this thing through was COMMON SENSE AND LOGIC, apparently not taught in business and computer science curriculums.
posted on January 7, 2001 11:47:37 PM new
[i]See http://www.zdnet.co.uk/news/1999/39/ns-10495.html
So perhaps Yahoo!Inc. itself is looking at 900,000 listings; one might conclude that their
internal forecasts are based on a 70% decline in listings in a worst-case scenario. [/i]
Not sure a news story from 1999 is relevant anymore?
Trying to figure out how to bold and italicize here ... forgive me if I didn't do it right!
You make some good points but it's funny that my experience is just the opposite. In more than a year that I have spent on Yahoo, some of the complaints that I have had is lack of community and trust, back and forth feedback wars, people getting ripped off with no recourse, etc. Yahoo would do nothing about it...
As a buyer I have never had a problem on Ebay but have purchased very little on Yahoo. The bargains seem to me to be better on Ebay (for experienced bidders) because of the high opening bids and first bid wins auctions on Yahoo. As a buyer I hate first bid wins auctions. They are usually priced higher than I want to pay.
I do agree that many Ebay sellers have almost nasty TOS. As a long time ebay seller I can see where they are coming from. You deal with all kinds of people on Ebay and on Yahoo for that matter and many buyers can be as difficult if not nasty themselves. What most people don't seem to get is that being flexible and at times even (eating humble pie) instead of being aggressive is usually the best approach and most of the time will calm the savage buyer.
Avoiding getting ripped off, high shipping charges and damaged goods is not that hard. Read feedback, ask questions and go with your instincts. Make higher dollar purchases from sellers with good track records and that seem to be (customer service oriented). Make small dollar purchases from newer sellers to help them build a reputation. It's not that much of a risk. You can't tell me that the majority of Ebay sellers are jerks that are out to rip people off. I don't buy it for a second!
My worst internet buying experiences by far have been on Metaexchange. Unfortunately their feedback system is, or was at the time, useless.
I will admit that Ebay is a little more business oriented than Yahoo. Sellers are there to make money and buyers are there for bargains. Most don't seem to be interested in warm fuzzies, just completing the transaction. Many transactions are completed without even an email from the buyer other than maybe a PayPal payment with an address to ship to.
I will say one thing in the Ebay community's defense. I get a far higher percentage of feedback on Ebay then I do Yahoo. On Ebay I receive about 1 feedback in 3 transactions. On Yahoo I average about 1 in 10.
It is all in the way you look at things and your experience. I have no axe to grind with Ebay, Feebay, Greedbay or whatever you wish to call it. I go there to buy and sell. I pay the fees if sales warrant it. I also have little loyalty to Ebay or to any corporate entity. If something better comes along I will go there or I will do business on both sites. I have to shake my head at mis-guided loyalty to any corporation. A lot of people here were singing praises for Yahoo a few months ago...
posted on January 8, 2001 05:05:03 AM new
outoftheblue - I agree with you. The buyers will most definitely go back to ebay (along with many of the sellers) and this will have further negative impact on prices gleaned at "auction" or with cut throat, always dropping "buy prices".
posted on January 8, 2001 05:21:49 AM new
Anyone who stays with YooHoo at this point is simply demonstrating their support for this manner of doing business. YooHoo needs an economic jolt to be shown you don't make a move like this with six day's notice. Bad business.
