eBay analyst day news roundup.

Some news reports are hitting from analyst day that I thought readers would be interested in so I've captured some of them here for your reading+viewing pleasure.  Tomorrow and later tonight the stock analysts will chime in as well and I'll try and summarize some of their findings.  Also, I have the Citi call with Mahaney (contact him if you want to participate) at 11am ET tomorrow (3/12/09) and after that will be publishing our thoughts on the analyst day and the implications for sellers here.

Before jumping into that, eBay has two downloads up from the day:

• The presentations are all in this jumbo file
• There's a little backgrounder here (financial background and bios). 

Most of the press took eBay's lead and talks primarily about the PayPal opportunities.

• ($ub required) The WSJ has an interesting piece out called 'eBay retreats in Web Retailing'.  In it Geoff covers the fact that eBay basically said today they won't compete head to head with Amazon on in-season product. Yours truly has a quote in here.
• NYT has a blog post by Brad Stone here.  Brad interviewed JD and this quote was concerning.  I can guarantee you that Amazon sees eBay as a competitor: "“Everyone is saying, it’s eBay versus Amazon. We aren’t trying to be a retailer. We’re not trying to fill our shelves with every new iPod. If our sellers can find new ones and resell it, that’s fabulous.”"
  •  There are two possibilities here: 
    •  JD is aloof and doesn't want the press to think Amazon is a competitor.
    •  eBay really doesn't believe Amazon competes, just like McKinsey told them that google isn't a competitive threat.  Either way, it's a weird way to approach this.
      • Maybe eBay hasn't seen the marketplace that Amazon is operating over there?  Last I checked, I think they may have ipods that are both new and used over there -oh, but they are a retailer so that's different.  Crazy right?  Well read that quote again.
• AP story is here - 
  •  JD quote - "..But we were faced with the innovator's dilemma. We were the largest, biggest, successful, profitable, and we knew we needed to make changes but the changes we'd made were always incremental because we didn't want to upset the apple cart," he said." 
  • Analyst quote - Derek Brown (aka Dr. Brown), an analyst with Cantor Fitzgerald, said he got the sense from the presentations that the changes eBay implemented last year didn't quite yield the results it had hoped, and that eBay is now speeding things up in an effort to bring the market back to them."Are they making the right changes in the right order and will those changes bear the fruit they hope? It remains to be seen," he said.  
• Reuters story is here - JD quote: ""Its (paypal) potential is enormous," Donahoe told Reuters. "It's not just a stepsister ..., it's a second core."  
  •  Analyst quote (shout out to eBay Strategies friend - SteveW!) "The question is: will those changes make the experience competitive with other online retailers like Amazon or Zappos who aren't standing still. That's hard to say," Pacific Crest analyst Steve Weinstein said. 
• FT is here  

There were two CNBC stories today from Jim Goldman.  The one early in the day was about eBay vs. Amazon (smackdown!).  Then at 8pm ET he interviewed JD - both are embedded here for your viewing pleasure.

SeekingAlpha disclosure - I am long google and amazon.

  

Comments

[Kate]

Saw your great interview! The article is great, too! http://3rdpoblogs.com/colderice/2009/03/16/i-am-mad-as-hell-a-must-read-report-how-to-fix-ebay/

[TekGems]

> What does Google Voice Lack???? A phone...

You're joking right? Google Voice can be used with any landline or cellphone. This is the fundamental advantage and problem with Skype. Google Voice's technology is superior to Skype (you will never have a call quality issue with Google Voice) and it is much more flexible. I think eBay may want to strongly consider selling Skype once the Skype killer (Google Voice) starts to destroy Skype's business.

[fatseal]

"“Everyone is saying, it’s eBay versus Amazon. We aren’t trying to be a retailer. We’re not trying to fill our shelves with every new iPod. If our sellers can find new ones and resell it, that’s fabulous.”"

JD, you don't have shelves to fill. I have shelves full. That I don't sell on ebay. You have no inventory, you are not Amazon. I went from an average of 400 listings to 50 since the changes, and multiply me times 1000's of small time sellers with long memories and you get an idea of what you have to overcome. Yes, you might be the Biglots of the internet, and be the website to unload the crap the retailers (and the public) don't want, but you still won't be Amazon, because without sellers you have less business, and even replacing us with 10 liquidators will not give you the variety of merchandise they have and that savvy internet shoppers want. If I want random pallets of crap, I can buy that from any liquidator. Ebay has made itself irrelevant, and improved itself to death.

[gordy]

Would not be surprised to see some deal between ebay and Google.... Look at the timing of the Google Checkout Fee increase (which just happens to match Paypal rates exactly) and the Google Voice announcement. What does Google Voice Lack???? A phone... What does Skype lack.... What is in Google Voice.

Also think of moving ebay onto the Google Infrastructure (app engine).... How much $$ would that save?

I think both ebay and Google realize that Amazon is the last man standing after this recession with Yahoo and Microsoft waning. Amazon is moving against google in epublishing, cloud services and to an extent advertising and threatens ebay on ecommerce and payments. Will we see the two join up somehow?

[Auld Cynical]

The root problem in Donahoe’s thinking is all related to cost, and the attempt to transform Ebay in a cost neutral way. This isn’t working and it’s resulting in paying Ebay customers – sellers – vacating Ebay. For example, Basic Stores offered an opportunity last year to create a trust relationship with small sellers that may very well have proved more useful than the current DSR hoop-jumping regime. But creating trust-store relationships would have been more expensive and probably required the 10% of staff sacked late last year to implement; hoop jumping is cheap.

It’s clear to me that the 2008 changes were expected to cause some damage to the business, which is why Ebay also ramped overall fees at the bottom end, but not damage on the scale that actually happened. The big question is, can more of the same only harder, faster and worse deliver a turnaround in the marketplace business faster than Amazon is outgrowing it? Two years is too long. Two years gives enough time for the specialist alternatives to consolidate their niches and see whole segments of the current markets drop off Ebay altogether.

What may be worse is that at the margins of Ebay there is too much degeneration, particularly dictatorial actions by Paypal with other people’s money and dead-beat buyers scamming honest sellers. This isn’t a firestorm, yet, but last year’s changes have created an ecology in which too many site users are being burnt and then walking away permanently, because critical decision making is automated rather than informed, in order to save cost.

If publicly stating that Ebay is going to tank for the next two years allows further ‘transformation’ to be paid for out profits rather than gouging sellers – making changes in a cost negative way and reversing the more stupid policies of last year – Ebay may just rebound into a contracted one-stop shop for liquidated stock. The secondary niches, and all forms of art and collectables in particular, are going to walk.