Powerhouse
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posted on April 19, 2001 08:47:48 PM new
From the news:
http://www.foxnews.com/story/0,2933,12199,00.html
"EBay added 7.2 million users in the quarter, bringing its total to 29.7 million."
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zzyzx000
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posted on April 19, 2001 09:14:30 PM new
ePay's net income has always been suspect with a new "one time charge" every quarter.
I know they have expanded worldwide, and I don't follow anything but the USA site where they raised fees a bit, but where listings #'s are flat as a board since the January rebound.
I just don't buy the projections about future earnings. Most of the items on ePay are better sold for a fixed price rather than at auction. That fad will continue to fade. Half.com may be the best thing they have going in a few years.
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AnonymousCoward
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posted on April 19, 2001 09:24:54 PM new
Whitman has repeatedly said she believes revenue ...can grow to $3 billion by 2005, which would mean an average increase of 50 percent per year.
And we think listing fees are high now. I wonder what the fees will be for 2005.
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morgantown
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posted on April 19, 2001 10:12:05 PM new
I can envision the thirty-cent listing fee becoming a dollar...soon..., can't you? After all, it's only a dollar.
Say it three times daily "it's only a dollar." 
MTown
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Powerhouse
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posted on April 20, 2001 04:20:30 AM new
Morgantown, quit scaring the straights. 
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chum
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posted on April 20, 2001 08:47:50 AM new
Whitman has repeatedly said she believes revenue ...can grow to $3 billion by 2005, which would mean an average increase of 50 percent per year.
She is going to do it by turning ebay into a QVC type business. The small guys will be shipped off to a sister site. eBay has already been investing in QVC to bring excess goods to the site clearly competing with their own sellers. To have that kind of growth she has to add mass merchants to the site.
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ecom
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posted on April 20, 2001 10:44:50 AM new
It's all smoke and mirrors.
If you can acquire successful businesses fast enough and take "their" profits to your bottom line, you can make up for your own company's mismangement and financial shortfalls.
It's a 1980s business model that Whitman knows all to well.
[ edited by ecom on Apr 20, 2001 10:46 AM ]
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computerboy
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posted on April 20, 2001 11:21:49 AM new
They haven't missed street estimates yet and their business model continues to grow, as projected. They're making solid strategic alliances and have made many vertical and horizonal acquisitions to their benefit. The truth is that they are smart cookies and will continue to shine.
Judging from the comments on the board, there's a bit of jelousy and resentment with eBay, which I understand. A friend of mine managed to be touched with the ebay magic wand and is now sitting comfortably at 33 years old with over $20 million cash. That would cover a huge number of listing fees, even with an increase.
Well, back to work! Not all of us have been so luck!
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zzyzx000
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posted on April 20, 2001 07:01:54 PM new
All Wall Street "estimates" ever were was raising the "target price" of the stock every time it reached an old target. No targets were ever based on any fundamentals whatsoever.
When the street values your business at 1000 times earnings and you buy a centuries old stable mature business like Sotheby's with your cash, that shows you cannot grow at the astronimically hyped growth rate.
What's so great about selling new stuff? You can get that anywhere. Their niche is used junk and collectables. In the US, their auctions count has finally leveled off. If they can expand throughout the world like Coca-Cola did then they might expand earnings for awhile longer. If not they will sink like a stone once they have a flat quarter. Look whaqt happened to Cisco, another seemingly invincible Wall Street darling.
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ploughman
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posted on April 20, 2001 08:53:25 PM new
They're counting on eBay maintaining a dominant market position, Microsoft-style, to grow earnings. The increase to 30 cents and a number of other roundly denounced policies are held in place only by this.
If eBay "succeeds" at hiking prices arbitrarily based on its dominant position, its profit growth will come at the expense of growth in size of the overall market. Business history shows this again and again.
I think it's reached a point where eBay is more interested in protecting its market share than in doing things that truly deliver value for buyers and sellers. Charging for Buy It Now? Gimme a break.
Don't confuse smart with greedy.
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Powerhouse
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posted on April 21, 2001 07:40:59 PM new
Honestly, ploughman, I see what you are saying, but who is to say how high they can raise prices before it actually begins to erode market share?
As morgantown was spoofing 'it's only a dollar', but how much are you willing to pay in a market that is so largely dominated by a single business?
There have been and continue to be competitors to ebay and we can go on forever about cause and effect, and which came first - the seller or the buyer, but in the final analysis the only true question is - how long can you afford to have stock langiush at a lesser site and how much of a profit loss can you accept for each sale at a lesser site?
There are and will be some who's merchandise will sale at rates and prices comparable to ebay's (at least some will make that claim) but for the majority of us it's ebay or no-way, not because we are all cheerleaders of Meg and Co but because the current alternatives have proven to be or appear to be non-viable for our particular items.
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reamond
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posted on April 22, 2001 12:46:37 PM new
While eBay's earnings increased, there is still doubt regarding Meg's huge revenue goals.
But there was an interesting tid bit that came out recently, it is calculated that the average price for an item sold on eBay is now $250.
eBay's actual costs for service are the same for the $5 item as they are for a $1000 item. The higher priced items produce more revenue for the same cost.
This dynamic will pose some challenges to small price sellers as eBay reacts to this dynamic.
The question is how eBay will exploit this dynamic on the site.
Higher listing fees is one way to increase revenue and discourage lower priced items from taking up server space.
Further segmentation of the site may be the answer, as well as paying extra fees to show up on a "universal" search engine that harvests all the targets from the segmented sites.
However, one thing is certain, eBay will exploit the situation to the highest degree to increase revenues.
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Empires
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posted on April 22, 2001 09:42:12 PM new
I think Time Warner used the same theory. Raise the prices, shake the apple tree and then... Satellite came around. Bye Bye the customers said to Time Warner....all but the Road Runner people willing to pay Time Warner more than they deserve. IMO
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reamond
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posted on April 23, 2001 10:06:48 AM new
My RoadRunner service is worth every penny I pay for it, but I can't speak for all regions. Some have very poor service.
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Powerhouse
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posted on April 24, 2001 02:42:10 PM new
Reamond, can you recall where you heard/read that the average selling price was $250?
Was it a reputable source?
That seems so much steeper than I would have guessed considering that the majority of the items seem to sell for so much less (at least mine do! LOL).
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zzyzx000
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posted on April 24, 2001 09:03:59 PM new
Not only does it sound very high but remember the average is not the same as the mean. An item sold for $1 million pushes the average price for 1 million lesser seales up $1 each.
The mean would be a better indication of what an "average" item is selling for. To find the mean you nead to look at all the auctions and see what price the most items are selling for, assuming there is a sloping curve approaching that amount.
Also items that go unsold are probably not included. That's a huge cash cow for ePay, and probably something they don't care to talk about.
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reamond
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posted on April 24, 2001 10:57:48 PM new
I was a little shocked at the $250 average too.
An analyst on the biz channel did the math using eBay's figures of gross amount in dollars of auction sales and number of completed auctions a year.
The analyst said there were x number of completed sales per minute and the average closing price worked out to $250.
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celebrity8x10s
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posted on April 24, 2001 11:16:10 PM new
The last report I saw in Baron's, about 6 months ago, mentioned that the average sold item was actually down from about $20 to around $17 and change. The $250 quoted is far off base.
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ploughman
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posted on April 24, 2001 11:53:25 PM new
Yeah, I need to start selling more of these $250 items. I divided out my last few dozen actual sales and, amazingly, the average came out to $17.50, or about what the previous post said.
Ebay definitely would like to be trusted enough to do more of the higher-cost transactions, though I can't ever see them being a high % of the total unless they outright banned the lower-cost items.
Server space? Puh-leeze. The sooner users get over thinking of that as an incremental rather than fixed expense, the better. It's like the phone company charging extra for touch-tone...they kept pulling that one LONG after the extra cost basis for doing so had vanished.
And if there's added expense in carrying sa listing for 10 days to justify a fee, shouldn't Buy It Now be not only free but actually cause part of the insertion fee to be credited if the item sells quickly? Hah!
Ebay's capital needs will continue to be significant, but they'll also get more in storage, processing power and everything else per dollar as the technologies advance. In three years from now they could be storing 10 times the total data they do now, but I guarandamtee you it won't cost them 10 times as much. This is purely about what the market will bear, and Wall Street hopes the market will be forced to bear a lot if there's not a strong competitor.
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reamond
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posted on April 25, 2001 01:57:17 PM new
The scalability of eBay is there, but how big can they get and still be viable for a seller ?
There is a limit to what buyers can see and buy at the venue.
eBay hovers currently at 5.8 million listings.
What happens at 10 million listings or 20 million listings ?
As sellers we are competing for eyeballs and disposable buyer dollars. Both elements have limitations.
Even using a search option has its limits. What happens when a buyer's search brings up 200 pages of the same item ?
There is a critical mass of listed items for an online auction venue which when surpassed, offers diminished returns for the sellers. This comes about through price competition, and actually having your items being seen in an ocean of millions of items resulting in no or diminished sales.
Sooner or later eBay will have to raise listing fees to keep the listings down, or just allow market forces to cause sellers having no or marginal sales to drop out.
Obviously the former is the smart way to go. eBay can drain off marginal sellers and increase revenues.
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Empires
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posted on April 25, 2001 03:13:46 PM new
The ratio could be looked at like this-
Average income of users- to product listed? or something like that. Where are our math specialists?
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