Small Ecommerce Business Get’s The One Two Punch From Google And eBay In One Day
eBay Analyst Day
Much has already been and more will be written about the first eBay Analyst Day held in 3 years. eBay executives did their best to put on their smiley faces in an attempt to encourage the folks from Wall Street. I will not attempt to regurgatate most of what is already out there, however here are two things that I took away from the event:
- PayPal is the leading money maker of the company. Some of you will remember I wrote about this last August in a blog post. One of the things I found almost laughable was the talking point eBay made that PayPal’s integration into the eBay platform had risen several percentage points over the past 6 months. Of course it did! eBay made it almost (this is as close as I can come to saying Monopoly) mandatory. Who were they really trying to kid?
- eBay will now be focusing on the “Secondary Marketplace”. First this is not a term that has been used before that I am aware of. What it really means is the liquidation marketplace. Out of season or end of live product. It was said, and I paraphrase here, “We are interested in attracting those businesses that have stuff in warehouses that they need to dispose of”. This certainly does not seem to include the small sellers that have one of’s.
While eBay continues to state that they embarce the small seller, in my opinion the only reason for this is the increased search engine visibility they receive by “allowing” these sellers on the site. Once buyers are on the site they are directed to the sellers that eBay wants them to see, not necessarily what the buyer wants to see.
eBay told analysts that 2009 would be very difficult on the eBay site, only slightly better in 2010 and incrementally better in 2011 IF the economy improves. eBay also said that it’s focus is now on the current customers and less on attracting new buyers.
Bottom line is lower volume sellers are in for a tough couple of years based on the current direction of the company.
For complete analysis of the eBay Analyst event check out http://www.ebaystrategies.blogs.com by Scot Wingo CEO of Channeladvisor.com
Google announced yesterday, during the eBay Analyst event (maybe to hope to sneak it out there with little attention????) that effective in May 2009 there would be a significant increase in fees for those merchants using Google Checkout.
Again, the small seller takes it on the chin with these fee increases.
Colderice did a fee increase comparison on his blog, and I think it brings home the point very well.
Every company needs to make a profit. I do not blame either eBay or Google for making these moves. They need to do what they think will improve their position in the marketplace and ultimately their bottom lines. This is what their stockholders expect.
All users of either eBay or Google need to decide whether their businesses can adapt to the changes or not. If not, the answer is simple. Change your marketing strategies to other venues or payment options.
Bank of eBay? Is This Where eBay Is Really Heading?
The Bank of eBay?
I have been talking and writing for months (OK, years) about the changes at eBay. It has been a long and winding road we have taken to get to this point in our ecommerce journey. While I thought the road was leading to a retail experience on eBay, an article today on the ABC News Money website by Michael S. Malone makes a tremendous amount of cents (OK sense).
eBay Numbers Remain Flat
By reading the financials and watching where the money is really coming from over the past couple of years one can justify the article. While the numbers for eBay have slowed significantly according to the latest financials, PayPal’s Merchant Services is growing at a phenominal rate of nearly 60% Y/Y according to Seeking Alpha. According to eBay’s own Q2 Financial Statement the growth rate of the eBay MarketPlaces was said to be 13% overall. This includes eBay, StubHub, Kijiiji, Shopping.com and other ecommerce sites. But, the PayPal growth is reported to be 33% Y/Y.
The new user growth on the eBay site has gone flat and eBay is more and more moving to a retail online expeprience. As this move will put it more in line with it’s major competiton Amazon, the real move that many people may not be noticing is into the ecommerce payment arena.
Money Makes Sense
Watching the money trail makes perfect sense. With over a 20 point difference in income growth between the MarketPlaces and Payment Systems and the room for growth in the ecommerce payment handling it makes me stop and take notice. Nearly every week I receive emails notifiying me of another company, airline or ecommerce site now accepting PayPal. Given the economy of today, ecommerce sites are fighting for every buying customer they can. These sites will do anything to make online purchasing easy for their customers and PayPal is in the catbird seat due to it’s position as the largest online payment system in the world.
Recent eBay Changes
While many including myself have focused mainly on the impact of the recently announced changes on sellers on eBay, could it be that this is just exactly what eBay wants us to focus on, and not the fact that PayPal is really the money maker and all the rest is just smoke and mirrors?
eBay Reported To Make Major Changes But Nothing Posted On Site
eBay Reportedly Making Major Changes
It is being reported by Ina Steiner editor of Auctionbytes.com that eBay announced major site changes overnight. The reported changes include major fee changes to Buy It Now (BIN) and Fixed Price listings, Finding (Search or Best Match) Payments allowed, Shipping, and Seller Standards. While these changes are being reported by Auctionbytes, there is NOTHING posted on the eBay announcement board as of 7:30 AM ET.
No Cash, Checks or Money Orders
In the vast list of changes noted in the article, the one that hits at the core of business is payment options. eBay (as expected) has apparently decided in their wisdom that US currency is no longer acceptable (Wow, I knew the dollar was in trouble) as a form of payment. Neither are checks or money orders. As eBay attempted and failed to institute a PayPal only payment policy in Austrailia, this is not an unexpected move.
Seller Standards Set
In the article Auctionbytes reports that eBay Seller Standards will be set to a minimum 4.3 Detailed Seller Rating (DSR) across the board beginning November 1, 2008.
Shipping Charges
eBay is reportedly setting shipping fee limits.
Select Notification?
While it has long been anticipated that these changes were forthcoming, I for one wonder why there is nothing posted on the eBay General Announcement Board? Ina says she was briefed yesterday regarding the upcoming announcement, and that the news was set to be released at 12 midnight. Reuters and other outlets were also apparently briefed.
As eBay sellers awake to their computers this morning, checking the Announcement Boards as they should every morning (yeah right) they will see nothing of these upcoming major changes unless they read Auctionbytes or receive Google Alerts.
Feds Pass and Propose New Legislation Affecting eCommerce Sellers
IRS Rule Attached to Foreclosure Prevention Act of 2008 (Enacted)
The federal government continues to seek ways to generate income from internet sales. In an amendment attached very quietly to the Foreclosure Prevention Act of 2008 (S.2636) which President Bush recently signed into law, third party credit card or transaction processing services will be required to report to the IRS those sellers conducting over 200 transactions or those who do over $10,000 worth of transactions per year.
Providers such as PayPal, Google Checkout, and others will be required to provide a 1099 to the seller and the IRS to provide the government with the ability to tax internet sellers. This law will take effect in January 1, 2011.
Organized Retail Crime Act of 2008 (Proposed)
In this proposed legislation HR.6491 would require online auction sites like eBay, Amazon, Onlineauction, Overstock.com and others to retain information about high-volume sellers and provide that information to retailers and to law enforcement officials in cases where police reports have been filed.
It is estimated by the National Retail Federation that organized retail crime costs retailers between 15 and 30 million dollars annually.
With the epidemic of shoplifting and other forms of retail theft, this measure will provide a means for law enforcement to cross check for items that may have been illeagally obtained.
eBay To Challenge ACCC PayPal Ruling
eBay has posted a response to the ACCC draft noice denying eBay the ability to require PayPal as the only payment option (with very few exceptions) on the eBay.com.au site.
The draft notice by the ACCC was posted yesterday, and according to an article on the Austrailian newspaper The Sydney Morning Hearld, though this is a draft ruling that must still be formally adopted, the ACCC rarely retracts a draft decision.
eBay contends it will fight the decision, and has rolled back the planned June 17th 2008 implementation of the PayPal only requirement until July 15th.
eBay has lost several judicial battles recently, and there is some feeling that eBay, known in some circles as the 800 pound gorilla, may be facing a battle such as the likes of King Kong. (Randy Smythe’s MyBlogUtopia) Previously thought to be invincible, little by little eBay is taking hits. In and of themselves these hits may not have much effect, but when these hits continue and build, the resulting cumulative effects may begin to weaken the gorilla allowing competition to build a formidable attack.
eBayLive 2008 is just 6 days away, and I look forward to hearing the sentiments of those eBay.com.au users that will be in attendance. We will search these members out and bring you live reports from the event live next week from our microphones of the ebay & Beyond: Basics to Business radio program.
eBay’s PayPal Only Plan In Austrailia “SUSPENDED”
The Austrailian Competition & Consumer Commission has issued a draft notice proposing to revoke a notification* lodged by eBay International A.G. on 11 April 2008. Under the notification, eBay proposes to mandate the use of PayPal for almost all transactions on the eBay site.
This news comes just a week before the eBayLive 2008 conference in Chicago and just 5 days before the planned implementation of the PayPal only payment rules on the eBay AU site.
“The ACCC is concerned that the notified conduct will allow eBay to use its market power in the supply of online marketplaces to substantially lessen competition in the market in which PayPal operates,” ACCC Chairman, Mr Graeme Samuel, said today.
According to the information on the ACCC site this action is only temporary until a final decision can be issued. Based on this information, it appears that at least for the immediate future eBay.AU buyers and sellers will have a choice in how they conduct business.
It’s Time For Many eBay Sellers To GROW UP!
“They just can’t get as worked up about poverty in other countries, for example, when they are not sure they will be able to pay their own bills since Ebay trashed their businesses.”
This is a direct quote from a recent post on the eBayInk blog.
As most of my readers and listeners know, I love eBay. Much of the time I don’t like eBay very much, but I still love the site. eBay has allowed me to support my family for the past 11 years. Selling on the site, conducting educational programs for internet marketing, working at eBay University for nearly 2 years, and now our ebay & Beyond: Basics To Business radio program.
Most of my listeners and readers also know that I am not afraid to speak out when eBay changes directions that I feel are a detrimental to the marketplace. I encourage dialog and expression of concern by community members so that management will know where we stand on issues that may effect our businesses.
What I fail to understand are comments such as the one quoted above. People,,,, GROW UP!
You are the owner of your business. You and you alone (or your partners and stockholders) MUST make decisions based on your business model and not on what eBay or any other site is doing! Change is constant and inevitable! Just look at GM. Yesterday GM announced the closing of 4 assembly plants making SUV’s and pick up trucks because of the changing market due to oil prices!
Grow up people! If the changes that eBay has and will be making do not fit your business, you and you alone must decide what you will do with your business to make it profitable and grow. Business owners must not allow another business to dictate their future! Whether it is eBay or Amazon, or Overstock.com ,or ETSY.com, or any other marketing channel, it is your responsibility to ensure these venues fit into your business model or you must move on!
I will defend your right to express your opinion or concerns to my grave, but after expressing your opinion or concerns, do what is right for your business! Continued complaining will almost certainly not help your business accomplish it’s goals. Continued complaining takes time, and energy away from what should be your main objective, making your business grow!
eBay is making changes that it feels are necessary for their business to remain viable. Good, bad or indifferent eBay is changing, changing in ways we would never have imagined 10 years ago.
Either live with the changes and make them fit your business or move on. Plain and simple!
-
Sponsors
New Page 1 -
-
Affiliates
-
Join Me on LinkedIn
