As long as there have been marketplaces, they have served as a channel for the trade of both legitimately acquired and illicit goods.  With changes in public’s buying habits along with the deepening recession cutting into brick and mortar profits, why not blame Ebay for playing the role of fence for stolen goods. While you’re at it, big retail, why not include Amazon, Overstock, Craigs List and any number of  other online marketplaces that allow anyone to sell goods to others. Even in the unlikely event you close down person to person sales on the Internet you’ll still have flea markets, garage sales and classified ad tabloids around to blame for your inability to cope with the bad economy and change.

“Thieves often tell the same disturbing story: they begin legitimately selling product on eBay and then become hooked by its addictive qualities, the anonymity it provides and the ease with which they gain exposure to millions of customers. When they run out of legitimate merchandise, they begin to steal intermittently, many times for the first time in their life, so they can continue selling online. The thefts then begin to spiral out of control and before they know it they quit their jobs, are recruiting accomplices and are crossing states lines to steal, all so they can support and perpetuate their online selling habit.”

Uh huh. Only problem? Actual stats show that such retail theft is on the decline. But, of course, that won’t stop the lobbyists from these stores from pushing — and that means we’ve now got the fourth such law introduced just this year to deal with. With the introduction of the new bill, the House Judiciary Committee held hearings with law enforcement officials who did claim that retail theft was a problem, but according to Thomas O’Toole, they also said no new laws were needed. (techdirt)

The biggest problem currently faced by retailers is an economic depression. The same folks who engineered the financial melt down are by in large the same lawmakers running the show in Washington today. Instead of new rules for the Internet that are bound to put a bigger chill on commerce, how about stepping back and doing a little less meddling. All of the ill informed intervention, spending and borrowing have only made things worse so far. More ham handed intervention by that same  poorly informed Parliament of whores is the last thing the Internet or the economy need right now.

That is its inaction makes it complicit in activities like shilling by not going after sellers who practice such tactics. The case in point –

How can you be sure the price of your latest eBay buy wasn’t shamelessly inflated by some faceless shill bidder? Well, there’s always the ad hoc investigative skills of Australian retiree Philip Cohen.

Cohen recently posted a nearly 8,000-word shill-bidding case study to the online forums at AuctionBytes, as part of a, shall we say, dogged effort to show that eBay does relatively little to stop the underhanded practice. His case study tracks an Aussie eBayer who made 190 bids on 41 items over a 30-day period, and all 41 items were listed by the same seller.

The implication is that the seller and bidder are the same person - or that they’re working in tandem to boost prices on the seller’s auctions. Cohen estimates that on one auction, the bidder in question artificially raised the price of the item by $156.

“This underbidder…stopped his ‘nibble’ bidding at the point when he equaled the maximum proxy bid value of the ultimate buyer,” Cohen writes. “At that point the underbidder would also have understood that only one more incremental bid was required for him to win the item; but he did not make that one more bid. What then is the chance that this underbidder is not a most naïve and blatant shill bidder? Absolutely none!”

Now this is out of Australia. Shilling, whether physical or virtual is against the law. So in a sense eBay if they are not aggressive in their pursuit of such practices becomes an accessory after the fact. There is however and inducement for eBay not to act. To the extent that a buyer is secured eBay’s commission on such a sale increases. That is reward enough on eBay’s part. What eBay’s intended mind frame in the matter would require a full scale investigation. To do that would require the power of the State and sufficient probable cause. Another words its not likely to happen.

Linky.

Here’s a sure sign that Skype, formerly heralded as the future savior of Ebay, has left the building:

And now Skype is being downright disintegrated from eBay’s services, starting with the UK website. This is what the dry announcement message reads (emphasis ours):

eBay is discontinuing Skype voice and chat buttons in listings as of 10th June 2009 in an effort to remove features with limited buyer and seller usage.

This change does not require any action on your part. We are just notifying you that as of June 10, you will no longer see the Skype voice and chat options when you list new items, they will not be included on the new item page, and they will no longer appear in your existing listings.

We appreciate your continued commitment to good communications with your customers.

Regards,
The eBay Team

(Tech Crunch)

Skype is another example of how CE’O’s often create corporate Frankensteins that never add up to the sum of their parts, let alone adding up to more.  The real profit in all of the mega deals we’re seen over the last couple of decades in tech has been in the making of the deals, not in creating shareholder value. Until shareholders wise up and stop appointing boards and CEO’s who can profit more from market arbitration than running the business, these so called “honest mistakes” will continue. Thinks Ebay’s the only example? Those who presided over the Time / Warner /AOL and HP/Compaq fiasco’s profited handsomely too. In every case, the shareholders have lost value, and the customer has not been served.

After first instituting wholesale changes that sent most casual sellers packing, Ebay’s turned on a dime again and is trying to woo them back.  Soon, you’ll be able to list five items per free on the site, but you’ll pay more on the back end. In some cases a lot more. Kind of reminds me of the story of the scorpion and the frog…

Beginning 16 June, users can auction up to five items every 30 days without paying eBay’s usual tariffs for listing an item. The company currently charges between $0.10 and $4.00 for peddling user detritus online, depending on the item’s price.

Also under the new pricing regime, the final value fee for the first five items auctioned per month will become a flat 8.75 per cent of the sales price, capped at $20.

Currently, eBay uses a more complex scheme to calculate a final value fees, were items sold for over $25 are charged 8.75 per cent of the first $25 ($2.19), plus an additional 3.5 per cent of the item’s remaining price. (The Register)

On the heels of of this piece on moves by eBay to divest itself of, shall we say, less then stellar performers we find this –

eBay said today it’s targeting an initial public offering for Skype in the first half of next year. The IPO idea follows recent rumors that Skype founders Niklas Zennstrom and Janus Friis were rounding up private equity partners to buy back their firm for $1.7bn. The IPO might also be a scheme for eBay to drive up the bidding price and make some of its money back.

The company has been looking for ways to offload its VoIP outfit since at least the beginning of this year, if only it could find someone willing to pay the right amount.

eBay’s chief executive John Donahoe today cited “limited synergies” between the online auction house and VoIP engine, adding he thinks Skype will do better as a stand-alone publicly traded company. Donahoe said he’s spent a year meditating on Skype’s fate since he replaced Meg Whitman as CEO in April 2008.

There are two aspects to this bust up. –

For Skype it certainly means they will have to earn their way. Its hard to say if there will be changes since the company has always been private; you don’t see the financials. But if the VoIP-PSTN and international calls are not paying the freight then Skype will be forced to go to a subscription model. They have a large user base so it is possible they could charge a $10-20 annual fee. That is dirt cheap for what they provide. Time will tell on that score.

As to eBay itself. I hope that CEO Donahoe is preparing to clean things up at the home office. Personally I rarely use eBay anymore. eBay has chased off the person to person seller. More succinctly they have buried the PtP seller in a flood of eBay stores that regardless of your search criteria are 5 pages deep all selling the same piece of garbage within a $1 of each other. No I don’t need that wind up radio-flashlight-battery charger-cum-ginsu knife sharpener for $11.99. All 344 versions of them.

Do I think Donahoe has challenges ahead for eBay? You bet and I am not so sure that they will succeed.

Linky.

Under the stewardship of it’s former CEO, Meg Whitman, Ebay spent billions buying up businesses with minimal synergies while allowing its broken core business to slide. So far, Ebay’s new management has done little to slow the exodus of buyers and sellers from its auction / marketplace site.  The spinning off of Stumble Upon could mean the current management is ready to unload these distractions.

now the company has been spun off to start life over as an independent startup, backed by new investors and the original founders.

The new company is led by co-founder Garrett Camp, who now steps into the CEO role. Co-founder Geoff Smith also joins Camp in returning to lead the company, but in an unannounced role. The company is backed by Sherpalo Ventures, Accel Partners, and August Capital. David Hornik from August Capital and Sameer Gandhi of Accel Partners join the board. (Tech Crunch)

There’s also rumblings that Skype is in play for a sale back to its original owners.

While none of this will cure Ebay’s woes, the refocusing on its marketplace is a good first step towards the fix. Another good clue for management is that at one time  Ebay almost ran itself profitably without much oversight. That was until the suits stepped in and broke it.

For over a decade, Ebay’s top management has been a working example of how arrogance makes otherwise smart people completely incompetent. For a brief shining moment buyers and sellers accepted constant rule changes,  inconsistent service, constant fee increases  and other forms of punishment just to trade there. When the internet as a marketplace grew, Ebay failed to change with the times and to keep pace. Arrogant management believed they could restore dominance by trying to control buy and seller behavior once again. This time buyers and sellers did not react as expected. Then management grossly overpaid to acquire Skype.  The company has grown nicely, but has not contributed the profitability Ebay management promised. Declining Ebay traffic and increasing fees bankrupted many sellers, including some of the most prominent. Revenues and profits from the auction site went sideways. The cost to shareholders is far more than the decline in stock price if you factor in the lost opportunity to grow.

The one star performer in Ebay’s family is PayPal. The web payment system is  Ebay’s profit engine, and continues to grow in spite of a bit of arrogant “tweaking” from the executives. When Ebay management first encountered Paypal, it  was mostly interested in killing it. The payment system threatened to loosen Ebay’s control on buyers and sellers. Paypal was an upstart payment system that made the fairly complex Ebay transaction a bit simpler. Before Paypal, most buyers and sellers waited for paper payments to travel in the mail to complete a sale. Paypal grew so quickly that it caught Ebay off guard.  Ebay tried to build its own competitor to Paypal, but time had run out. Paypal had reached critical mass.  Ebay tried every way imaginable to kill Pay Pal before it finally spent large to buy it. Now Paypal may very well save Ebay from extinction.

Chief Executive John Donahoe acknowledged at the company’s annual analyst day that changes to eBay’s slowing marketplaces business were overdue and pledged to accelerate the pace.

But analysts say the company signaled no dramatic changes beyond efforts to lure more sellers and buyers onto its site.

By 2011, its marketplaces should see $5 billion to $7 billion revenue, eBay said, spurred by search, catalog and platform improvements. That compares with 2008’s $5.6 billion.

“There is nothing new they gave us to make us feel more positive,” about the marketplaces business, Collins Stewart analyst Sandeep Aggarwal said.

EBay pushed its fast-growing PayPal unit into the spotlight on Wednesday, with President Scott Thompson the first to address analysts after Donahoe, saying PayPal expects the online payments arm to double its business within two years. (Yahoo)

Today most of the buzz on this company will be about its Superbowl ads.  The more aware visitors to the Godaddy site will note the addition of a market place. In the ether of the web, the opening of a new online marketplace is a routine occurrence, with most fading away as quickly and quietly as they appear. This is only news worthy because of the man behind it. Bob Parsons is one of the most tenacious of American entrepreneurs. He’s made and lost fortunes, always coming back stronger, and is known for sticking with a business until it succeeds.

Opening a shop on the marketplace is simple, and relatively cheap. $4.99 a month plus 10% of sales including payment processing. In it’s infancy, the Godaddy Marketplace will benefit established sellers with good reputation the most. For the established Ebay Stores  seller, who is  paying at least $15.95 per month plus $.03 to .15 per listing, plus 12% of closing price, and another 3% to Pay Pal for payment processing, this is a bargain. (no wonder sellers call  it Fee Bay). It’s also worth noting that Ebay does very little to promote products in their stores marketplace. If Parsons applies his usual stick with it until it works philosophy, and can deliver better SEO and equal utility, it’s a winner.

disclaimer: Godaddy.com is a Third Pipe advertiser, however we recive no compensation from any subscription to or purchase made in the Godaddy Marketplace, nor were we compensated in any way for this post.

For the first time in its history, eBay has a down quarter. In response eBay will lay off approximately a 1000 personnel. eBay of course attributes this change of fortunes to a down economy. –

n the fourth quarter, for the first time in its history, eBay saw a decline in year-over-year revenue.

“We’re not happy about that,” CEO John Donahoe told analysts and reporters during the requisite conference call announcing the company’s Q4 results.

For the quarter ending December 31, eBay pulled in sales of $2.04bn, a 6.6 per cent drop from the same quarter last year. Meanwhile, profit tumbled 31 per cent to $367.2 million, or 29 cents a share

Excluding certain one-time items, earnings came in at 41 cents a share, down from 45 cents. And that beat the prognostications of Wall Street prognosticators. Following the company’s earnings announcement, eBay shares dropped 4.5 per cent in after hours trading, but at last check, they were up 0.73 per cent to $13.28.

A down economy mght be the primary reason. But has been noticeable is that the margins have been getting tighter every quarter for 2 years now. Gone are the heady days of 30% growth. Some of the drag on profits is also the changes that have been instituted. Person to person sales have given way to stores and drop shippers. I mean come on, how many people do you need to have selling the wind up charger/flashlight/radio combo device for $29.99. People have wised up that eBay has become a junkyard.

Linky.

Yeah, me too. But here it is, Ex-eBay CEO Whitman is going to attempt to parley her dynamic expertise (cough, cough) to the Mansion in Sacremento. –

Former eBay Inc. chief executive Meg Whitman plans to run for governor of California, a person with knowledge of her political aspirations said Monday.

The 52-year-old Republican plans to run in 2010 for the seat Gov. Arnold Schwarzenegger is leaving but is not ready to make a formal announcement, said the person, who was not authorized to talk publicly and spoke Monday on condition of anonymity.

Whitman made the decision while spending time with family over the holidays and will make the announcement official in four to six weeks, he said.

Henry Gomez, a spokesman for Whitman, said she stepped down from the boards of eBay, Procter & Gamble Co. and DreamWorks Animation SKG last week due to “personal reasons and time commitments.” He would not elaborate.

So lets see. She came on board to eBay when it was a rising star in the net income department then immediately began to transform eBay into what it is today — a parasitic money grubbing storefront. At the sametime driving off the little guy just trying to have a online garage sale due to the fee increases and general mess. But we are supposed to take the lump of coal she represents and expect greatness? With a State already running a multimillion dollar defict I would not be surprised that if she got in you could expect every road to be a toll road paid for via PayPal! Can we say perish the thought??

From Boardroom to Boredroom lets hope it does not happen.

Linky.