Does eBay Equate to Auctions, Anymore?

eBay announced first quarter 09 revenue of $2.02 billion, a year-over-year decrease of $171.6 million. According to eBay, other sectors such as Paypal and Skype performed well compared their core Marketplace business where revenues fell dramatically. Bottom line, eBay’s net income for Q1 was $357.1 million which comes out to $0.28 per share.

Is this a wakeup call for eBay to return to its core business and ensure they remain the premier online marketplace? According to Ina Steiner, co-founder of AuctionBytes.com, “eBay’s marketplace sales dropped 18 percent in the first quarter versus Amazon’s 18 percent increase, showing there’s more going on at eBay than a strong dollar and bad economy.” This makes one think if one day eBay loses its grip instead of us saying “eBay it” we will start saying things such as: “Let’s Amazon it” or “I just Bonanzled it” or even “Brb, I am Wigixing.”

Skype

Skype, first Oprah now IPO, what a ride it’s been for them. Skype reported $153.2 million in revenue for Q1 which represents a 21 percent year-over-year growth. Skype also increased their user base by 37.9 million which brings their total membership of registered users to 442.2 million.

Paypal

Paypal reported a superb quarter with $643 million in revenue which is an increase of 11 percent year –over-year. The net total payment volume for Q1 was $15.86 billion which is an increase of 10 percent. Payapl’s number of registered users increased to 73.1 million which is a 22 percent year-over-year increase.

Marketplace

So eBay’s other two branches look really strong, how about their core/trunk? Their marketplace group, consisting of site such as Kijiji, Shopping.com, StubHub, ebay and more, recorded $1.22 billion in revenue which is an 18 percent decrease year-over-year. One bright spot was that their online classifieds revenue increased by 23 percent year-over-year which is a strong indicator that they are growing in popularity in comparison to the structured auction/buy process. After eBay spins off Skype, is Paypal next?

eBay Bucks. Great Benefit? Or Good Marketing?

eBay has recently announced that they are beta'ing a buyer loyalty program [Article Link]. This not a new thing to e-commerce as almost every retail site out there has some sort of affiliate/loyalty program in which you can receive cash back and sites such as FatWallet [Fat Wallet Link] make it extremely easy for you to take advantage of these deals. Many say this might be too little, too late for eBay, but I think it is a win-win proposition for them. What many do not realize is that, yes you can get 2% back on your purchases, but that incentive just become an eBay gift certificate that will have to be spent within 30 days on their site.

So let’s dissect this from eBay’s finance department’s point of view. Let’s pick a highly sold item, say an Apple iPod 4GB Silver 3rd Gen [Wigix Link]. Let’s take this eBay auction for example: eBay Link. The seller has already paid $0.35 [I won’t count the subtitle and just assume that was free] to list this item and when the item sells, eBay will collect another $5.20 or so. So eBay has made roughly $5.50 on this transaction. eBay is now going to give 2% of the final sell price back to the buyer, which is roughly $1.50. Like all gift certificates, I am assuming eBay calculated a 50% breakage, so they only paid out $0.75 on this transaction. Now, let’s say the buyer purchases 2 items this month on eBay and accumulates $3 eBay Bucks, what can one possibly buy online nowadays that won’t cost more than $3 to ship [ok, yes, if you have Amazon Prime]. At the end, eBay is really not giving up much, if anything at all, and gaining a ton of good press.

I wanted to compare this pricing model to one of a new emerging marketplace, Wigix. Wigix’s fee structure [and most new online marketplaces out there] is more competitive than eBay’s entire fee structure even with this additional 2% cash back. Wigix has no listing fee and charges nothing for all sales under $25, then a very simple structure for all items above $25. If that same iPod Nano was sold on Wigix, the seller would have only had to incur a fee of $1.50, a 75% savings compared to what they would have paid if it sold on eBay. Even if we factor in the buyer’s cash back promotion eBay is running, Wigix is still only charging 60% less compared to eBay. This pricing structure is extremely competitive and a great start for the promising company.

eBay Import Tool

Yep, Wigix did it again. A eBay Import Tool AND and bulk upload tool? All in one week? Wow.

Here is more information on it: Click Here

Hope everyone had a great Easter. Summertime is around the corner. See you at the beach.