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Summary:

Is any tech CEO more reviled by his or her own customers than eBay’s John Donahoe? In online forums, sellers seethe about the higher fees and site changes he’s implemented. They write and sign petitions calling for his ouster. Even eBay employees voted him onto Glassdoor.com’s […]

Is any tech CEO more reviled by his or her own customers than eBay’s John Donahoe? In online forums, sellers seethe about the higher fees and site changes he’s implemented. They write and sign petitions calling for his ouster. Even eBay employees voted him onto Glassdoor.com’s “Naughty List” of CEOs with the highest disapproval ratings.

But while just a few months ago, Donahoe seemed destined to steer the e-commerce giant into irrelevance, a consensus is now starting to emerge that he may instead be turning it around. Investors have driven the stock up 71 percent since it hit a 52-week low on March 9, compared with a 44 percent rise in the Nasdaq. Collins Stewart analyst Sandeep Aggarwal said last week that he sees “many evidences of turnaround” at the company. And the ever-volatile Jim Cramer rebuffed viewer demands to put Donahoe on his gimmicky “CEO Wall of Shame,” saying the stock could rally further.

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Most of Donahoe’s changes are small but significant, in that they go a long way toward safer, easier shopping. For example, Aggarwal estimated that more than half of the items sold on eBay are now available for free shipping, up from less than 10 percent last year. “Free shipping” is important as it’s a phrase that generates higher conversion rates in online ads. eBay’s own search engine now promotes more reliable sellers. Recent fee changes have, by Aggarwal’s count, increased the number of listings beyond those found on Amazon. Perhaps most encouraging: Donahoe has finally come up with a coherent description of the new eBay: It’s not Amazon, or even Overstock.com. It’s an online big-box discounter, like Costco.

Other parts of eBay’s cluttered corporate structure are being addressed as well. Donahoe sold StumbleUpon back to its founders and is mulling the retirement of the Kijiji classified site. Skype is gathering enough momentum to allow for a sale or spinoff at a respectable price.

Strategically, much of these changes make sense, but it’s not clear to what degree they’re resonating, especially with consumers. Quantcast data suggests weekly traffic to eBay continues to erode relative to Amazon’s. And comScore’s data from April, the most recent available, showed a 15 percent year-over-year drop in eBay traffic — although that’s a slight improvement over the 20 percent declines logged in both February and March.

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Even if the changes work, they don’t address what may be the biggest challenge to eBay’s future: Craigslist. Yes, eBay owns a significant stake in Craigslist. But Craigslist’s for-sale listings, which are free to post, still compete with eBay’s fee-based listings. During the last recession, people looking to raise quick cash by selling their stuff turned to eBay. This time, they turn to Craigslist.

If Craigslist wanted to kneecap eBay, it could find a way to make its for-sale listings nationwide, not just locally, and facilitate shipping arrangements. There’s no way eBay’s fee-dependent revenues would be able to compete with free. That would make the challenges John Donahoe faces today look small.

  1. eBay owns 25% of Craigslist. Anything less than 51% of a privately held company that will never go public isn’t a significant stake.

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    1. eBay bout 25% OF cRAIGSLIST FROM a sigle person. What an asshole watch in a year they’ll be distroying craigslist too.

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  2. If eBay is all about profit, loss, corporate success, and squashing competitors, then maybe it is being turned around. But if eBay is about community and customer experience, then I’d suggest that eBay has lost its way.

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  3. A controlling stake, no. But judging from the way Craigslist tried to dilute that stake down, I’d bet they think it’s significant.

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  4. But there is no company in the history of startups that hasn’t diluted like that. eBay’s lawsuit against them was sour grapes.

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  5. Well, you can listen to the guru’s like Jim Cramer (who just a couple of months ago called ebay that “hapless” company) you can look at your mysterious figures. Down in the trenches the sellers will tell you a different story and so far that story has been upheld by the declining last two quarters Ebay reported! Before January, 2008 I had my sights set on powerseller status – which is difficult because I make everything I sell. Business was good – money was rolling in for me. 2008 was the big turning point for small sellers. I’ve sold only 11 items in the past month and my last 3 items are sitting stagnant with only ONE view between all three in the last 24 hours. Is it me? No…go to the discussion boards and you will see the same complain all over. Read the comments threads on articles and you’ll see it again and again. How Ebay is hiding this is beyond me. They are masters of only ONE thing – manipulation of figures to present them in the very best light and to hide the rot underneath. So….at this point I can only see Ebay turning more and more to failure. They lost tons of buyers because most of Ebay’s buyers are also sellers – a fact they keep on ignoring. I see failure for Donahoe and its well-earned.

    Should Donahoe ever be able to dismiss most of its sellers and turn into a cheap Amazon clone there is still one fact they don’t understand. They’ve lost the reputation they once had – they’ve become the most hated company on the internet and they won’t outlive it. Thousands upon thousands of sellers who were put out of business will continue making “noise” and using word of mouth will see to that!

    10+ year constant Ebay seller.

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    1. “Before January 2008 … money was rolling in for me … [but] I’ve sold only 11 items in the past month”

      Have you ever heard the word ‘recession’ said?

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      1. Sales are down as a direct reaction to policy changes for sellers. I am a powerseller and my sales are down 70% since the changes last month. NOT RECESSION! Donahoe is trying to turn eBay into an Amazon; they do not care about the seller they make changes without providing a bulk edit platform that works in hopes that the masses will just let GTC listings relist and absorb the rate hike. A real example… a listing last month that cost me $0.35 this month would be $1.85, who has time to go line by line and edit hundreds or thousands of listings so you simply end the item, eat the rate hike or join the ebay exodus. Ecrator here I come. No more Monopoly; I could see the writing on the wall when they sent me an email stating that I could only accept ebay owned Paypal payments.

        Ebay PowerSeller and sometimes PowerBuyer.

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    2. “They lost tons of buyers because most of Ebay’s buyers are also sellers”

      An excellent point that I am writing into a paper on the subject for my MBA. I came to this site as it was quoted in my e-commerce textbook. The general idea of my paper will be that Ebay is so busy trying to become Amazon.com and Craigslist that they forgot who eBay is and who their customers really are.

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      1. Philip Cohen Monday, July 26, 2010

        Don’t forget to include a few chapters of eBay’s blatant criminiality: their deliberate, planned, facilitating of shill bidding fraud on unsuspecting, trusting buyers.

        In the meantime, for anyone seriously interested in the utter incompetence and deviousness of eBay’s executive management generally, and in particular eBay’s deliberate and demonstrable criminal facilitation of the rampant shill bidding fraud being perpetrated on unsuspecting buyers, by a great many unscrupulous professional sellers via nominal-start auctions, an introduction thereto (along with some PayPal horror stories thrown in for good measure) can be found at http://www.auctionbytes.com/forum/phpBB/viewtopic.php?p=6502877

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  6. Although the eBay stock is headed north, it has less to do with the core marketplace and more to do with the simplification of the corporate structure. Amazon’s third party sellers are growing >30% YoY while eBay is shrinking (albeit single digit points)… As eBay has raised prices and changed their algorythm, they have pushed out the great deals and the fun from their marketplace making a collision with Amazon inevitable.

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  7. Interesting to see that you think Craigslist is the impending threat not Amazon. Craigslist website is awesome for what it does. Though a national craigslist seems improbable. Craigslist would need to have merchant reputations ( Right now everyone who is not an abuser is assumed to be good) , Change search and add browse. All together it would ruin what craigslist is .. And seriously why would you use craigslist if the chances of fraud are much much higher

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  8. Lessee here…

    eBay traffic? Down and still trending down for months on end.

    eBay profits? Not bad, but coming at the expense of things like 21 day holds on PayPal withdrawals by sellers (huge float to draw interest there), increased fees and just generally the generation of a lot of ill will among all but the largest sellers.

    Evidence of turnaround? Apparently the stock price. And what does the price of a stock really tell us? I submit that except in the case of a company in severe distress, it tells us nothing more than stock investors still move in herds.

    eBay turning around? Ya know, from my perspective as a small occasional seller there in days gone by, the answer has to be a resounding no. eBay has well and truly lost touch with its roots. It’s on the way to doing what all corporations seem to do eventually and that is utterly forgetting who they are, where they came from and what it was they originally set out to do.

    Turning around? No. A blip in the stock price? Sure.

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    1. People who think Paypal tries to increase float in order to earn interest income are morons.

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      1. Roman Berry Sunday, June 14, 2009

        That’s what I call a nice, reasoned argument, especially when that isn’t even what the post you are responding to says. None the less, it doesn’t take a genius to figure that when you hold money from a massive number of transactions, even when those individual transactions may be small, that the float is in fact quite a considerable sum.

        I won’t get into labels and name calling. As a general rule, I find that people who resort to that sort of thing right off the bat do so because they have no real argument to make. YMMV.

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      2. I have read that the “float” on that held up money is upwards of 40 million dollars a year and that does not include the new “rolling reserves” that also holds back sellers’ money. They now say that 40 figure has probably doubled! Paypal, not under banking regulations, can do as it darn well pleases…and that’s just what Ebay is making it do. I can tell you I’ve had a Paypal shopping cart system on my website for many years and they do NOT act the way they do in Ebay transactions! On my website, I am Paypal’s customer and I’m treated with respect – on Ebay I’m just one of the herd to be milked for as much revenue as possible!

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      3. would this above moron be John donahoe

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      4. props to you three.

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  9. eBay is going the way of the dinosaurs…..extinct…I have bought and sold on eBay since 2000, and this year is the worst year on record for sales. I am lucky if I get one sale per month. Dispicable isn’t it? The category I list in generally has oodles of listings and bidders galore that produced record high final end prices. Now, forget about it. The bottom has dropped out, and I am packing it in. Since Donahue took over, it’s been nothing but bad news bears. Don’t hold out for a turnaround with him at the wheel. He’s on a collision course and he’s taking you all along for the doomed ride. Get out while you can people! It’s time to move all your eggs into another basket or two. Forget about FeePay once and for all!!!

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  10. John Donahoe wants Costco like bargain hunters. JD fails to realize that eBay once had these buyers by the millions.

    eBay has been alienating these buyers in huge numbers starting back as early as 2005. It’s no coincidence that the alienation started just after JD joined eBay as President of Marketplaces.

    System changes, policy changes, faulty search methods, huge fee increases, and poor implementation across the board have all served to combine and push buyers and sellers away from eBay in record numbers. Now, JD wants them back….Go figure.

    In just over a year since formally taking over as CEO, JD has claimed to have one answer after another to bring eBay back. Each has failed to produce results so he rolls out another and it fails.

    When will he realize that futility is the act of making the same mistakes over and over again yet expecting a different result?

    First it was Diamond Sellers, results – none.

    Then it was to mimic Amazon, without all the things that makes Amazon a success, another failure.

    A few weeks ago, the latest salvation was going to be liquidators.

    And now, eBay wants to be Costco.
    .
    Sooner or later, when JD runs out of schemes and business models to poorly imitate as he continues trying to bamboozle shareholders into thinking he has a solid paln, he will get around to the one that has been staring him in the face all along…. Let eBay be eBay by returning to its roots.

    JD needs to stop giving speeches to other organizations and instead, communicate directly with his remaining users.

    Maybe JD should take a page out of Auctiva founder and CEO Jeff Schlicht’s playbook, and publicly apologize to buyers and sellers.

    Apologize for dismissing and ignoring complaints from buyers and sellers, and for referring to them as ‘noise’.

    Apologize for systematically destroying the sense of community that was the cornerstone eBay was founded upon.

    Apologize for all the poorly thought out changes and all the horribly implemented system revisions.

    Apologize for and roll back the massive fee increases which have alienated sellers, driven up prices, and motivated buyers to find real bargains on other sites like Amazon.

    The answer has been staring JD in the face all along, but he has been to arrogant and refuses to see it.

    Try something new – turn eBay into….well… eBay.

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    1. John Donahoe has implemented changes to Ebay that have totally ruined my buying experience. He has insulted all customers publicly and the “new” Ebay treats customers terribly. I no longer buy there. I take my money somewhere else.

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    2. Well said RicRoe…

      Truly eBay is now a ship without a captain, rudder or sail…eBay management has no clue as to the direction eBay needs to go.

      All of John Donahoe’s “magic” has been done with mirrors to fool Wall Street and the Investors..JD talks out of both sides of his mouth…He has lied about the true health and vigor of eBay and cooked the books to make eBay appear healthy….

      There needs to be a full investigation by the Wall Street governing board to review the stock sales of Meg, Pierre, and other top management from 2007 to present..Insider Trading was obvious – Meg and Company knew that the Jan 2008 John Donahoe roll-out was going to tank eBay, and they were right!…..there should some eBay principals be paying the same penalty to society that was forced upon Martha Stewart for stock manipulation…Jail time!!

      Read this blog for unbiased true picture of where eBay is at present…. http://ebay33ebay.blogspot.com/

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