EBAY - Ebay

[rpadebet]

Anyone interested in this company around these prices?

 

Seems like they have a good network moat (where else could you auction off random stuff?), biggest existing online payment system in paypal (competitors are trying, but are mostly just hope and dream at this point), decent growth + operational and execution related issues (hacking, key paypal person leaving, bad recent quarter etc).

 

At 10 x FY15 Cash flow per share +stock buybacks in place, this appears to be a replay of Apple, MSFT, Orcl from last year. Yes there is severe competition and recent results are not that great, but there is a valuable core business which is trading very cheap compared to the competition.

 

Good things may happen again if things become more normal.

 

 

Not sure whether is another Ebay thread, if so please merge this with that.

 

[ukvalueinvestment]

Paypal is a great business.

 

It's the eBay bit I worry about.  Seems it's becoming less and less relevant.  I mean, if you want cheap second hand stuff, Amazon is just as good, right?

 

That said, I think the stock is probably a decent long term hold.  Offshore cash situation is important.

[PatientCheetah]

too many startups/giants are trying to chip away the moat around paypal. I also do not have a high regard for the management. They seem entitled and lack vision. An decent price right now if you think moat will be defended

[DTEJD1997]

I can go on an "extended disco remix" about how shortsighted & foolish Ebay's management is.

 

They seem to have policies/procedures dreamed up by a committee that has never actually sold meaningful amounts of products on Ebay.

 

It seems they have a short term mentality of how to game profits for the next quarter or two without regard to the longer term.

 

They also have a MAJOR policy change coming up in August that contains numerous foolish provisions.  The Ebay community discussion boards are filler with disgruntled sellers.

 

I have personally sold MILLIONS of dollars of products on Ebay since the 90's.  I regularly converse with other major sellers who collectively have sold probably sold over $100MM on Ebay since the 90's.  NOT A SINGLE ONE IS HAPPY WITH THE DIRECTION EBAY HAS MOVED.

 

They are ALL actively scaling back, setting up their own E-commerce websites, selling directly, and selling on Amazon.

 

If anything, I would look to be bearish on Ebay.

[zizou]

Hello! I have owned ebay for the last couple of years and would have liked to have owned for longer. Of late, I've started to lose confidence in the management after the hacking incidents, which makes paypal particularly vulnerable.

[siddharth18]

I can go on an "extended disco remix" about how shortsighted & foolish Ebay's management is.

 

They seem to have policies/procedures dreamed up by a committee that has never actually sold meaningful amounts of products on Ebay.

 

It seems they have a short term mentality of how to game profits for the next quarter or two without regard to the longer term.

 

They also have a MAJOR policy change coming up in August that contains numerous foolish provisions.  The Ebay community discussion boards are filler with disgruntled sellers.

 

I have personally sold MILLIONS of dollars of products on Ebay since the 90's.  I regularly converse with other major sellers who collectively have sold probably sold over $100MM on Ebay since the 90's.  NOT A SINGLE ONE IS HAPPY WITH THE DIRECTION EBAY HAS MOVED.

 

They are ALL actively scaling back, setting up their own E-commerce websites, selling directly, and selling on Amazon.

 

If anything, I would look to be bearish on Ebay.

 

I think sellers were angry from the day Meg Whitman left and Donahoe entered. And ofc any time the fees are increased, they are up in arms about it.

[king888]

Ebay has a new selling limit imposed on sellers . This limit will reduce number of listings there substantially

[rkbabang]

Ebay has also chased away most of its non-professional sellers with its constant rules changing, fee changing, and simply making it a pain to deal with, which has also made buying there less interesting as it is only the big sellers left (and many of those are leaving as well).  I used to use Ebay a lot, but now I buy things on Amazon and sell things on Craigslist or just donate them.  Ebay's strength is that it is a good place to find things you can't find anywhere else, like when I needed a new touchscreen for my Garmin GPS unit, I found it on Ebay and it shipped from Hong Kong. That was about 2 years ago and I think it was the last time I bought something on Ebay.

 

[bizaro86]

I don't have a position here, but think that the eBay marketplace is actually one of the least interesting businesses that they own. I really like paypal, but more than that I think Stubhub could be one of the greatest businesses in the world. They sell confidence, and sell it at a very high price.

[DTEJD1997]

I think sellers were angry from the day Meg Whitman left and Donahoe entered. And ofc any time the fees are increased, they are up in arms about it.

 

I think most sellers have the opinion that Meg Whitman was "simple minded"...

 

Sellers are upset about the fees.  What they are REALLY UPSET about is:

 

A). Rules that punish sellers for nothing they can control.  For example, if you ship a package and it gets lost, you get lowered in rankings.  Notice it is NOT about reimbursing the buyer OR sending them a replacement or anything like that.  Your package gets lost, you get punished.  Sellers have no control over USPS, UPS, Fed-Ex.

 

B). If buyer does not have money, OR for whatever reason asks you to cancel transaction, AND they don't do follow up "paperwork", you don't get your fees reimbursed AND IT COUNTS AGAINST THE SELLER! 

 

C). Ebay is actively promoting websites of sellers OFF OF EBAY.  Some of my higher end auctions (items $500+) have collapsed, as Ebay is putting links to my competitors (in my auctions) OFF OF EBAY.  Why is Ebay competing with their own sellers?  They are going to get MORE money from the link to the competitor than a sale from me?

 

D). Ebay is tightening the rules for sellers but is doing in back handed and sneaky ways.  If you want to cull out small time folks, FINE, just make it clear.

 

E). Rules & fees for foreign sellers are more advantageous than they are in USA.  How can a USA seller compete with somebody in China who pays almost no seller's fees?

 

On & on....

 

It is clear that Ebay is now being managed by people who have not actually sold & built businesses on Ebay.  Never a good long term proposition.

[ItsAValueTrap]

1- I like Ebay's moat.  It's not that strong but it's there.  Ebay will always be good for buying and selling extremely obscure items.  It's about the long tail.

 

If you're into electronics, Ebay is a good place to find obscure parts.  Pricing is often better than Digikey.  I don't see Amazon ever being competitive in that tiny niche.  Craigslist also won't be that competitive in that niche because it's local buying/selling (though some people do use Craigslist for obscure stuff).

 

2- Paypal has an extremely strong moat.  20-40 of its competitors have exited the business.  Breaking into the payments industry is brutal, costs hundreds of millions of dollars, and almost always ends in failure.

 

3- I would like the stock more if it was cheaper.  I don't own any.

 

Sellers are upset about the fees.  What they are REALLY UPSET about is:

As an individual, I would still sell on eBay knowing about the new changes.  (*I haven't sold on eBay for years.)  eBay did make some positive changes in giving more free listings.

[DCG]

1- I like Ebay's moat.  It's not that strong but it's there.  Ebay will always be good for buying and selling extremely obscure items.  It's about the long tail.

[/size]

I agree with that, but question how much room there is to actually grow that side of the business at this point.

[ItsAValueTrap]

There should be some organic growth from more people shopping online, eBay spreading into other countries, eBay getting better in other countries (e.g. shipping charges being automatically calculated), more people getting on the Internet, more people learning how to use a computer, etc.

 

They will have some headwinds from Craigslist/Kijii, random niche online retailers, and Amazon taking some of their business.

[DTEJD1997]

Hey all:

 

Another goofy problem with Ebay....

 

Selling a $300 computer part.  Paypal flags/reverses the transaction for fraud.  I no longer have the money.  I call in, they say NOT TO SHIP THE ITEM.  OK, no problem.  The item did not ship yet...so it is a minor annoyance.  This happens on July 4th.

 

Making shipments today on July 7th.  Ebay's website says this item needs to be SHIPPED.  Ebay does note that the buyer is NO LONGER A REGISTERED EBAY USER.

 

I call Paypal, they say the transaction/buyer is a fraud, DO NOT SHIP.  They send me over to Ebay.  Get transferred to 5 different customer service reps who have difficulty understanding the problem.  One of them actually tells me to ship the item!

 

There is obviously a problem in communication between Ebay & Paypal.  There is also obviously a problem with Ebay's code & servers.

 

Additional problem at this point is if I don't ship, I will be penalized for not shipping on time.

 

I've spent over an hour now trying to get this cleaned up.

 

This is the 3rd time I've had this happen in the last 2 months.

[Ham Hockers]

Hey all:

 

Another goofy problem with Ebay....

 

Selling a $300 computer part.  Paypal flags/reverses the transaction for fraud.  I no longer have the money.  I call in, they say NOT TO SHIP THE ITEM.  OK, no problem.  The item did not ship yet...so it is a minor annoyance.  This happens on July 4th.

 

Making shipments today on July 7th.  Ebay's website says this item needs to be SHIPPED.  Ebay does note that the buyer is NO LONGER A REGISTERED EBAY USER.

 

I call Paypal, they say the transaction/buyer is a fraud, DO NOT SHIP.  They send me over to Ebay.  Get transferred to 5 different customer service reps who have difficulty understanding the problem.  One of them actually tells me to ship the item!

 

There is obviously a problem in communication between Ebay & Paypal.  There is also obviously a problem with Ebay's code & servers.

 

Additional problem at this point is if I don't ship, I will be penalized for not shipping on time.

 

I've spent over an hour now trying to get this cleaned up.

 

This is the 3rd time I've had this happen in the last 2 months.

 

Just curious, what kind of volume are you selling each month?

[DTEJD1997]

At this point in time my monthly volume is VERY LOW, about $15k.  However, in times past, and when I devote full attention to it, it is frequently double or triple that.

 

Ebay & Paypal also have problems with certain electronics items.  For certain higher end processors, half OR MORE, of my transactions wind up being fraudulent.  90% of the time, these frauds are caught before the item ships, but not always.

 

Paypal has always eventually reimbursed me, as I am very strict about shipment and record keeping.

 

The crazy thing is that the fraudsters are now MUCH more sophisticated than they were in the past.  They must have breached Paypal & Ebay's databases, as the fraudsters have me shipping to registered & confirmed addresses.  In the past, they didn't have the confirmed address, so it was pretty easy to catch.

 

It has wound up costing them several thousand dollars over the last 6-8 months for my one account.

 

I expect though that I am not the only seller with this problem.  These are not esoteric or low volume items either....

 

 

[ukvalueinvestment]

There will always be individuals with complaints about eBay.  Seems to me that they are either fixable problems or irrelevant to the overall revenue line/story.

 

The fact is that they enable billions of ecommerce.  I am about to move house and put a load of furniture up for sale.  Where do I go?  Where else but eBay.  When I pay for anything online, what do I use? Paypal

 

 

[brk64311]

Does anyone have a copy of their 2013 Analyst day presentation?  I can not seem to find it on their investor relation web site.  I managed to find the 2011 presentation on the web, but not the 2013 one.  Many thanks.

[oddballstocks]

There will always be individuals with complaints about eBay.  Seems to me that they are either fixable problems or irrelevant to the overall revenue line/story.

 

The fact is that they enable billions of ecommerce.  I am about to move house and put a load of furniture up for sale.  Where do I go?  Where else but eBay.  When I pay for anything online, what do I use? Paypal

 

Why would you use ebay for big bulky local items?  Why not use craigslist?  Craigslist is crawling with people, in my area (a mid-sized mid-Atlantic city) if you don't contact a seller on the first day, or right after the posting you have no chance of purchasing.

 

We have friends who've moved like yourself, they post on Craigslist that they're moving and put the furniture on the front lawn.  By the end of the day buyers have come and cleared the lawn.  It's incredible.

[ukvalueinvestment]

I'm in the UK, where Craigslist is not so popular.  Look it's not about bulky items.  It's about the fact that if you want to sell "stuff", eBay has massive mindshare.

[DTEJD1997]

There will always be individuals with complaints about eBay.  Seems to me that they are either fixable problems or irrelevant to the overall revenue line/story.

 

The fact is that they enable billions of ecommerce.  I am about to move house and put a load of furniture up for sale.  Where do I go?  Where else but eBay.  When I pay for anything online, what do I use? Paypal

 

You are right, there are always individual problems.  HOWEVER, I don't think the criminal underworld decided to target DTEJD1997 and give him a hard time.  I would suspect EVERYBODY selling certain types of items has problems.  When you have 50%+ fraudulent transactions, that is a problem!  How do you control your inventory?  How do you plan for business?  Somedays, I've had $1,000 in bad transactions!  I'm a small seller too!

 

Then, on top of that, I spent 90+ minutes on the phone trying to get Ebay to correct a relatively problem with one of these sales.  All the reps admit it is a problem on Ebay's part, and they keep transferring me.  8 reps later, they tell, don't worry about it, you've got an excellent, top rated seller status, if you get knocked out, call us back and appeal it.  WTF????  They admit it is their fault, they've got a problem with the coding/server, and they are going to ding my rating, but don't worry?  Call back and appeal?  Sounds like they are too lazy to fix it, OR they want sellers knocked down.

 

Once again, I doubt I'm the only one this has happened to.

 

I know several other sellers who have businesses selling MILLIONS of dollars on Ebay yearly.  They are ALL dissatisfied with Ebay & it's service.  They sell there as Ebay has the most market share.  Most of them are exploring selling on Amazon and other venues, but Ebay is still where it is at for now.

 

So Ebay has sellers trapped,  they HAVE to use their service. 

 

If I were the business owner, I would prefer to have sellers WANT to use my service.

 

Ebay is vulnerable to competition.  Many sellers will leave in a heartbeat if they can and somebody offers a decent competing service.

 

Thus, I would argue Ebay is in a potentially very weak position because of their poor service, security breaches, etc.

[ItsAValueTrap]

So Ebay has sellers trapped,  they HAVE to use their service. 

 

Isn't that a sign of a strong moat?

 

I think that the problem is fraud.  Ebay is inherently vulnerable to fraud.  I think Ebay and Paypal have done surprisingly well despite its obvious attractiveness to fraudsters.

 

2- Their customer service might suck because it is an expense that they need to keep down.  Though it looks like they aren't doing very well in that department given that the reps aren't given the power to fix your situation and they weren't trained to handle things that they can't fix.

 

The problem with giving customer service reps the power to fix stuff is that they might abuse their powers to help their buddies.

 

Ebay could certainly do better.  If they freeze an account, then all the transactions related to that account should probably be automatically cancelled.  This is something that they can automate (e.g. it is low cost after being automated).

[DTEJD1997]

So Ebay has sellers trapped,  they HAVE to use their service. 

 

Isn't that a sign of a strong moat?

 

I think that the problem is fraud.  Ebay is inherently vulnerable to fraud.  I think Ebay and Paypal have done surprisingly well despite its obvious attractiveness to fraudsters.

 

 

I would counter that "trapped" user indicates the presence of a moat.  A "strong" moat?  Not so sure...trapped & disgruntled users attract & invite competition.  If your users are satisfied & happy, that makes it that much MORE DIFFICULT for competition and in fact might discourage competitors in the first place...

 

I've been selling on Ebay since the mid 90's.  There has ALWAYS been a small problem with fraud.  No question.  For years & years I was able to counter 99%+ of it.  NOW IT IS TOTALLY DIFFERENT.  The Paypal & Ebay databases must have been hacked because the fraudsters have confirmed & verified addresses!

 

I've had more fraud in the past 6 months than I have in the previous 15 years of selling on Ebay!  Additionally, my level of sales volume is DOWN SIGNIFICANTLY from some prior years.  Could it be that I just have bad luck?  Maybe...but I doubt the criminal underworld is picking on just DTEJD1997....

[ukvalueinvestment]

But if eBay agreed with your assessment, these problems are fixable, no?

[DTEJD1997]

But if eBay agreed with your assessment, these problems are fixable, no?

 

A lot of the problems are fixable, yes...

 

However, how do you fix fraud?  I am unsure how to do that, as I don't know how the problem originated.

 

I think a big part of Ebay's problem is that they have people running things and setting policy that have NOT built significant businesses using their product.  This is a classic problem for lots of businesses.  They grow and then they bring in outside/inexperienced management.  Also, perhaps management by committee.

 

Of course, alienate too many people and problems become un-fixable.