Monday, 10 March 2014

eBay being "broken" is an opportunity for others

Carl Icahn continues to get publicity about the inefficiencies at eBay.   He says the company is badly run and has lost $4B in shareholder value due to bad decisions, mostly around the sale of Skype.  We agree that eBay is badly run but the failings go beyond just the sale of Skype.  eBay is fundamentally a badly run company which needs a complete overall to put it back on its tracks.  Meanwhile its failure to run the company properly and provide a decent and fair service to users is merely an opportunity for other companies in the same space.

eBay was founded on the principal of enabling person to person buying/selling.  However, it quickly realised that the main issue in this area was the lack of trust between buyers and sellers.  It mistakenly thought the solution was to rate the sellers. But this had the effect of creating a set of "professional" sellers with high ratings rather than looking at supporting the honest occasional seller.  This lead to eBay moving up market to mostly professional sellers with today 70% of its income coming from this type of selling.  It may have initially made more money for eBay, but it has positioned it more in competition with Amazon rather than supporting the person to person selling.  Person to person selling is a trillion dollar market and yet it is not today supported by any properly run company.  eBay still takes 5% on every transaction and yet does little for its users when there is a dispute.  This whole area needs a complete re-think; why does a market place take any commission on a sales, why should a market place get in the way of a transaction.

Further as users move from web to mobile eBay has remained in an old technology area - it has not moved with the times.  Again an opportunity to a new comer in this space.

Watch this space for more information on a new approach to this potentially massive business.




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