Archive for the ‘Soar’ Category
EBay Boycott Fails, Profits Soar
Posted on: May 12, 2008
eBay has the last laugh at its sellers expense, throws a bit of sand in boycotters faces with earnings report
Apparently, eBay’s policy changes are having desirable effects, despite the massive public outcry the company received. While the company cut its listing fees, it more than made up for it by significantly raising its commissions on successful sales, particularly on low-priced items such as video games and CDs. The higher rates along with the elimination of negative seller feedback to the buyer created outcry among many loyal eBay sellers.
Some sellers tried to boycott eBay. Initial metrics seemed to show the boycott to be working — listings were decreasing and sales were down, by most official counts, although eBay insisted they weren’t.
However eBay soon rebounded and resumed largely business as usual, despite having lost a few loyal sellers. As DailyTech‘s Shane McGlaun wrote in a blog, sellers really had few choices — Amazon.com only allows resale of select items such as CDs or books, and Craigslist.com is avoided by many, due to its unseemly reputation as a hotbed for illegal activity. Most sellers were stuck with eBay, whether they loved it or hated it.
On Wednesday, eBay CEO John Donahoe announced a stronger than expected earnings report, with the company reporting $2.19B USD in revenue, a 24 percent increase over Q1 2007. The performance significantly beat analyst expectations. Net income also rose 22 percent to $562M USD.
Despite the boycott, listings jumped 10 percent to 647.4 million, which eBay attributes to the listing fee cuts. However, eBay did admit that its “conversion rate”, the percentage of sales ending in success, “declined only slightly”, though eBay would not reveal exact figures. The total “gross merchandise volume”, a metric measuring the value of goods sold on eBay and associated properties, experienced 10 percent growth to $16M USD
However, while eBay may have a bit of grounds to gloat over the boycotting sellers, the long-term outlook for the company is not quite as peachy. In 2008’s first quarter, eBay had 83.9 million active users, up just over one percent from last year, at 82.9 million users. The stagnant growth indicates that eBay may be reaching the market saturation point.
For a company at a market saturation point, customer satisfaction becomes increasingly important. EBay CFO Bob Swan noted, “We’ve concluded that the best way to grow our active user base is by not losing any of them.”
However, while Donahoe may not want to lose his users, his company’s policy certainly threatens to send some users packing, or at least slow growth further. Next month, the company will eliminate negative feedback from sellers to buyers, taking away a major tool which sellers could use to safeguard themselves against malicious customers. While Power Sellers will have some new protections, normal sellers will find themselves in a much more dangerous situation, at the mercy of their buyer’s reviews.
Dave Strom of South Boston, Va., bought a Smart ForTwo Passion Coupe, which he says is getting 45 miles a gallon.
Soaring gas prices have turned the steady migration by Americans to smaller cars into a stampede.
In what industry analysts are calling a first, about one in five vehicles sold in the United States was a compact or subcompact car during April, based on monthly sales data released Thursday. Almost a decade ago, when sport utility vehicles were at their peak of popularity, only one in every eight vehicles sold was a small car.
The switch to smaller, more fuel-efficient vehicles has been building in recent years, but has accelerated recently with the advent of $3.50-a-gallon gas. At the same time, sales of pickup trucks and large sport utility vehicles have dropped sharply.
In another first, fuel-sipping four-cylinder engines surpassed six-cylinder models in popularity in April.
“It’s easily the most dramatic segment shift I have witnessed in the market in my 31 years here,” said George Pipas, chief sales analyst for the Ford Motor Company.
The trend toward smaller and lighter vehicles with better mileage is a blow to Detroit automakers, which offer fewer such models than Asian carmakers like Toyota and Honda. Moreover, the decline of S.U.V.’s and pickups has curtailed the biggest source of profits for General Motors, Ford and Chrysler.
Once considered an unattractive and cheap alternative to large cars and S.U.V.’s, compacts have become the new star of the showroom at a time when overall industry sales are falling.
Sales of Toyota’s subcompact Yaris increased 46 percent, and Honda’s tiny Fit had a record month. Ford’s compact Focus model jumped 32 percent in April from a year earlier. All those models are rated at more than 30 miles per gallon for highway driving.
Dave Strom of South Boston, Va., recently bought a tiny Smart ForTwo Passion Coupe, made by Daimler, the German automaker.
Mr. Strom also owns a pickup truck, which he uses mainly to haul his boat. When he runs errands, he drives his Smart, which he says is getting 45 miles a gallon.
“I had to smile the other day when I filled my tank for $18 and the guy next to me had a Ford Explorer and the pump was clicking past $80,” said Mr. Strom, a 66-year-old retired manager of a Chevrolet dealership.
Previous spikes in sales of smaller cars were often a result of consumers trading down during tough economic conditions or gas-price increases. When the economy improved or fuel prices dropped again — as they did after the oil-price shocks in the 1970s eased — buyers invariably went back to bigger vehicles.
But with oil prices expected to remain high for years, auto industry executives are seeing a turning point.
Valleywag - valleywag.wordpress.com 
Recent Comments