I apologize for the lack of updates to Red Ink Diary recently, we are having internet connectivity issues. You can read the official excuses here. Although the article claims service has been restored, internet is intermittent and agonizingly slow.
I am going to experiment with writing on a word processor and pasting to the blog, we will see how it goes.
Y’all come back!
So, (as we say on eBay) everything is wonderful on the bay! There was much repetition, the odd comedic moment, a few genuine clues, subtle contradictions and lots of filler.
“So our Lorrie Norrington and our U.S. team are very on top of executing between now and the remainder of the year.”
Stylistically I noted an increasing tendency towards nosism, but the undoubted word of the quarter is “our”. Things were so jolly I almost expected one of those vintage postcards saying “Wish you were here”.
There are few surprises in eBay’s second quarter 2010 (Q2-10) report. In the interests of economy and being green CEO John Donahoe recycled his Q1-10 opening remarks.
Q1-10 “First, we are becoming a more customer focused company. We are driving improvements to our user experience and we are measuring our success with three customer oriented metrics; net promoter score, velocity and market share. I have tied a portion of our leadership compensation to customer satisfaction… Second, we are becoming a more technology driven company and we are increasing our commitment to innovation.” SeekingAlpha
Q2-10 “First, we’re becoming a more customer-driven organization. We have three clear customer metrics, net promoter score, velocity and market share, and we’ve tied a portion of management’s compensation to customer satisfaction… Second, we’re becoming a more technology-driven company with an increasing commitment to innovation.” SeekingAlpha
Basis point or point: One hundredth of 1 percent (0.01%). Each percentage point of yield equals 100 basis points. Gross Merchandise Value - GMV
Presumably we would never have guessed scores are not up for low grade and inactive buyers?
Clues and contradictions
It is entirely possible I am being dim here, if so please enlighten in the comments.
Classifieds grew 20% in 2009, showed a 14% gain year over year in Q1-10 and slowed to 7% in Q2-10. Advertising revenue growth is slower at 9% for the quarter from 12% in Q1-10.
Whatever happened to Shopping.com? Has it turned into the red headed stepchild of eBay Inc?
G-Market acquired at a cost of $1.2 billion in 2009 is conspicuous by its absence from Q2-10. In Q1-2010 CFO Robert Swan said “our acquisition of G-Market increased growth by four points resulting in organic revenue growth of 11%. ” His Q2-10 statement
“Marketplaces segment margin was 40% in the quarter, down 220 basis points from a year ago. The main drivers of the change include increased investments to continue to build trust, value and selection, as well as, the inclusion of Gmarket” SeekingAlpha
In Q1 Swan excused decreases in Marketplaces segment margin with ‘investing in a lower take rate’ and ‘new Buyer Protection programs’. In Q2, surprise!
“The take rate increase was driven by higher velocity on lower priced items and lower power seller discounts versus last year … along with a shift of much of the cost of our Buyer Protection Program from PayPal to marketplaces”
Donahoe says velocity is down, sold item growth was 5% in the U.S. Swan says it is up, on lower priced items. Donahoe is going to fix it.
“we’re in the midst of making some adjustments in the format mix of auctions and fixed price … we’re now going to be increasing gently the fixed price exposure, as well as, ensuring that higher ASP items are getting appropriate visibility.”
Velocity is an expression of conversion measurement, stock into sales. Inventory turnover ratio (ITR) measures the velocity or speed of conversion of stock into sales. It is important to realize that a high inventory turnover ratio may not be accompanied by high profits. Margin at its simplest is another word for profit, more cultured.
Decoding the BaySpeak
Secondary markets are so last year, we prefer “off-price inventory”.
Delicate fine tuning of search with a pitchfork and shovel is taking place, expect the excavator later.
Once again decreases in eBay fees resulted in increased costs for eBay sellers, what a surprise, (not). “a shift of much of the cost of our Buyer Protection Program” is coming out of seller hides too. Think payment hold, rolling reserves, and coming soon, pre-authorized direct debit from your bank account and/or charges to your credit card. Bet you can’t wait.
Cheap stuff is selling, mainly from stagnant and previously invisible stores inventory, but I wonder if that inventory is being replenished.
The Emperor has spoken, it would be nice if you did too in the comments.
Y’all come back!
I reviewed Boocoo.com while it was in pre-beta. The site launched June 21st, and is, so far as I can tell, still in beta. Management said no fees will be charged for the first two weeks but as of today fees are still not being charged.
How it works
A percentage of all fees is shared with Boocoo’s media partners. The partners, licensed by zip code, will promote the site and receive transaction fees on completed sales. If the buyer and seller are from different zip codes, the fee is split. All partners have committed to monthly print or broadcast ad campaigns.
My initial thought, this is akin to a mixed metaphor. How many classified newspaper in hand readers would be comfortable making online transactions? Then I realized that most newspapers have websites where you can access their classifieds. An example is shown below.
Chairman and CEO George Willard Sr. responded to my questions and had some of his own. I was impressed by his straightforward manner and his accessibility.
Revisited
Other than the new front page and ability to sign in, not much has changed. I received 27 views on 13 listings over about a week.
An auction purchase I paid for June 19th is still showing unpaid on my account page. Neither the seller nor I can figure out how to mark it paid.
Feedback left for me on June 15th by two sellers did not show a week later nor did the feedback I left for the seller whose item has arrived. Click image to enlarge.
I emailed support about feedback and received a reply within 24 hours. My question, “What happened to the feedback left for me by two sellers?”, was answered by a real person who included their name and a toll free number in their reply. The answer just about gobsmacked me.
Thank you for contacting the boocoo (sic) auctions help desk. 14 days after the auction the buyer or seller can not see the feedback. The purpose of this is to ensure that the seller leaves feedback and vice versa.
As a buyer this does not make me feel secure, a crook has a two week window of scamming opportunity before his bad feedback shows up. Hopefully Boocoo will rethink this.
The site has a few design flaws. Here is an example:
How many would click the purple search tab at the top when there is a search box immediately below? I didn’t, until today. Much to my surprise it leads to a page where you can browse by category, much more satisfactory than repetitive searches for specific items that do not yet exist on the site. This is a serious issue because frustrated potential buyers are not likely to persist.
If you are a small seller and an auction addict, give the site a try while there are no fees being charged. I found the listing process very fast and smooth and I know for a fact there have been some sales.
UPDATE:
Here is a link to Boocoo.com It will open in a new window.
Y’all come back!
I read a post on Event Horizon 1984 Blog Log “eBay Inc Stock Price During CEO John Donahoe’s Tenure” which started me thinking about my own eBay investment history.
The eBay investment
Early in 2001 I had been buying on eBay for two years and selling for one year, I was completely hooked. I bought shares at just under $10. I was aware that generally internet stocks pay no dividends but thought my investment would appreciate sufficiently to compensate for that lack. In December 2004 eBay would hit its peak at $58.88.
With hindsight I could have split my initial investment between eBay and Amazon which was trading at $10.19, but I was underwhelmed by Amazon and passed on the opportunity.
In 2006 I began building this website. I had quadrupled my eBay inventory to 3500 multiple item listings after stores went into search and the abrupt reversal of SIS in March resulted in an 80% drop in sales. A 250% increase in store listing fees six months later impelled a corresponding inventory reduction on eBay. The need to diversify off eBay was becoming clear. In 2007 eBay and PayPal’s percentage of my gross was higher than that of my wholesale costs, overhead (S&H) or profit. By January 2008 after the slowest ever Christmas sales it was apparent that I could no longer afford to sell on eBay. I needed to either change my line of products or venue.
The only residual value from the eBay years was my feedback. By February 2008 feedback changes and the ugly atmosphere at eBay made it plain that the only way to preserve my unblemished record was to leave. I joined the boycott and have neither bought or sold on eBay since.
This is what I wrote on this blog in April 2008
Hear me well eBay. I will not be bringing back the 3500 multiple quantity listings I had in my eBay store when you shafted me in 06, those listings I removed when you doubled my listing costs … those fixed price listings you would like to charge me 12% final value fees on. I am a businesswoman. I can’t run a viable business with my venue micromanaging it.
Thoroughly disillusioned by eBay, there was no reason to hold stock in an organization I was convinced was going in the wrong direction. I sold at $30. Again with hindsight, it was a good decision, eBay dropped to $10.27 in March 2009 and 14 months later is trading at around $20. Amazon was trading at $72.41 the day I sold my eBay shares and today’s average price is $120. Ah well!
The second investment
This is a 1920s kit cottage located in a small town in South Dakota. It has been well cared for and rents for $300 a month. I own it free and clear.
After deducting taxes, insurance and management fees plus an 8% set aside to a maintenance contingency fund, the house has earned 11% annually on my investment based on it’s 88% occupancy rate during the period I have owned it. Additionally it has appreciated (conservatively) at 4% per annum.
The comparison
Over the eight year term my eBay investment appreciated at 14.75% per year but produced no income. If I still owned the stock it would have appreciated by 8.6 per year.
Over the same eight year period the house appreciated at 4% annually or by approximately 37% while producing 11% income.
There is not a whole heap of difference between the two investments in terms of net return. The differences are security, lack of volatility, (def.# 4) and potential in the real estate, contrasted to liquidity in the shares.
Some thoughts on real estate investment
As with any investment the profit potential hinges on what you pay for it. Use a realtor and be upfront and specific about your goals. Do the math and research before you look so you know your price parameters. Listing price has no bearing on offer price, if you can’t negotiate to a price you can make money on, walk away. As Auntie May says “Cash talks with a loud voice.”
Be coldly analytical when investment property shopping, location, price, condition (anticipated maintenance) and expected return must carry more weight than charming staging.
Do not allow yourself to become emotionally attached. It is an investment. Pay close attention to the area, is it trending up or down? What is the school district’s reputation? Better locations attract better tenants.
Unless you have real estate management experience and knowledge of applicable law, find and employ a capable rental agent. Keep tabs on them.
Y’all come back!
