What in the world is going on over at eBay? Back in the olden days — the 1990s — eBay was a beacon of hope in the online world. It established a level playing field by which any mom-and-pop retailer around the country (or around the world) could compete with the big boys online and create a profitable business.
Of course, those days are long gone. The new “corporate eBay” has all but thrown the little guy under the bus. The company is now firmly in bed with big business (especially mega-retailer Buy.com), and offers favorable deals to the corporations, while continuing to raise fees on individual sellers.
But you know what they say: “what goes around comes around.” In a brilliant stroke of karma, eBay is now getting jabbed with the sharp end of the sword they’ve been living by. Their financial performance has been slowing for several years now — long before the current economic situation developed. And in some ways, eBay has become the ultimate victim of its “forget the little guy” policies over the last few years.
As a result, a lot of the “little guys” have forgotten about eBay too, and the company’s growth has slowed to low single digits in the last few years. With CEO John Donohue at the helm, it would appear that eBay has neither a well-defined mission statement nor a viable corporate identity — at least not anymore.
They’ve tried integrating with big box retailers like Best Buy, tried moving away from auctions in favor of regular retail sales, tried revamping their seller feedback system, tried raising their fees to individual sellers — and yet none of these harebrained strategies has been particularly effective.
The fact is, EBay circa 2008 finds itself in exactly the same financial crunch they were in three years ago. So what is the company doing about it? Unfortunately, the company has announced it will layoff more than 1000 workers, a full 10% of their current workforce.
But in a perfect example of the “what are they thinking” strategy the company has followed over the last few years, eBay has also announced it is buying several new companies, including Bill Me Later, the online payment firm. Purchased for $945 million, eBay plans to integrate Bill Me Later’s services with its own Paypal online payment division.
Strangely, the company has also agreed to purchase two Danish classified ads sites for nearly $400 million total. Keep in mind, the company is expanding (and spending a great deal of cash to do so) at a time when it is also laying off 10% of its workforce!
Is there a viable business strategy in here somewhere? Or is eBay just biding their time until they are eventually bought out by Google? Oh yes — it could happen.
