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In fairness eBay has had the Skype facility available to it's auction listers for a while now. That said, I've not noticed any lister using it. That to me is understandable as I can't imagine many listers wanting to field calls at all hours day and night from all over the world. Just as eBayers want to see a return to a true community feel, they will also think simple email works best and allows them time flexibility.

Likewise I can't see many businesses increasing the headset count in their Call Centres to take VOIP (internet telephony) calls when they've not long started reaping the benefits of remote online dealings.

I still believe Meg & Co need to get feet back on the ground. Revisit eBay from a traditional users viewpoint and see why it is they are leaking sellers and buyers at the moment. That leak could become a major plumbing problem very soon if it is ignored much longer.

The fee increases introduced a week back now were meant to cut back the number of subscription paying store sellers which appears to have worked. Presumably to replace that subscription income we were given the impression items would switch from store to core listings. But the core listings in the US appear to be around 2.5 million lower today than the period just before the new store fees hit. When will the growth happen? Early days yet but some reassurance from management would be nice.

I agree with you that eBay management currently seem primarily focused on trying to add value to stockholders investment. Trouble is, to me, they are focusing in completely the wrong direction! I also agree that they appear to be everywhere right now because they are uncertain about the shape of things to come. But isn't that the time to give a little love and attention to your existing profitable assets too?

Sheldon, my question is: Are these strategic moves by eBay just meant to mask the problems in their core business? As Peter states in his blog comments “The deals highlight the weaknesses in eBay's auction and telecommunications businesses and are not likely to make much of a difference to Google's revenues.” Though I wonder where eBay’s stock would be today had they worked out an alliance with Skype rather then buying them for an outrageous price.

I'm not naïve, moves like this are necessary for all of the reasons you stated in your comments, but the core revenue-generating engine of eBay needs a serious tune-up.

EBay needs to battle on two fronts. Strategic moves like this are necessary because, as you say, “the end game is unclear” and they also need to call in more troops to fight the problems in their core business.

Graham, Randall,
I appreciate your well reasoned comments. You both bring up good points, and in particular the one about keeping focused on your core business. If you go back and look at my post on Hard Assets vs Soft (click on my by-line for all past articles) you will learn that I think all exclusively web based companies are going to be faced with a constantly changing sea and need to anchor themselves to terra firma somewhere. MySpace is now anchored, AOL is long ago anchored, MSFT has many anchors, that will be the trend. As I think about what I wrote and your issues and what this might mean for the future; perhaps there is one more thing. Ebay may be a better fit with Google then they are with MSFT or Yahoo ar anyone else and perhaps Google is starting to think this way too.

Sheldon, if eBay anchors to Google, who does Google anchor to? I bet Time Warner wishes AOL wasn't anchored to them.

Randall,
I long ago said Google should buy Starbucks and I still think so. Both Google and Ebay need a foundation to operate from. TWX might regret the deal with AOL but AOL shareholders don't regret it, me among them.

Sheldon, I agree, it was a much better deal for AOL shareholders.

As you probably can tell, based on my comments, my concerns are with ebay from a seller’s perspective. EBay has created a wonderful marketplace that has matured in the US and actually faces competition Internationally (China and Korea). The largest sellers in that marketplace have limited growth potential because of the site dynamics and EBay can't entice large corporations to sell there because there is no benefit to scale. Barnes & Noble surely wouldn't pay 17% of revenue for sales and marketing. EBay is left with small business and they are pricing them out of the equation.

I would also agree with you that Ebay needs an anchor in the real world, if nothing else, to bring their management team back to earth. They are killing the Golden Goose. (Core business) If they don’t fix that their will be nothing left to anchor.

Thanks for the dialogue.

Hi Sheldon,

Enjoyed searching through your past posts and did find the one you referred to. It was worth looking up as it makes a very valid point.

Although I'm obviously being simplistic, when considering the prospects of any business, I try to keep focused on the customer perspective.

So, when I look at purely web based businesses I try to figure out who the customers really are? It is not always obvious. With Wal Mart I know when the doors are open, it's how many people walk in and what they spend that concerns me. But with Google, although open all day, how do I judge who the paying customers are they depend on? Is it the people clicking on contextual advertising links? Is it the people placing the ads? And so on...

Put it another way. Would Wal Mart open a store and make everything they offer inside FREE? Think a moment. Obviously this will attract fantastic customer traffic and the idea would be to cover the internal walls and ceiling of the store in advertisements for other businesses in order to generate revenue. Sound like a good idea? Effectively, in my view, a lot of online presences are doing just that. Offering expensive to host/provide services for free, attracting volume traffic and relying on little more than advertising to pay for the services and, hopefully, a return to investors. I can't see Wal Mart stores ever contemplating such a model and, in time, I think the online communities being built will have to become more traditional in outlook if they are to genuinely prosper in the longer term.

So getting back to eBays current direction. Are they forgetting what they already have? Anchors in millions of homes/offices/stores around the world - real people trading tangible assets for real cash.

Ebay gets a generous slice of every offered item and completed transaction. They even had over 500,000 real people paying between $16 and $500 per month to make their offers available in a mini-website hosted by eBay and, yet, they seem happy to turn their back on this reality.

It's worrying. Ebay seem to see their customers, their anchors in reality if you will, as something to reject now. It's almost as if they wish they had no customers to deal with, prefering to play with 'traffic' rather than 'people'.

Returning to the customer perspective, every recent development at eBay seems to be placing more obstacles and more cost between seller and buyer which will only deter usage of the site. In Google speak that's lower volumes of traffic.

Google rarely has a customer that feels part of anything tangible. Ebay, on the other hand, was built by offering a sense of belonging to its customers.

I can agree that a much closer partnership between eBay and Google has potentialy huge merit.

Leave Google to play the online traffic games and attract the clicks while eBay does what it used to do best - accomodate real people trading real items for real cash from real homes and stores all over the world.

So, her I am back at the root problem. Will eBay reconsider it's current direction? Will they get back to basics and look to rejuvinate a community feel? Will they look to re-establish a better sense of value and belonging for it's increasingly alienated customers?

Until the answers are known my savings will be risked, as eBayers put it, St Elsewhere.

I have grave doubts about the benefit of this tie-up for Ebay and indeed Google, who I thought were more astute. Ask yourself this question, do you click on the links of the plethora of advertising that covers the information you went to a site to find. Probably not.

From what I understand is when an eBay customer has a fruitless search Google will provide alternatives, presumably off Ebay, so where does eBay gain in that? For Google it is relying on Ebay providing customers who will click and leave the Ebay environment.

I can see customers using Google to search first as eBay declines, so what does Google gain from falling numbers using eBay. Unless this is a cunning plan to further emasculate the stricken giant.