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Rakuten INC Does "Buy It Now" of eBay INC Diamond Seller Buy.com

Rakuten Inc Does "Buy It Now" of eBay Inc Diamond Seller Buy.com
20 May 2010
EventHorizon1984

A figurative shoe dropped as The Wall Street Journal announced "Japan's Rakuten to Acquire Buy.com" earlier today.  Buy.com's "But It Now" price was a manageable "$250 million."

Here are some things you can look for while you watch this news rapidly spreading around the eBay blog-sphere.

1)  How long it takes eBay to respond.

When eBay does a hot roll out, their press release hits the stands at the same time the news hits the wires.  When eBay is caught off guard, there is a time lag between the wire news and their response.  You can measure the level of surprise at the corporate level, by the amount of time it takes eBay Corporate to officially respond.

When Rakuten Inc, "the top e-commerce site in Japan" says:

• ""We feel it has a great strategic fit with our global expansion," said Hiroshi Mikitani, the CEO of Tokyo-based Rakuten. "Our goal is to become the number one e-commerce company and Internet company in the world.""

There had better be a good response from eBay Inc.

Incidentally Rakuten Inc plans a joint venture with Baidu Inc.  The same China search engine that eBay is partnered with.

2)  How long it takes Amazon to respond.

When Rakuten Inc says:

• ""We believe that we have a very different business model from Amazon and eBay. We empower the merchants""
  

Expect an interesting response from Amazon.

3)  What will Randy Smythe say?

Well known business savvy eBay fixture Randy Smythe currently works as "Merchant Evangelist" of the "third-party merchant program" at Buy.com.  With Rakuten Inc stating "We empower the merchants" perhaps Mr. Smythe had a hand in the acquisition.

We doubt he was an innocent bystander in this deal.  Any comments he is allowed to make will be fascinating.

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The Consequences of Being Attached to eBay's Hip

The Consequences of Being Attached to eBay's Hip
17 May 2010
EventHorizon1984

Like many on line journals, for example (shameless SEO linking) TheBrewsNews, Red Ink Diary, GrannyGoodPaints Place, as a friend put it, we write 'for the halibut.'  Unlike other sites, there is no pressing need to gather an audience solely to hawk expensive services to eBay sellers. 

We bring this up because something we can neither confirm nor deny dropped on our virtual desk.  That tidbit brought up the question, 'what happens when the audience of a blog changes?'

The obvious answer:  the blog is read by fewer people.

If you write without regard to generating income, you'll continue to write something.  If you're dependent on the revenue generated through ads and hawking services based on an eBay centric audience, you have choices.

1.  Denial.  Nothing will change, continue as always.

"The old Ebay was sitting in people’s attics. The new Ebay is sitting in warehouses”
Lorrie Norrington, eBay INC

eBay will be around a long time.  But eBay's focus will move from small sellers to warehouse/volume sellers.  The focus of the newest eBay sellers is less toward folksy generic advice, and more toward receiving hard core business services.  Five years ago there was good revenue from giving general starter advice to people unfamiliar with the Internet.  Today people are more Internet aware, and through searches can get that expensive advice for free.

The fresh new unaware sellers will still be out there, but their numbers will continue to shrink.  Conversely the number of blogs providing advice and services will continue to mushroom.  To spell it out, more businesses for fewer customers.

2.  Expand your focus.  Multi-channel is good.

EBay Buys Skype for $2.6 Billion (2005)
Sold! eBay jettisons Skype in $2 billion deal (2009)

Multi-channel has benefits.  When executed properly it's a good move, like eBay centric (" eBay is an investor in ChannelAdvisor") Scot Wingo (ChannelAdvisor CEO) indirectly hawking  ChannelAdvisor Amazon services.  But as seen above there are risks involved.  For a revenue generating blog, perceived fallibility can translate to loss of face and loss of income. 

From a potential customer viewpoint, a business that makes mistakes of it's own choosing, might not be a good place to get advice or services.

3.  Do something else.  Change is good.

"You can't change people."
John Donahoe, eBay INC

Suppose one were a mystery writer, decided 'change is good', and kill off your most famous character.  It worked for Arthur Conan Doyle, right?

• "Public outcry, however, led Conan Doyle to bring the character back"

When a blog depends on advertising income, it's a very bad idea to alienate readers.  And in the process alienate the blog's revenue stream advertisers, who want to reach those readers.

In the aforementioned example said 'mystery writer' created a new character, but remained a mystery writer.  When you are essentially a 'business writer' and your revenue blog is eBay centric, what do you change to?

Join the parade of a million articles and books giving general business advice?

4.  Retire.

Most here are partial to number 4.

We expect to see many blog retirements over the next two years.

Disclosure:  Ad revenue affords one of us the occasional cup of coffee.  <sip>  Thank you.

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The eBay Noise Aggregate (eNA) - Measuring The Impact Of Store To Core

The eBay Noise Aggregate (eNA) - Measuring The Impact Of Store To Core
1 May 2010
EventHorizon1984

On February 27th the eBay Noise Aggregate (eNA) was 196517.

{dramatic pause}

Like 42, without proper context both numbers are meaningless.  The context of the first number would be the question "What is the aggregate sales total for a representative set of "noise sellers" over 30 days (January 29 to February 27)?".  Answer: To the nearest dollar, $196,517.

You might be asking, why bother creating eNA?  That answer is, some here wanted to know how eBay sellers reacted as a group, when Store Inventory listings received "full exposure in eBay search results".  Without waiting for results from eBay's next Earnings Call.

One could ask for seller opinions, or build a sample set of sellers and use tools such as Terapeak to get precise numbers.  We took the second option and assembled a Nielsen-Dow Jones-style metric.

In boring terms, over two hundred "noise sellers" were initially selected ...

Let's digress a bit.

When the subject of "noise" and "eBay" are brought together, it invariably leads to this statement:

"And so we are going to continue pushing hard on all three dimensions and we will -- we are confident of the direction, we’re confident of our -- of the outlook. There may be some changes that will have some negative short-term impacts as we -- you know, Bob mentioned Australian safe payments, that as we go to all electronic payments and there’s cash and checks and things that come off the site, we may have some sellers that make some noise and/or pull some things, but we are absolutely confident in the direction we are going that we are going to improve the buyer and overall user experience on eBay and that that is going to lead to a healthier, more vibrant marketplace."
John Donahoe, 16 April 2008

Actually "noise" dates back to prior eBay CEO Margret "Meg" Whitman.  The "She" mentioned in this quote from August 2003 is Meg Whitman:

"She even monitors the "noise" on eBay's discussion boards, online forums where users discuss, among other things, their opinion of eBay's management. (Level 1 means "silent," and 10 means "hot" or, in Webb's words, "the community is ready to kill you." Normal for eBay is about 3.)"

If you want to be a real stickler for "noise", there is also this 2001 quote made during Meg Whitman's reign as eBay CEO:

"We start from the principle that if there's noise, you better listen."
eBay Chief Operating Officer Brian Swette, 3 December 2001

With ""noise" on eBay's discussion boards" as a reference, most "noise sellers" were selected from random Store and Seller Central discussion board threads.  Remember by Meg Whitman definition, posts made on discussion boards are "noise".  The rest were culled from other eBay forums and off-eBay boards. 

The "noise sellers" consist of eBay sellers posting positive or negative eBay comments. And those who posted advice, or made comments other than 'pro' or 'con'.  In short, if you post regularly on the aforementioned forums, you're probably on the list.

The over two hundred became one hundred nineteen (119) as one last qualification was added; must have sales during a measured ninety day window.  To be less obscure, about half the sellers we selected last year did not register any sales during the period January 29th to April 28th.  Or left eBay during that period.  Or something else happened.

Even after the triage, the survivors represent a variety of views, and have a variety of products available.

One more digression.  eBay can afford to ignore "noise".  Consider the sales of a previous front page featured fashion seller stylepremium.  They had sales of $169,065 over a 30 day period.  Versus 30 days "noise seller" sales of $196,517.

We digress too much.  Let's take eNA for a spin.

eNA  (504,067 Positive Feedback)
$196,517 - Total Sales, January 29 - February 27
$188,238 - Total Sales, February 28 - March 29
$173,608 - Total Sales, March 30 - April 28

Let's add in the percent difference between one 30 day period and the previous 30 day period.  Plus number of items sold.

eNA  (504,067 Positive Feedback)
$196,517 - Total Sales, January 29 - February 27
     13,315 - Items Sold, 1/29-2/27
     -4.2% - Percent difference between Total Sales period 2/28-3/29 and 1/29-2/27
$188,238 - Total Sales, February 28 - March 29
     13,379 - Items Sold, 2/28-3/29
     -7.8% - Percent difference between Total Sales period 3/30-4/28 and 2/28-3/29
$173,608 - Total Sales, March 30 - April 28
     12,679 - Items Sold, 3/30-4/28

Ultimately the value eNA is measured in it's predictive ability. Or lack there of. 

Let's see how these trends compare to those of eBay Institution (yes we're collectively in awe) JayandMarie.

JayandMarie (885,737 Positive Feedback)
$80,921 - Total Sales, January 29 - February 27
     28,125 - Items Sold, 1/29-2/27
     -1.5% - Percent difference between Total Sales period 2/28-3/29 and 1/29-2/27
$79,721 - Total Sales, February 28 - March 29
     27,945 - Items Sold, 2/28-3/29
     -10.9% - Percent difference between Total Sales period 3/30-4/28 and 2/28-3/29
$71,065 - Total Sales, March 30 - April 28
     27,384 - Items Sold, 3/30-4/28

Well eNA is in the ballpark, given JayandMarie specialize in DVDs and CDs. And eNA was meant to provide a group trend.

Let's compare eNA to one of eBay's most protected Diamond sellers, Buy (Buy.com).  With Buy's huge variety of products, it should be a good sample of eBay as a whole.

Buy (1,326,785 Positive Feedback)
$3,283,304 - Total Sales, January 29 - February 27
     93,227 - Items Sold, 1/29-2/27
     -4.30% - Percent difference between Total Sales period 2/28-3/29 and 1/29-2/27
$3,142,205 - Total Sales, February 28 - March 29
     91,097 - Items Sold, 2/28-3/29
     -21.1% - Percent difference between Total Sales period 3/30-4/28 and 2/28-3/29
$2,478,285 - Total Sales, March 30 - April 28
     77,864 - Items Sold, 3/30-4/28

hmmm.  That drop of -21.1% is rather large.  Why don't we look at the numbers of John Donahoe celebrated seller Eforcity?

Eforcity (1,784,423 Positive Feedback)
$967,621 - Total Sales, January 29 - February 27
     137,953 - Items Sold, 1/29-2/27
     -5.29% - Percent difference between Total Sales period 2/28-3/29 and 1/29-2/27
$916,473 - Total Sales, February 28 - March 29
     132,183 - Items Sold, 2/28-3/29
     -19.3% - Percent difference between Total Sales period 3/30-4/28 and 2/28-3/29
$740,000 - Total Sales, March 30 - April 28
     111,015 - Items Sold, 3/30-4/28

Hmmmmmm. 

Well eNA was created to show the group view from "noise sellers", not individual Diamond sellers.  Or perhaps eBay hasn't supplied all the sales figures to Terapeak yet.

"The other thing that happens as part of that is we no longer have the store inventory format and so the fixed price items are now all in sort of core search and what we have proven in Europe is our search engine can take that. These are things that were proven out in Europe and will take time to sort of work their way into initially our listings and into demand but we feel good about the impact it will have on the U.S. business over the remainder of the year."
John Donahoe, 21 April 2010

Or just maybe eBay sellers will see a rash of listing specials in May 2010.

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Buckaroo Banzai, The Adventures of Buckaroo Banzai Across the 8th Dimension (1984)

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