eBay vs. Amazon long term view
Based on recent report from Nielsen, eBay page views showing a steady decline over a period of two years. This is a clear indication eBay visitors a losing interest in eBay site or leaving the site because they cannot find what they are looking for. In contrast, Amazon page views hold steady. This indicates a consistent level of interest in Amazon site while interest in eBay continues to decline.
According to another metric by Nielsen, unique visitors to eBay continue to decline while Amazon continues to gain share of unique internet audience. We now have a relatively long period of time to measure true impact of changes initiated in late 2007 by eBay management to benchmark the two rivals based on those merits alone.
We have forcasted the signs of trouble in eBayLand as the recession approached in October 2008. Let’s take a look year later on how these forcasts turned out.
- Following eBay’s management blunders we have seen visitors and page views decline on eBay while Amazon’s increase. That still holds true per Nielsen’s graphs above.
- eBay lets go fraud, hijacked seller accounts, fakes and counterfeits go unchecked on it’s site. We have pointed a million times that eBay, who holds it’s profits above the safety of it’s customers, will see sales declines, as more and more customers get burned by the shady scammers whom eBay lets thrive on it’s site. eBay profits from all scams on the site. But consumers are not stupid. Once burned a person tells 10 others who then tell others and so forth and thus slowly but surely word has spread that eBay is not going to protect you as a buyer or seller if such protections stands in way of eBay’s profits. Furthermore eBay is famous for making a significant effort in covering up the fraud on it’s site in an effort to mislead it’s customers into thinking they are safe. There are vast amounts of testimonies to such eBay Hack Cover up and eBay Security Breach cover up all over the internet. Actually eBay spends 7 figure amounts on hiring and firing Public Relation firms to clean up this security mess.
- eBay should be doing better sales-wise than Amazon in depression economy, eBay is branded as heavy discounter, close out e-commerce venue. Back in the recession years of 2001 eBay made headline news bragging it is recession proof. In 2009 recession, ebay blames recession for it’s continuos sales decline.
How did eBay and Amazon compare on latest QUARTERLY REPORTS?
NET REVENUE
Amazon reported better numbers — Amazon’s revenue in the latest three-month period rose 14 percent over the second quarter of 2008, to $4.65 billion. eBay’s revenue fell 5 percent to $2.1 billion
NET INCOME
Amazon reported better numbers again. Amazon posted net income of $142 million in the second quarter, a 10% drop from the same period in 2008 and the first such decline since December 2006. Chief Financial Officer Thomas Szkutak of Amazon said the profit decline was due to a $52 million settlement the company paid in June to resolve a dispute with Toys R Us. Without the payment, Amazon’s profits would have increased. eBay reported a 29% decline from the same period in 2008, a second consecutive decline in 2009. Net income fell to $327 million, compared with $460 million, in the year-ago quarter for eBay.
No doubt, both companies are affected by the recession equally. At the end of 2008, for the first time in its history, eBay stomached a year-over-year decline in quarterly revenue. And now it has happened three quarters in a row. The cause of eBay’s loss in revenues, loss of income and growth shrinkage rests entirely on eBay’s management. But during a conference call with industry analysts and reporters, CEO John Donahue called the company’s latest quarter “solid,” saying “we’re moving in the right direction, a strong company getting stronger.” eBay management has a long and proven history of placing profits over and above everything else.
EBAY RECAP
Net Revenues down 4%
Net Income down 29%
Marketplace Revenues down 14%
Vehicle sales down 32%
And as for those registered user numbers…
Active users edged up from 88.3 to 88.4 million for its lowest gain (100k) in the 4 quarters presented in the release
In the meantime they had to add 37 MILLION new accounts to eak out that 100,000 active user gain. Now according to the data… This is showing incredible user churn.
A full 82% of Ebay’s registered users have not “who bid on, bought, listed or sold an item within the previous 12-month period.”
This should trouble stock holders as well.. “GAAP operating margin decreased to 19.6% for the quarter, compared to 24.8% for the same period last year” That is a 20% decline in margins
As eBay alienates it’s customer base, it will fade into the mediocre land of has been along with AOL internet service, Alta Vista search engine, Xerox copiers and IBM computers.