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Do you sell your book (or anything else) on eBay? If you’ve had more than zero sales, consider yourself lucky.
eBay sellers have seen catastrophic drop-offs in sales, while eBay steals scads of their dough. WTF happened?
The easy blame is Cassini, the glitch-plagued, useless search engine eBay rolled out in 2013 just when sales started flatlining. (Sellers call it “Can’tSeeMe.”) Naturally everyone assumed a connection. And there is one, but eBay started doing things that are way more awful than Cassini:
● eBay gives preferential treatment to foreign mass marketers, pushing aside smaller domestic sellers.
● eBay deliberately hides many listings. (See Here’s how and why eBay limits visibility of your listings below.)
● eBay hides your listing descriptions, too. Except when it replaces them with random nonsense phrases.
● eBay interlards the listings you pay for with eBay product promotions and links to competing listings, along with advertising from external retailers like Target, who pay eBay to skunk up your listings with pop-up ads that redirect buyers away from eBay. Schadenfreude points: Those retailers are paying eBay big bucks for ad placement on listings no one can see.
● eBay forces users to use PayPal. PayPal is bad. Even eBay knows it. eBay will not accept PayPal payments for its annual seller outreach events tickets, where you can share in the warm fuzzies for just $199!
● eBay’s 2015 user agreement forbids you from adding your customers’ email addies to your marketing list.
● eBay forces sellers to use its Global Shipping Program (GSP). You mail your international packages to a Kentucky distribution center run by Pitney Bowes, who removes your packing materials to save money on postage and then ships broken purchases, often to the wrong place, with exorbitant export fees due to buyers (typically 33% of item value) that eBay keeps if customs doesn’t. Despite assurances that sellers bear no responsibility for packages GSP loses, eBay docks sellers anyway. GSP has been caught stealing shipments and reselling them on eBay. It’s so successful (for eBay), the company has expanded the service to domestic shipping. Shyp will even come to your house to relieve you of what you sold. What could possibly go wrong?
● If you call eBay customer service and the CS rep doesn’t like your attitude after you’ve been on hold for hours, watch out for damaging retribution.
● eBay is notoriously cheap. It’s US customer service reps are mostly Filipinos who are paid $5 per day plus a sandwich. In 2015 eBay tried to trick Ecommercebytes.com, an independent news site, into carrying eBay’s baggage for free. When that failed, eBay tried to trick eBay sellers into providing support, for free. Meanwhile eBay invested lavishly in a massive eCommerce talent training center in China.
eBay vs Google
There’s more. Remember all that action you used to get from people finding what you sell via Google search? Wave bye bye. eBay shot off its own foot by aggravating Google so egregiously that Google eliminated eBay listings from Google search. Here’s how:
● In 2006 eBay rolled out Google Checkout as a payment method, then rolled it back in a few days later.
● In 2013, eBay published a study claiming paid search ads on Google were a waste of its money.
● Over three days in 2014, eBay rearloaded 97 commercial tutorials onto YouTube, hoping its guides on how to buy belly button rings and not lose socks would boost eBay’s presence in Google searches (Google owns YouTube). Mostly it just boosted Google’s pique.
● In retaliation for eBay being dickish, Google minimized the presence of low-quality and/or thin content promotions, like eBay’s poorly thought out AdWords campaign.
● In 2014 eBay sellers suffered massive cutbacks in their listings on Google Shopping search after Google made the service pay-to-play and eBay didn’t want to so much. eBay punished Google by moving its Internet ad business to Bing, used by no one.
● In 2015 shoppers reported receiving “Suspected Phishing Site” warnings on every eBay page they viewed using Chrome (a Google product).
● In 2016, when eBay’s Gumtree classified site was hacked, affected users with Gmail accounts found their hack notifications — eventually — in their spam folders.
Anyway, here’s how and why eBay limits visibility of your listings:
● Rolling blackouts (rotating exposure). eBay’s file management system herds what it considers less-desirable listings (ie, yours) into dead zones. It assigns server locations and listing numbers based on criteria like category and seller volume, allocated regionally, which eBay can manipulate discreetly. So like, if eBay needs you to step off because they got boxcarloads of bad art and Korean Rolexes to fence and you’re hogging their precious bandwidth with your dumb book, they just turn off your whole server and the entire Midwest (or wherever you are) goes dark.
● Restricted visibility of listings to small, distant areas. By forcing you to sell far away, eBay gets a bigger postage kickback. When you buy postage from eBay, eBay gets a fat cut from carrier services (a whopping 58% from USPS, 13% from FedEx). And eBay doesn’t want you selling locally, where buyers can — horrors — pick up for free!
● eBay physically turns off listings (tap-on-tap-off) without notification (including ending auctions early, often within one minute of the end. One reason is to block snipe bidding, which overtaxes eBay’s inadequate infrastructure and bandwidth.
● Secret selling limitations (throttling). No matter what you do, you’ll only be able to sell as much as eBay allows, and not one widget more. You’ll still be allowed to list things and pay listing fees, of course, but instead of your listings, buyers will see this:
eBay’s rationale regarding restricted visibility is actually codified in their user agreement:
I now invite you to share my horror upon discovering that “a positive user experience” means my eBay listings are visible ONLY in Texas, Louisiana, Mississippi and South Carolina. They’re not big readers of cutting-edge literature there, so I gave up selling my novel Dead Spot on eBay.
Fun Fact: In December 2014 an eBay forum moderator leaked an internal company memo explaining nine different kinds of limits to which sellers are arbitrarily subjected, including this one: “Silent limits (limits placed on an account that can’t be seen by the seller).” The post was deleted immediately. Here it is:
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Earth to eBay: Your technology platform blows
You’d think an ecommerce company as big as eBay would try to keep up with technology. But no.
● eBay recruits programmers from the local bus station. (Most are H-1B foreign workers.)
● Instead of using standalone servers to conduct its cavalcade of bad experiments, eBay beta tests on live listings. Worldwide, eBay had 16 site crashes in 2014 alone, on top of site hacks resulting from inadequate security. In November 2015, the site was down three times. eBay UK was down for three days in February 2016. Broad downtime outages are pretty much the norm.
● Due to lousy security, eBay experienced a hack in May 2014 by cyberthieves who stole the unencrypted names, passwords, email addresses, physical addresses, phone numbers, and birthdays of 100, 112, 128, 145 or 233 million eBay users (depending on which report you believe, although there’s a consensus that the hack actually occurred the previous February and eBay informed no one for three months). As a direct result, 24% to 49% of customers abandoned the venue.
Fun Fact: So many sellers fled, eBay now encourages buyers with complaints to file IC3 Internet fraud reports, thereby relieving eBay of responsibility to refund buyers when sellers go AWOL. If you thought selling on eBay sucked before, wait until your name’s on an FBI list.
● eBay’s user database was hacked again in July 2015, and then again in December. eBay wouldn’t say how many accounts were compromised, and ignored the second hack for a month before patching the related security flaw.
● eBay UK was occupied for 3 weeks in September 2015 by hackers who installed booby-trapped ads on the site. The ads infected millions of users’ computers with malware that stole their data. eBay notified no one. “The attacks that are documented publicly are only the tip of the iceberg,” said a representative of the security firm that discovered them. (In March 2016, the same thing happened on Australia eBay.)
● Instead of building firewalls, in October 2015 eBay started storing security data in temporary Flash cookies stored on your computer. When you clear browser cookies during regular maintenance, you’ll be locked out of your eBay account and see this message: “We don’t recognize your computer.”
● April 2016: eBay’s Gumtree classified site was hacked.
● April 2016: hackers successfully robbed eBay users with ransomware.
● April 2016: eBay commenced testing password-free user authentication on live accounts, demanding that test subjects identify all other computer users in their building. Credit card and banking data for everyone!
● May 2016: eBay withdraws its latest seller tool, which replaces sellers’ PayPal email addies with strangers’ and/or gives 100% of your sale proceeds to charity.
● July 2016: eBay users are tormented by inescapable popup boxes exhorting them to “object Object OK.”
● August 2016: Following a June media blitz announcing the launch of artificial intelligence to enhance eBay search, the reality of what that meant became painfully evident. eBay’s bargain basement algorithm upgrade searches not only listing titles, but also descriptions and seller policies. Looking for red leather shoes? eBay will helpfully direct you to books, furniture, cosplay costumes, and F-150s. The new search became operational the day after an unexplained site outage, presumably to load the program because that’s the only way eBay knows how.
● Magento, a popular ecommerce service that was part of eBay Enterprise from 2011 until November 2015, is a jackpot for cyberthieves using malware and ransomware to freely steal customer credit card information from independent web stores that use Magento.
Fun Fact: 149,000 users successfully sued over a data breach in 2008, and another breach-related class action began in 2014. eBay didn’t fix its security then, so you can safely assume eBay will never fix it. Paying off claimants is cheaper.
● eBay sells discounted postage to sellers, but the service is frequently ultra-slow or completely down. When it does work, the program generates return labels with addresses for the wrong seller and duplicates tracking numbers on unrelated shipments.
● eBay encourages sellers to input “item specifics” on their listings, ostensibly for better search visibility. Then Cassini systematically excludes listings from search by those attributes.
● eBay now bullies sellers into using UPCs, even if what they’re selling doesn’t have a UPC (handmade) or predates the use of UPCs (vintage). Listings without UPCs are relegated further in search results (if that’s even possible). According to Market Realist, forcing sellers to use UPCs “is helping to increase exposure for items in organic searches.” Translation: Foisting busywork on beleaguered sellers is how eBay avoids paying for search engine exposure. Fun Fact: Buyers can’t search items on eBay by UPC or item listing number.
● The main thing eBay’s new Amazon-ish UPC cataloging system has succeeded at is further confusing braindead buyers, who don’t understand the difference between product reviews and seller feedback and stick scathing irrelevant rants against sellers on catalog descriptions.
● eBay’s mobile app is virtually useless. It omits item descriptions and changes all your listings to Free Shipping! If a buyer tries to leave you five-star feedback on his iPhone, eBay’s mobile app will erase it. Plus the shopping cart doesn’t work. The September 2015 app update is even worse than what it replaces. Among other things, it hides bidder IDs from sellers.
● eBay’s Apple Watch app was so abominable, Apple yanked it from its app store — one of only two dumped out of some 3,500 available. The other one belonged to a scumbag who stole cancer charity donations.
● Got a problem? Call eBay’s award-free customer service all you want. They won’t help you. They WILL activate bots that identify keywords in your tirade that enable eBay to spam you with targeted Internet ads.
eBay’s unwillingness to modernize its staff, coding, or infrastructure is a big mess of stupid, best exemplified by a market launch on October 9, 2014, when eBay began hosting live auctions with real-time bidding for a consortium of major art auction houses. The highly publicized event crashed eBay’s American servers the first day and its European ones the next. The buyer premiums alone ranged up to 30% of price realized, and eBay wasn’t about to forfeit that. So it shut down other marketing operations and/or transferred their databases to foreign servers to free up bandwidth and server space for the live auctions. According to reports on technical issue reporting boards and eBay forums, US sellers found their stores had become Russian or Chinese ones, their PayPal accounts were German, and their auctions had vanished. Some members could only access their accounts by logging in via eBay Canada. US buyers were blocked from making purchases from US sellers because, eBay insisted, one party wasn’t in the US.
(eBay achieves this remarkable feat with Docker and Kubernetes, technologies that package up all the components of an application so that it can run anywhere. In eBay’s case, out of a car trunk.)
In Dumbest Ecommerce Site On Earth News: On Sept. 4, 2015, eBay announced more real-time auctions with Phillips and Sotheby’s, presumably because of the success of the previous live auctions that crashed eBay’s servers and got it sued. One auctioneer reported that 10% of his sales went unpaid, and all his deadbeat “winners” registered through eBay.
More Fun eBay Tech Facts:
● In May 2014, then-CEO John Donahoe blathered freely to the media that eBay would integrate Bitcoin as a payment option. A year later, eBay was banishing sellers who accepted Bitcoin payments.
● On January 27, 2015, eBay announced it had created a new horrible technology division to build a new horrible payment gateway to replace PayPal after its spinoff, despite a non-compete agreement with PayPal.
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This seems like a good time to remind everyone (especially eBay) that even though eBay acts like a retailer, it’s not. It has no inventory, warehouses, fulfillment capabilities, or salespeople. It’s just a brokerage for independent sellers who provide stock and manage their own sales, and pay eBay a commission to use the venue. But for reasons that defy all logic of commerce, eBay has commenced jettisoning the small and mid-sized sellers who made it the 800-pound gorilla it is today.
In 2013 (and reportedly as early as 2008, when ex-Bain & Company CEO John Donahoe became eBay’s CEO) an anonymous eBay manager posted this chilling warning on the sellers’ forum, accompanied by details of the secret Machiavellian makeover designed to result in exactly what has transpired:
“[Small to mid-sized sellers] are not wanted. Leave. If you stay, you will be crushed. Leave. Go away. You cannot win. … You do not know how much they [eBay] hate you.”
Reports vary, but eBay admitted to (translation: probably grossly understated) 54,000 seller suspensions over just two days in 2013. In addition, ridiculous sales limitations were placed on an undisclosed number of active sellers.
After a tsunami of bad publicity, eBay clammed up about whatever it’s doing. (One possibility: driving disenfranchised sellers into its disastrous Valet selling program. Another possibility: unloading small sellers before US ecommerce sites are forced to collect and disburse sales taxes to all states. Big etailers have this ability; eBay doesn’t.)
Whatever the answer, on the 20th of every month thousands more sellers are kicked out, nominally for “underperformance” (directly caused by listing invisibility, duh).
Your turn will come. In the meantime, eBay doesn’t care if your listings never sell. Why? Because fees, dog. eBay has no skin in the game. You sell, you don’t sell — eBay wins either way.
When buyers can’t see listings, sellers relist perpetually, paying a fee per listing of 30 cents (plus $3.05 more for optional listing upgrades). eBay collects a minimum of $31.20 in fees for one unsold $10 item relisted weekly for two years, compared with $1.20 if it sells once. If a seller ends an auction early and there were bids on it, there’s a penalty fee. Do you prefer 30-day fixed-price listings? Don’t worry — eBay will convert them to Good Til Canceled without notice (no, you can’t change them back) and bill you monthly in perpetuity. Yes, even after you’re dead.
Want more (or any) buyers to see your listings? You’ll pay extra for that. And if you do manage to actually sell something, eBay will relist it without telling you — and charge you a listing fee. When buyers don’t pay or return what they bought, you ain’t getting your seller fees back. For returns you’ll pay for shipping, at a specially inflated rate that’s hoovered from your PayPal account against your will, along with the refund you’re forced to give. So you lose all that and all the fees you paid, plus the thing you sold if your buyer doesn’t bother returning it. Buyers don’t even have to pay for what they “buy” to score refunds. Try to fight them, and you’ll be arrested.
In November 2015 eBay announced it will no longer investigate seller claims of buyer return fraud. Why? Raw naked greed. Fees eBay collects from countless failed transactions like the following are too lucrative to pass up:
In May 2015 a woman sold her boat on eBay for $8,500. The buyer paid with PayPal, used the boat all summer, then filed a credit card chargeback. eBay and PayPal sided with and refunded the buyer, who refused to return the boat unless the seller paid him an additional $2,690.
In April 2016 an eBay seller sold a $1,400 donut fryer to a buyer who claimed it was broken and wanted a refund, despite the fact that the buyer is the one who broke it. eBay sided with the buyer, seized the funds from the seller’s PayPal account (because they’re still not connected, at all, lol), and forced the seller to pay the return shipping, too. The only alternative given the seller was to let the buyer keep the fryer and the refund.
In Campbell v. eBay Inc., a 2012 lawsuit that challenged eBay’s “the buyer is always right” policy, the plaintiff’s lawyer stated: “eBay does not and will not review the facts of the case to arrive at a fair resolution of the dispute between the buyer and the seller.” eBay’s boilerplate response to every dispute is that its TOS overrides any policies stated by sellers. Anthony A. Ferrigno, a lawyer in the case, told The New York Times: “If the contract is rescinded, if there is no sale, then the company does not collect final value fees.”
See how that works? eBay reportedly rakes in an average of $100 for every sale that goes south. Now multiply all of the above by millions of returned/unsold/unpaid-for listings to get the big picture.
But wait, there’s more fees!
● eBay collects store fees — $25-$350 per month. If you signed up for a store and you want out, you’ll pay an early termination fee, from $5.32 to $719.80. Cha ching, sucker!
● eBay pushes eBay MasterCards with a vertigo-inducing variable purchase APR of 19.99% or 23.99%.
● For books, eBay caps your shipping charge at $5 to $7 and then steals 13% of that in fees (10% to eBay + 3% to PayPal). Selling coffee table books? Reference books? Textbooks? Good luck with that!
● American Express, having tired of account hijackers and scammers who abuse chargebacks to “rent” eBay stuff, revamped its Return Protection in 2015. It now covers only US purchases returned unused/unopened/undamaged within 90 days, with a $1,000 annual cap and no reimbursement of shipping costs.
● eBay customer service reps are trained to call 911 in response to the many calls from sellers who are suicidal or having heart attacks.
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What a shock. eBay is hemorrhaging money.
Despite valiant efforts to fleece sellers, eBay’s revenue nosedived in 2014 and 2015 (including a $200 million loss due to the Google debacle alone) and remains stagnant in 2016. Three of eBay’s biggest partners bailed: Toys R Us, Martha Stewart, and Neiman Marcus, who said the partnership “did not meet all our expectations.”
Why? Because eBay is to modern ecommerce what MySpace is to Instagram. But according to eBay, all its failures are someone else’s fault.
The company blamed its 2014 slump on the data breach (and blamed that on employees) and food stamp reductions (after partnering with bottomfeeder mega-retailers like Wal-Mart and Sears). In 2015 eBay blamed its revenue reversals on the US dollar being too strong. John Donahoe blamed mom-and-pop sellers for tanking eBay. CFO Scott Schenkel blamed “the SEO headwinds” (codespeak for Google exiling eBay) for eBay’s inability to attract new buyers.
According to its Q3 report, eBay had $749 million net profit from 128 million users. Sounds like a lot, right? Dogs, that’s $1.95 monthly profit per user. Who needs massive infrastructure for that? Homeless people make more money selling soda cans.
A Seeking Alpha article explains that eBay’s 2014 net income was actually $46 million, down from $2.856 billion in 2013.
● Q1 revenue declined 4%.
● The ecommerce consulting company ChannelAdvisor.com noted that eBay’s Q2 active user growth was 6% — way lower than its 14% growth a year earlier.
● A Q3 earnings conference call in October downplayed eBay’s 2% revenue decline from the year earlier. US gross merchandise volume (GMV) accelerated 1 point over the previous quarter (due entirely to ticket sales on StubHub), but YTY GMV declined by $433 million and net revenue by $51 million. Q3 auctions declined 21%.
● Q4 revenue was unchanged from a year earlier.
● eBay’s “fundamentals continue to be weak” and it “has not shown the revenue growth necessary for profit upside,” said Barclays after downgrading it in March.
● In April Morgan Stanley downgraded eBay to underweight, blaming “erosion” in the UK and Germany cited in a survey. It showed that “62% of respondents in the UK and 68% of those in Germany said they had no plans to shop on eBay in the next 12 months. That is up from 21% and 17% respectively at the beginning of 2015. The rising level of buyer churn and/or lack of interest from new potential buyers is troubling.”
● eBay’s Q2 revenue growth was down 1%, with active marketplace buyer growth unchanged YTY. The figures weren’t worse only because of StubHub and classifieds sales. Amazon reported 31% sales growth that quarter. The average annual growth rate for the whole ecommerce industry is 15%.
● In October eBay announced it’s selling its Latin American marketplace, MercadoLibre.
eBay hasn’t disappeared beneath the waves yet because it uses fake sales to inflate its GMV report to investors. It basically just exists to be sacked by insiders until there’s nothing left to pillage.
In June at Code Conference, new CEO Devin Wenig told tech industry leaders and investors: “We sell $90 billion worth of stuff a year!” It’s a lot less than $90 billion’s worth when adjusted for theft and nonpayment. “We are doing what we said we would do!” boasted Wenig, who ascended on July 20, 2015. He received half-year compensation of $14.5 million for losing vast sums of money.
eBay is “on life support,” Scott Wingo, CEO of ChannelAdvisor.com, told Bloomberg.
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The upshot: eBay is hurriedly liquidating assets of any value, most notably via scams best described as fake IPOs.
The PayPal IPO was July 17, 2015. PayPal represented nearly half of eBay’s value. eBay announced the spinoff on September 30, 2014; the next day eBay assumed $7.5 billion of PayPal’s debt (ie, all of PayPal’s debt).
eBay bought PayPal in 2002 for $1.5 billion and won’t reveal the amount raised in the IPO (neither will PayPal), but when the dust settled there was a $13 billion spike in market cap. eBay took a $2.194 billion writeoff for its “discontinued operation” of PayPal. PayPal received a $5 billion cash divorce settlement from eBay (80% of eBay’s entire 2014 end-of-year cash). CFO Bob Swan said “more likely than not” the gift would be parked offshore to evade tax liability.
Nobody paid any taxes. eBay now may be able to avoid RICO and antitrust indictments, too.
On July 15 eBay claimed it also sold Enterprise, its ecommerce services division, for $925 million — at a loss of $1.475 billion. (eBay acquired it in 2011 for $2.4 billion.) Part of Enterprise is now owned by Permira Funds’ Innotrac Corporation; Morgan Stanley, who’s managing eBay’s debt financing on the Enterprise deal, says it can’t find buyers for the remaining $640 million of eBay’s loans still outstanding and eBay lied to investors about its earnings on the deal.
Fake IPO Fun Fact:
Remember Magento, the eBay service that allowed hackers to loot its customers with malware? It was part of the Innotrac deal, and was then spun off from eBay Enterprise in a big hurry (November 2015). Mark Lavelle, the eBay boss who let hackers run rampant at Magento, is the new CEO of Magento Commerce Technologies.
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So caveat venditor, dogs. eBay is no longer a venue for modest indie sellers. Besides big box stores and Asian mass marketers, eBay only values sellers who are bloodthirsty international terrorists or high-volume fraud factories or fencing shit stolen from Amazon and sick people. But eBay isn’t copping to that because they’re too greedy to blow off all the free dough. The big question is, where does it all go?
eBay openly admits hiding money in Switzerland and Luxembourg. But if eBay’s not spending it on programmers, inventory, infrastructure, advertising, or customer service, what does it spend money on?
That would be lawsuits (at least 36 major ones since 2001 and a federal DOJ criminal investigation). Also golden parachutes and businesses it doesn’t need. (Over 40, according to Wikipedia. Remember Skype? And in July 2015 eBay announced it purchased the retread rag business Twice.com to beef up Valet, then a week later eBay announced it was ending Valet, and then it didn’t.) But mostly eBay spends its money on litigation payouts.
Despite plenty of complaints, there’s no action yet against eBay by either the SEC or FTC. The FBI and DOJ announced an ecommerce counterfeits crackdown in 2015, and the SEC at least still pretends to prosecute insider trading. You’d think they’d look into eBay’s vast off-the-books slush fund, called the black budget, that eBay uses to finance illegal activities.
The most plausible reasons why eBay has dodged greater regulatory scrutiny should make you think, and squirm:
1) Boardroom bully Carl Icahn (he owned 2% of eBay before the PayPal spinoff, then 3.8% of PayPal) makes generous political contributions to Mitch McConnell, John Boehner, Mitt Romney, Orrin Hatch, John McCain, and other cash-before-Constitution carpetbaggers who endlessly block cabinet appointments and kill meaningful regulatory legislation; plus, he has successfully evaded SEC investigations himself;
2) While he was eBay’s CEO, John Donahoe contributed $35,800 in 2011 to President Barack Obama’s reelection campaign and $15,200 to the DNC in 2009. Donahoe was recently appointed a member of the President’s Export Council, an international trade advisory committee. In November 2015, the President begged eBay sellers to support the onerous TPP by selling more internationally (despite that — or maybe because — a padded flat rate mailer sent registered priority to Europe or Japan costs $47 and coincidentally provides huge seller fees and postal commissions to eBay). Draw your own conclusions.
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Which brings us back to the seller purge that’s destroying millions of small businesses…
Giant fees from big box retailers and generous government payments for member records (no hard figures for eBay, but the Feds pay Verizon $775 each and AT&T $325 each; Cricket and U.S. Cellular, $250. Facebook pays no taxes in exchange for providing records) mean eBay doesn’t need your pathetic little sales commissions anymore.
That has freed eBay to painfully drag out and monetize the exodus of all the small sellers it loathes. The question remains: Why? Scuttlebutt is rampant in eBay forums and elsewhere as to the reasons. Pick your fave:
1) fewer members means fewer payouts from upcoming lawsuits
2) fewer members means fewer claimants from a rumored bankruptcy filing
3) easier reincorporation of eBay in another country. eBay UK paid a paltry £620,000 income tax for 2013 sales of over £1.3 billion (eBay US paid $6.1 million on $2.86 billion net revenues). eBay Australia and New Zealand paid only $6.2 million in income tax on billions in revenue over the past 12 years, and wrote off goods and services taxes it didn’t collect.
4) prep eBay for sale to another company, like Alibaba.
FWIW: In September 2014 eBay announced the PayPal split. The following December eBay commenced layoffs in the thousands. According to the Wall Street Journal: “Analysts have said an independent eBay would be a candidate for a buyout, and job cuts would help lower operating costs, a key metric for buyout firms.”
So let’s just say it: eBay transferred all its cash and assets to PayPal and offshore banks, and absorbed all of PayPal’s financial liabilities, obviously in preparation for (one way or another) The End.
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Anatomy of a trainwreck
It’s been nearly a decade since eBay’s profit machine comprised buyers and sellers of stuff. Now you are the product being sold. (When I logged in for 10 minutes on June 23, 2015, eBay injected 127 advertiser-paid cookies into my computer.)
eBay also flat out steals stuff. On Nov. 14, 2015, eBay colluded with UPS to illegally auction off a rare custom car engine made for and stolen from tech entrepreneur Rob Dahm.
The rest of eBay’s revenue comes from fee theft, fake IPOs, selling customer records to governments, and pump-and-dump.
Here’s how the latter works. eBay unlawfully gooses its stock price by planting acquisition/spinoff or technology overhaul rumors in the media. (Google to buy eBay! Carl Icahn to buy eBay! eBay may accept Bitcoin! eBay to sell off PayPal! John Donahoe going to PayPal! eBay to adapt artificial intelligence!) Insiders know every press release is a dinner bell.
Every time eBay’s share price spikes, board members and top execs sell theirs, then buy them back low (via company discount), and resell them at the jacked-up market price for huge profits.
Along with the official PayPal spin-off announcement on September 30, 2014, eBay also announced the imminent departures of then-CEO John Donahoe and CFO Bob Swan. The share price spiked 7.5%. To squeeze off a shitload of Hail Mary stock dumps, eBay’s management dragged their gold-digging ass for six months before divulging the exact spinoff date (July 17, 2015) and triggering the massive sell-off destined to accompany it.
As a parting gift to himself, all of Donahoe’s restricted stock unit and stock option awards were accelerated. So on November 17, 2014, Donahoe bought 297,573 eBay shares at $25.85/share for $7,692,262. He sold them the same day at $55/share, for $16,344,000. His one-day profit: $8,651,738. The next day he dumped another 485,665 shares for $26,672,721. (These numbers were later cooked to show he instead sold 188,092 shares for $10,346,940 at $55/share.)
Then on Feb. 2, 2015, Donahoe sold 129,445 shares for $6,865,815. He bought them back on Feb. 10 for $3,227,063 and resold them the same day for $7,119,475. Donahoe’s one-day profit on Feb. 10: $3,892,412.
Many other eBay insiders joined in the fun, until the PayPal spinoff bombed their party. Before the split, eBay stock eternally hovered between $50 and $60, and never paid dividends. Even with a last-minute buying frenzy by opportunists taking advantage of the impending stock split (one share of PayPal received for every eBay share already owned), the price never rose above $66. (Fun Fact: Rival Amazon’s share price was $466 the same week eBay and PayPal split.)
On the first trading day after the split, July 20, PayPal’s share price was $40.76, while eBay’s sank to $28.57 and never recovered. Donahoe left eBay for PayPal with a $23 million retention bonus for “helping out.” Swan received an obscene retention bonus, too, of $12 million. Other top execs left with booty, too.
The dump continues. Among the high-profile escapees were German hedge fund Meag Munich Ergo Kapitalanlagegesellschaft, which sold its entire eBay stake of 521,357 shares for $14,326,890 in Q3 2015. In Q2 2016 the Third Point hedge fund sold its entire eBay stake of 9 million shares. And the giantest dump of all: right after the PayPal split, Carl Icahn unloaded all 46.3 million of his shares — his entire 2% stake in eBay.
In July 2015, right after the spinoff, activist investor-nudnik Icahn traded his eBay holdings for 3.8% of PayPal, where his old eBay nemesis John Donahoe chairs the board. The next quarter, Icahn dumped 18.25% of his PayPal stake.
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More fun dysfunctional family news:
eBay founder Pierre Omidyar and PayPal founder Peter Thiel engaged in a duel to the death over (I am not making this up) Hulk Hogan. Gawker.com published a video of Hogan shagging the wife of his best friend, radio DJ Bubba the Love Sponge. Hogan sued Gawker for invasion of privacy. A jury awarded Hogan $140 million in damages. Gawker is appealing. Omidyar is supporting Gawker, and Thiel is paying Hogan’s legal fees. Gawker‘s owner filed for bankruptcy, suspended Gawker, and sold the company’s assets.
Thiel, a registered Trump delegate, spoke at the 2016 Republican National Convention about his everyguy struggle as an obscenely rich white gay man. Facebook, on whose board Thiel serves, proactively issued a statement claiming anything Thiel might say does not represent anything Facebook believes.
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eBay corporate culture in a nutshell
Where’s the beef? For one brief, radioactive moment, it was at PayPal. Just ask Icahn and Donahoe.
Under the seven-year stewardship of John Donahoe — who calls eBay sellers “noise” — eBay became an easy road to huge piles of money (ie, yours) for thieves and insiders. Especially Donahoe. He says his first job, which mainly involved wrecking trucks and drinking stolen beer, taught him everything he knows about leadership. What’s left of the new, PayPal-free eBay is a hollow shell making a loud thunking sound.
Few Nasdaq companies need to be investigated more than eBay does. In the meantime, eBay still laughably promises sellers better visibility in exchange for sellers providing 24-hour turnaround, free shipping, generous return policies, and of course lots of fees. But in reality seller compliance doesn’t buy blackout immunity, and eBay penalizes sellers for things they can’t control. eBay forums are clogged with complaints from cooperative sellers whose stuff is still deadweight at the ass end of search results (when it’s visible at all) behind thousands of duplicate listings for Chinese counterfeits and other dreck that don’t even have the search terms in the titles.
In other words, eBay’s current business model is you giving eBay money for nothing and eBay pimping you out to advertisers, not you selling stuff on eBay.
My advice: RUN LIKE HELL! Don’t bother selling your book (or anything else) on eBay. Short of worldwide famine or collision with a comet, eBay is your worst nightmare.
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Can’t get enough ecommerce skulduggery news? Read my latest post about BS theme park Etsy.
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