eBay revenues defy army of bitter users

17-07-2008

by The Register

Despite a flagging economy -- and some serious vitriol from longtime users across the globe -- eBay is raking in serious dough.

During the financial quarter ending 30 June, the world's most popular online auction house nabbed USD568 million in profits, a 20 percent increase from the same quarter last year, and net revenues grew from USD1.83 billion to a hefty USD2.2 billion. That's also a 20 percent a leap.

In recent months, the company has ticked off countless users with an endless stream of sweeping sales changes -- including a ban on negative feedback about buyers, a botched search engine overhaul, and an ill-fated effort to force PayPal down millions of Australian throats. But so much of that second quarter revenue came from its core marketplace business. Marketplace revenue topped USD1.46 billion, a 13 percent increase from last year.

"In our Marketplace business, we felt good about our overall results as we implement changes designed to make eBay more competitive, with better experiences for buyers and more opportunities for sellers," newbie president and CEO John Donahoe said during a conference call with reporters and industry analysts. "Beneath those numbers, we're seeing some early encouraging signs for the changes we're making."

Donahoe acknowledged that many customers would use vastly different words to describe the changes, but he said that can't be helped. "We've...earned some criticism from our community as we've made changes through the first half of this year. When you have 84 million active users, anytime you make a change, someone is going to be upset."

And he argued that eBay is constantly responding to the, um, negative feedback from longtime users. "We listen and we incorporate their feedback with what we believe is best for the collective good of the marketplace. This is the art and science of our business. An open, honest dialogue with our community makes eBay stronger."

As an example, he pointed out that eBay recently backed off plans to prevent Australian buyers and sellers from using any payment method other than its very own PayPal. But the company is still intent on forcing sellers to at least include PayPal as an option. And just this week, a group of Aussie protesters announced plans to take legal action against the company.

"eBay is still pursuing its original plan by stealth, if you will," Robert Vandermeer, the protesters' ring leader, told The Register earlier this week. "If you go in and try to create a listing, it's still PayPal in your face all the time, if you to buy an item, when you go through checkout and want to pay, 90 percent of the screen is basically PayPal blue, and you literally have to scroll to the bottom to the tiny fonts that tell you that you can pay by other means."

As you might expect, the 10-year-old PayPal is a cash cow. During the second quarter, PayPal revenue was up 33 percent to over USD600 million and total payment volume grew to USD14.9 billion.

Donahoe says that PayPal makes the net safer for buyers and sellers. But there are others reasons he's intent on, well, expanding its reach.

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