A few weeks ago, eBay announced its 4th quarter 2008 earnings figures and they were disappointing. Disappointing to its investors, but not entirely surprising. Usually eBay has been a shining star on Wall Street, but last quarter they showed some signs of stress. The news included the fact that net revenue was down 7% year over year and that the eBay marketplace revenue had a 16% year over year decline.
eBay’s official word on this to blame the economic conditions. But even during the dot.com bust, they not only survived but continued to grow and ended up being an ecommerce poster child. I suspect there are other forces at work this time around. If you recall, eBay angered a lot of their small seller base last year and caused a sizable evacuation of sellers. There was the change to the feedback mechanism and the paradigm shift on their search results (among other things). These tended to affect the smaller sellers rather than the larger sellers and could a good part of the reason eBay’s earnings were down year.
In the meantime, eBay alternatives such as BluJay and eCrater continued to thrive. Amazon, which announced its earnings toward the end of January painted a much more favorable picture of their 4th quarter. In fact, Amazon said it was their best 4th quarter ever. Like many companies that make their money from retail products, the 4th quarter of the year is usually the biggest for eBay. To have disappointing figures like this doesn’t look good for them.
What do you think? Do eBay’s disappointing revenues have to do with the recession or does it have to do with eBay itself? Post your thoughts in the comments below.