Tag Archives: eBay

eBay Sells Off Craigslist Stake

eBay’s one-time dream of anchoring its large classifieds/marketplace business with Craigslist as now officially ended. Last week, eBay accepted a cash buyout from Craigslist for its 28.4 percent stake, allowing eBay to focus on splitting off its multi-billion dollar PayPal division as a separate company.

eBay isn’t disclosing what it received for its stake, but it is likely to be at least 10x what it sunk to buy into Craigslist, or $320 million. Aim Group analyst Peter Zollman notes that Craigslist has plenty of cash in the bank to pay for those shares, with estimated profits of $304 million in 2015, or nearly 2.5x more than its $130-140 million profit in 2013. The surge in profits occurred as Craigslist started charging auto dealers for used auto ads, in addition to its fees for apartment, recruitment and escort listings in certain markets. Other parts of the site remain free.

eBay had purchased its stake in 2004 for $16 million from one of the Craigslist’s early employees. It initially sought a friendly relationship with the Craigslist leadership, paying founder Craig Newmark and CEO Jim Buckmaster $16 million for goodwill. In exchange, it was awarded a board seat.

In theory, the relationship could have worked. eBay was one of the only dotcoms to successfully build community into its business model . Publicly, it remained a company that was dedicated to “community first.” In reality, however, that may have been an earlier version of eBay. At the time of the deal, eBay had already begun focusing on hyper-efficient services – unlike Craigslist’s avowedly lowtech, small revenue approach. It had also started charging higher fees on most items, and focusing more on profits than on building a viral, Craigslist-like community. It also was focused on a number of big dollar paid classifieds and vertical areas, especially eBay Motors.

By 2008, relations between the two companies dissippated into a number of lawsuits and counter-lawsuits, as eBay set in motion a plan to launch its Kijiiji classifieds as a Craigslist clone – apparently as a hedge in case it wasn’t able to assume control over Craigslist. Later, in court documents, it was revealed that eBay had passed along confidential board information to the Kijiiji team.

Ultimately, Kijiiji – now eBay Classifieds in the U.S. — never broke out as a person to person classifieds success, although it is the leading classifieds site in Canada and has a good presence in many countries. Even if does not serve as an effective P2P anchor for classifieds, eBay has become one of the leading online classifieds sites in the world, with major international properties such as eBay Kleinenzeigen, Marketplaats, Gumtree and LaQUo.

While eBay may ultimately be more focused on its enterprise businesses, former CEO Meg Whitman’s 2006 description of classifieds as eBay’s “lead generation, advertising based model” still holds true. As for the future of Craigslist, we’ve noted press reports in The Wall Street Journal and others suggesting that Craigslist has been made obsolete by the emergence of smart phones and lost its chance to become a major ecommerce player. The latter part may be true – Craigslist is hardly poised to compete in the goods value chain against Amazon, Google, eBay and others. But it remains the global leader in person-to-person online classifieds, and there is no reason to suggest that it won’t remain the leader.

Facebook Goes Up Against Craigslist and eBay (Sort of)

Craigslist has outlasted its challengers, and remains the platform to beat for classifieds, or “things to sell” marketplaces. eBay, similarly, remains a leader for the sale of goods – although most are not geographically oriented. Amazon is also active in that space.

Can Facebook, with its huge volume and trust networks, cut into their business? It is going to try via a new “For Sale” offering that allow users of its groups to post items for sale. Items are listed with prices, photos, descriptions, pick-up location and prices. They can also be listed as “available” or “sold” to let buyers know what’s still on the market.

The listings are currently free – and probably won’t go into the paid areas that provide the bulk of Craigslist’s revenue: apartments, cars, jobs and “personal services.” But if Facebook decides to provide a greater emphasis on classifieds, it could conceivably move into transactions (and commissions). It could also open the service up beyond its groups to have more of a geo-orientation.

It isn’t the first time that Facebook has been used for classifieds. Oodle, a large classifieds platform that launched in 2005, took over a nascent Facebook classifieds service in 2008 and focused on Facebook’s huge scale to offer items for sale to friends and groups within the service. Oodle was sold to QVC several years ago.

It also isn’t the first time that online groups have been used for classifieds. In their heydays, Yahoo Groups and Big Tent – each with hundreds of thousands of users — had active lists of classifieds. Many associations and groups currently host classifieds on their websites and pages.

The classifieds project is the latest transaction-oriented effort from Facebook, which may want to diversify its revenue beyond advertising. Facebook has been experimenting with various transaction models for several years, including tests with virtual gift cards, deals and virtual currencies. Facebook has also developed an Amazon-like capability to enable transactions on other sites by collecting credit card information on its profiles.

The Return of Same Day Delivery via EBay Now

When eBay purchased Jack Abraham’s Milo.com in December 2010, it caused some head scratching. While retail Inventory is helpful to track goods availability and has some value in developing location-based promotions, it seemed an unlikely anchor for eBay’s SMB and local ecommerce services.

Abraham’s upgrade of his title to head of EBay Local last year, however, indicated that changes were afoot. And this week, eBay has finally unveiled the fruit of his labors: eBay Now, a same day delivery service that builds on inventory to take it to the next logical step.

The service, following in the footsteps of first generation local services such as Kozmo.com and UrbanFetch, has launched in San Francisco with BestBuy, Bloomingdales, Nordstrom, Target, ToysRUs and Walgreen. It is mostly aimed at luring major merchant accounts to eBay’s broad range of merchant services.

Deliveries are $5 and available for orders over $25 from 9-9 during the week, and from 9-6 on Sunday. Three free deliveries per customer are available during the test. Other Milo customers that might jumpo in include Home Depot, Ikea, Lowe’s, Sears and J.C. Penney.

Strategically, eBayNow positions eBay against other ecommerce heavyweights seeking to provide a suite of etail services, from promotions to search to transactions to hosting…specifically Amazon (although Amazon indicated this week that it will not be providing a similar service.) Long-term, Google and others that are developing transaction marketing services could also compete. Uber, the Web-based limo reservations service, is also experimenting with delivery, although it isn’t clear whether the limited delivery services that have been introduced are merely meant to promote the limo service while cars sit empty.

Milo.com Positions Itself as Anchor for EBay Local

Inventory hasn’t yet emerged as a “must have” for merchants, but the strategic importance of tracking store inventory remains undiminished. Merchants will potentially use inventory levels to drive users to specific locations, build promotions to get rid of overage (or remove promotions when supplies are running low).

While far from universal, many national retailers are beginning to use various inventory services, including eBay’s Milo.com, Gannett’s ShopLocal, Local Corp’s Krillion, Wishpond , Sale Locator, Retailigence and various other services.

eBay’s purchase of Milo.com in December, 2010 as an anchor for its eBay Local unit really caught our attention. We caught up with founder and eBay Local head Jack Abraham this week.

Abraham sees a world where Web product search and physical store visits converge. “You’ll make your decision on the Web to come into the store,” he says. Three key areas being targeted for inventory-based marketing include electronics, home & garden and apparel. Each of these areas not only relate to product sales, but possible service extensions as well, such as for contractors.

The move towards inventory-based marketing, however, is happening slower than Abraham would like. Nevertheless, he cites a growing number of relationships, and remains confident that it will happen, perhaps via media partnerships. A Milo deal with Find n Save, the shopping product from eight major newspaper companies, is a start in this direction.

Meanwhile, Abraham is seeking to leverage eBay’s role as a tech partner for both national and local merchants, comparing eBay favorably to Amazon, with which it has an increased rivalry. “Unlike Amazon, there is someone on their side that wants to help them,” and who “reaches them at the decision point,” says Abraham.

While Amazon Stores has a huge body of merchant customers, it has recently run afoul of some merchants with its price comparisons feature. Indeed, some merchants believe that working with Amazon is a Trojan Horse likely to end up driving customers to its own site. eBay doesn’t have warehouses” to sell goods against merchants, notes Abraham.

ZVents Sold to eBay’s StubHub

The events listings space has taken a number of twists and turns with Zvents trying to steer people to retail events as a business model, and also become a media driver in its own right; Eventful focusing more and more on Hollywood studios and TV shows to drive viral demand for their entertainment properties; GoldStar focusing on quiet, sophisticated events; and others focusing on social media and transaction hybrids.

Not everything has worked out as planned. Today, ZVents announced that it has been sold to eBay’s StubHub. For StubHub, which is a reseller/scalper of events, it will get a chance to work ZVents’ list of events from 140,000+ local marketers and promoters. Typically, 60,000 events are listed at any one time.

It — along with other eBay properties — may also seek to do more with Zvents large network of newspaper partners. But that would likely be a second phase, if ever.

ILM East: eBay’s Milo and PaperG on Local Retail Solutions

Retailers are gravitating in a major way to online solutions that complement their other marketing, according to panelists participating on the retail panel at ILM East in Boston.

Jack Abraham, who founded Milo.com, which was acquired last year by eBay, predicted that every store will need to participate in cross channel shopping in order to stay relevant. Forrester Research apparently thinks so too. Abraham cited Forrester research suggesting that such shopping will account for more than 50 percent of sales by 2013.

Managing inventory online, and using it for promotional purposes, is a big part of it all. “The focus is on real time availability,” says Abraham. In the physical world, popular products that people want are selling out all the time.”

Ultimately, eBay must be considered the player with the greatest potential in the category, Abraham added. It already receives 2 billion ecommerce searches a month, compared to 847 million for Amazon and 226 million for Google. “

PaperG VP Tyler Bosmeny, speaking on the same panel, said that the explosion of retailer data makes cross channel shopping and marketing more inevitable. It is increasingly common to have product data, location data, time data and customer reviews for products, he says. “Analytics will bridge online marketing with offline sales.”

eBay Firms Up Local Strategies

In case you haven’t noticed, eBay has been ramping up a local strategy in the past few months via the integration of all its vertical properties with its home site, the $75 million purchase of Milo.com, and today, a $200 million acquisition of Brands4Friends, a fashion-oriented, German ecommerce site with 3.5 million members and 200 employees.

EBay’s efforts to acquire new local and vertical properties and integrate them with the home site is a perfectly logical growth strategy. Despite its perceived decline in the marketplace, eBay in 3Q 2010 saw two billion U.S. product searches – well ahead of competitors such as Amazon, which saw 847 million product searches, and Google, which handled 226 million product searches over the same period.

The push into local certainly represents a major change for the company. In the last 1990s, eBay backed off of a comprehensive local strategy when it determined that a “Local Trading “ feature concentrating on items that were too heavy to ship (i.. sofas) didn’t have the traction to really work. Instead, it concentrated on building up eBay Motors, while adding various other verticals, such as Rent.com, an apartments site, StubHub, the ticket scalping site, and various classified services, such as Kijiji (eBay Classifieds), initially developed as a Craig’s List lookalike service.

More recently, eBay worked on a new prototype for a comprehensive local portal, using eBay Motors as a base, while including its various classifieds properties, as well as other services. But that effort seems to have gotten lost in the midst of major corporate changes.

Inevitably, however, eBay has continued to push up against local as it looked for paths to growth. Five years ago, it acquired a site that eventually became eBay Stores, which now competes with players such as Web.com.

Milo CEO and Founder Jack Abraham tells us that eBay is handling the absorption of his site at the highest level. CTO Mark Carges personally lead the acquisition effort, and VP of Engineering Dane Glasgow has been charged with the absorption. Abraham notes that the 25 person company’s small size makes it easy to move right onto the eBay campus. He also says that his team may be deployed on other eBay initiatives beyond local.