eBay’s stock is dead in the water, and its two key constituencies–buyers and sellers–are pissed. Here’s our Four Plan Plan to fix the place:
- Sell Skype. Skype has never had any real synergy with eBay (unlike PayPal, which does). Despite falling short of of its initial goals, Skype has done OK, and eBay could probably sell it to Yahoo, Google, or Microsoft for about $4 billion (10X revenue). eBay should sell the company, remove the distraction, and use the cash to buy back stock and make truly complementary acquisitions.
- Cut prices. Sellers are up in arms about two things: A) eBay’s high upfront listing fees, which create a risk that sellers will lose money on products that don’t sell, and B) eBay’s overall pricing. eBay should take a page out of Amazon’s book and cut prices significantly. This will force competitors out of the market and create a better value proposition for sellers. Yes, it will also result in a major short-term hit to profit margins and the stock. But it would be the smart move long term.
- Invest far more money in improving the buying experience. As eBay’s John Donahoe has recently observed, eBay’s interface and search tools are a joke. The company should spend what it takes to build an Amazon-quality buying experience. Yes, this will be a multi-year process, and, yes, it will cost a lot of money. But making the place a better experience for buyers is crucial.
- Retire Meg Whitman. Meg had a good decade at the helm, but it’s time for new inspiration and new blood. The mistakes of recent years–Skype, failure to focus on the buying experience, failure to buy, copy, kill, or partner with Amazon–have hurt the company’s core business and competitive position. Meg has run eBay since its inception. It would be interesting to see what a talented new CEO could do. Perhaps John Donahoe’s the man.
Two of these “fixes” would cost money and likely hurt the stock in the near-term, but if this is what helps the company over the long term, then so be it. eBay still has an amazing global business. It’s time buyers and sellers started to rave about it again.
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