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January 22, 2008, 12:56 pm

Meg Whitman bids farewell to eBay

Meg Whitman
EBay CEO Meg Whitman. Image: eBay

By Yi-Wyn Yen

After 10 years as one of the most high-profile CEOs in Silicon Valley, Meg Whitman will leave eBay on March 31. John Donahoe, who worked with Whitman at Bain in the 1980s, will take over as president and CEO.

After two years of a declining stock price and a slowdown in the growth of the auction business, it comes to no one’s suprise that Whitman, 51, is retiring. Wall Street analysts and industry insiders say Whitman’s departure has been expected for awhile. This March will mark Whitman’s 10-year anniversary at eBay (EBAY), and she has previously stated that a CEO should not stay longer than a decade.

“She’s done a phenomenal job leading the company up until now, but the business has matured. Buyers and sellers are looking for a change,” says Scott Devitt, an Internet consumer analyst with Stifel Nicolaus.

The auction powerhouse is under pressure to move quickly to make a major overhaul with growing competition from Amazon (AMZN). eBay will report its fourth-quarter earnings Wednesday, and Wall Street is expecting to hear how Donahoe’s new position and an anticipated drop in listings fees will jump start eBay’s auction business.

Donahoe, 47, joined eBay in April 2005 as president of eBay Marketplaces, one of the company’s most important businesses. At a UBS conference with investors last December, the former management consultant at Bain outlined key strategies to revive eBay’s marketplace – which has 248 million registered users – in 2008. Donahoe has said the company must focus on balancing both the needs of buyers and sellers. Historically, eBay has paid more attention to sellers, who pay fees to list their products on the site.

As eBay has become more corporate, Whitman’s philosophy has been to bring in executives from outside. In 2006, she recruited Bob Swan, a 15-year General Electric (GE) veteran as CFO. The year prior, she hired Donahoe, who did an 18-year stint at consulting firm Bain, to run eBay’s auction business. Last January, Donahoe led the successful acquisition of StubHub, the online ticket resale service that handled more than 5 million ticket sales in 2007.

The ultimate test, though, is whether Whitman’s successor can reverse eBay’s slowing marketplace, which accounts for 70 percent of the company’s revenues. Whitman, one of the most high-profile female CEOs, has been repeatedly criticized for not capitalizing on change quickly enough and for overpaying for the telephony service Skype. “Could eBay have been proactive before Amazon and Google came along? They could have,” Devitt says.

One problem that rankles eBay users is the fee charged to sell items online. Historically, eBay has increased listings fees at the start of every year. But with more eBay members turning to sites like Amazon or Google (GOOG) to sell their products, eBay is looking to lure its core users back. The company is expected to announce a lowering of the fees soon. “If there’s a negative here, it was in the speed of which they’ve improved on the site. A fee structure could have been executed two years ago rather than today,” Devitt says.

A prominent eBay members network – that the San Jose-based company closely monitors – says that its members listings dropped 14% in the fourth quarter from the previous year. “eBay’s marketplace isn’t set up to scale well for sellers. Whether you list one item or one million, it’s a flat price structure,” says Jonathan Garriss, the executive director of the Professional eBay Sellers Alliance. “As sellers build bigger businesses, it makes sense to have their own platform and participate in shopping engines like Google or sell on the Amazon platform.”

Dumped my six-year-old eBay account totally this date. Wasn’t the fees that finally drove me off, although it was a factor. It was their incredible arrogance of disallowing bank check or money order as payment methods UNLESS the seller also offers the loathsome Paypal (which eBay owns), or Propay, credit card, etc. I generally react to “You do it this way or else” with, “Okay, or else.” I expect eBay is handling a few account closures about now…

Posted By Mark, CO Spgs CO : October 23, 2008 9:19 pm

Ebay needs to look to itself and remember how it all started. Fees should be reduced and the pricing structure made simpler.
Paypal is a law unto itself with absolutely no transparency or reasons given for its actions.
It can take money from your account with no reasons given and does not respond to emails. The only way to resolve the issue is to sue them which is timeconsuming, expensive and often finacially impractical for the small amounts that may be involved.

Posted By Grant, Sunbury, Middlesex. : August 2, 2008 10:22 am

Well Donahoe managed to make ebay WORSE. Not only did he fail to lower seller fees…he went ahead and took away all seller say. Not only is he not luring back sellers, he is driving them away in DROVES.

Posted By Jolie Harrison, TX : May 24, 2008 11:34 am

what do you mean by local auction house?

Posted By Paul, San Diego, CA : January 30, 2008 5:07 am

I’m glad Ebay is aware of the disinterest their fee structures have generated. I sold on Ebay for years, and after taking a look at my profit margins, after Ebay has taken all fees and with Paypal, it just isn’t worth it anymore. They have “nickeled and dimed” people to death, and I have found their are fewer buyers on, which lends to lower sales. Also, it is very difficult to compete with the commercial businesses on there, under the guise of individual sellers. That has run rampant and knowledge of that has made many participants exasperated with Ebay. Here is hoping that Ebay can get their act together.

Posted By Previousseller, Bridgewater, MA. : January 24, 2008 6:34 am

I am 100% with Charles…

I am doing much better:)

Posted By Anonymous : January 24, 2008 2:00 am

As another powerseller who deals in high-end women’s clothing and bags ebay is making a fortune off of everything I sell. I have limited the number of items to sell online as the percentage that ebay/paypal takes, plus the time of having to ship items has caused me to rather sell in my traditional brick-n-mortar store. Meg Whitman did a great job but she should have left 2-3 years ago as Amazon and Google entered the market and starting pulling sellers away from ebay. No seller will ever match the amount of money Whitman pulled in the last 2 years while pushing inadequate goods. She earned her gold star but it luster has been lost.

Posted By Stephanie Cooper, San Fransico CA : January 24, 2008 1:12 am

I’VE WAITED FOR THIS DAY Let’s get back to ebay basics. Having home sellers selling their used items in the mix of the new ones is the foundation of why I signed onto ebay 10 years ago.
I have bought and sold on ebay for 10 years, and it feels like ebay is always trying to be something else, when the foundation of ebay stands alone because of it’s simplicity and greatness. Over the years we have lost the ability to sell our RV’s, list ad’s with ease, and list cheap items without being nickled and dimed like we are a Mc Donald’s drive thru. Omidyar made ebay, a simple platform to sell, Meg inflated it into a money spending, sweepstakes generating giant. Let’s get back to basics. If ebay forgot those basics, go check craigslist again. It’s still hot, and it’s still simple. I can’t wait until that lesson is learned. Make the auctions cheap to list and simple. Quit professionalzing smoothing all of the lines. It has changed ebay, obviously looking at the stock I would never buy, not for the better in that aspect.

Posted By Kelsey Tucson Arizona : January 23, 2008 9:44 pm

I’ve been using eBay for about 4 years now and think that it’s an amazing tool. One thing they need to work on, however, is combating the scammers. I get at least one scam e-mail a month saying I bought something and did not pay for it. I also get a lot of fake buyers trying to pull money wiring scams. These e-mails are beginning to look very legitimate and to the untrained eye, could fool one easily. All it takes is one time to lose loyal customers.

Posted By Alex, Long Beach, CA : January 23, 2008 8:33 pm

Too old, too tired, too rich = NO FIRE in her belly. Got all the homes she needs; got a private jet too? What has she done in past 3-5 years that ADDED VALUE FOR SHAREHOLDERS? She’s got hers! Lets hope the guys got BETTER IDEAS and SOLID EXECUTION…no, not meg, but OPERATIONS!

Posted By Robert Puget Sound, WA : January 23, 2008 7:53 pm

The statement about fee’s is right on. The fee’s are outrageous for simple itmes. By the time you print a Paypal shipping label you have given eBay.Paypal 3 sets of fee’s. Not enough special listing reduction in fee’s openings. As eBay grew large, it became slugish and will in time lose it’s dominance.

Posted By Mike, Anchorage AK : January 23, 2008 7:36 pm

ebays customer service is horrible. Their paypal service is about as good. It’s one thing to use the site normally but when you don’t agree on something. They don’t care. you do it their way or hit the highway. As someone who did $1300 a month between paypal and ebay. They lost my business over a $30 dispute in billing.

Posted By Kris Jacksonville,FL : January 23, 2008 7:15 pm

How do you spell Botox ?

Posted By Bill Smith, El CInque, TX : January 23, 2008 6:44 pm

I hate paypal. They charge a lot. The default method of payment is through my bank. They hate when people pay by card. I have brought it to their attention several times, but no use.

Posted By Venu Tirumalai, Edison, NJ : January 23, 2008 6:02 pm

eBay has lost its way. The reason it’s facing a continuing slide to oblivion is because it has an archaic internal structure that is based on individual sellers instead of corporate sellers. Their feedback system is highly buyer-slanted and a real business cannot possibly operate successfully in that atmosphere. Their time is over. They need to take their toys and go home.

Posted By Mark, madison, wi : January 23, 2008 5:30 pm

I’ve been selling on Ebay for 2 years. My sales have increased to $10K/mth. Ebay gets a FULL 22% of that with listing fees, final value fees and Paypal fees. They have FORCED me to open my own online store and encourage customers to shop there. I appreciate the powerful marketing engine Ebay is but like the article says, Ebays fees don’t scale well. As I list more and more items, 450 presently (I actually manufacture the products), they fee’s have become a larger part of my costs. Power sellers should be encouraged to list more items not penalized! I’m not greedy or ungrateful but it should be the more I make they more they make. Kinda like how the Ebay stores work – inexpensive to list but with a higher final value fee. Only problem is the majority of buyers don’t understand the Ebay store concept. 80% of my items are bought in the auction part of Ebay even though I list everything with a fixed price.

Posted By James, GPF : January 23, 2008 5:09 pm

Whitman’s heralded “feedback” system
has become “blackmail” to the buyer,
who feels they cannot honestly evaluate the seller without receiving retribution. The auction house favores the seller (Ebay’s bottom line). The entire site has gone unchecked, and needs to be revamped into a true and honest auction house again.

Posted By Harvey,Melbourne,Fla. : January 22, 2008 10:05 pm

As an ebay powerseller I feel they could do more to help the seller. Paypal is a big problem. I have had money removed from my account and not recieved my merchandise back from the buyer and paypal is of no help.

Posted By Larry Hollingsworth , Joplin , Mo : January 22, 2008 9:52 pm

I have been doing better at the local auction houses than ebay. I dont have to put up with ebay annoying pulling of questionable items like toy cap guns that do not look like real guns and the raising of rates all the time. Also I dont have to deal with paypal with buyers lying to paypal about packages not being received even when delivery confirmation states it was delivered. I hope ebay goes away. I took my business elsewhere and did better than what ebay could ever do. I do not regret it one bit.

Posted By Charles, allentown, pa : January 22, 2008 5:32 pm

As an ebay powerseller, I was wondering how long it would take for ebay to restructure their fees. As I sell more, they make even more money off of me on both the front and back end, as well as through paypal. Amazon is starting to look pretty good…

Posted By Jon, Saint Bonifacius, MN : January 22, 2008 2:45 pm

As someone who sells on both Amazon & eBay, I can say that eBay, no matter how irritating the nickel & dime fees & other crap, remains far superior to Amazon! However, eBay’s top management stumbled badly with Skype, & someone has to pay the price.

Posted By Anita Baker-Blocker, Ann Arbor MI : January 22, 2008 2:18 pm
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