The pundits are piling dirt on eBay's (NASDAQ:EBAY) grave:
- "Auctions on eBay: A Dying Breed," shovels BusinessWeek.
- "Was eBay a fad?" asks Rough Type blogger Nicholas Carr.
- "Will changes at eBay hurt the business model?" wonders my friend Steven Mallas at Blogging Stocks.
I'd normally join the line to dance on eBay's grave, having occasionally criticized its namesake site over the years. But in this case, I'd rather wipe away the dirt, crack open the coffin, and show everyone that eBay is far from dead.
If you don't believe me, let me prove to you that the online auctioneer still has a pulse in three different ways.
1. Auctions are alive and well overseas
If eBay had a jump-the-shark moment, it might have been last year, when the website suffered a year-over-year dip in listings in Germany and the United States. If the site's two biggest markets were heading the wrong way, would the rest of the world follow?
Apparently not: eBay reversed the trend two quarters later. The company is too mature to sport the kind of growth spurts it did in its youth, but it continues to grow.
The same goes for online auctions in general. Check out the growth of Gmarket (NASDAQ:GMKT) in South Korea, or MercadoLibre (NASDAQ:MELI) in Argentina and Brazil. Cyberspace auctioneers continue to thrive, even with the proliferation of free classified listings sites like Craigslist and eBay's own Kijiji.
Even online retailers like Amazon.com (NASDAQ:AMZN) and Overstock.com (NASDAQ:OSTK) run consumer-to-consumer auctions on their websites. In short, the niche is hardly dying.
2. Creativity is rewarded
Just because consumers want a little more certainty and instant gratification from their online experience, don't assume the game has passed eBay by. The company now offers a growing number of items with a "Buy it Now" option.
Then again, who says a little mystery is dead in online retail? Compare online jeweler Blue Nile (NASDAQ:NILE) to fast-paced jewelry auctioneer Bidz.com (NASDAQ:BIDZ). Net sales climbed by just 4% at Blue Nile this past quarter, while Bidz posted a 39% spike in revenue during the same three months.
Despite its size, eBay has shown the ability to innovate. That's unlikely to end, especially as eBay rolls out social features to make it earn its premium fees.
3. You can't please everybody
Power Sellers aren't happy, but what else is new? Trust me, I think the feedback rating changes that eBay instituted -- giving more ammo to buyers than sellers -- is a mistake. However, even when disgruntled sellers leave, they're usually replaced by an even larger pool of sellers, most of whom are actually happy.
While eBay's largest sellers usually complain about higher prices, their complaint this time dealt more with the site's policies. Many eBay sellers even went on strike. Did it work? Not really. eBay's first-quarter revenue and earnings rose 24% and 22%, respectively.
A lot is baked into eBay's overall performance. It has the faster-growing PayPal payment platform, and the even-faster-growing Skype communications application, in its arsenal. The company has also peppered its marketplace business with incremental acquisitions like ticket reseller StubHub and last year's debut of Kijiji.
This may make it harder to evaluate the performance of eBay's namesake site in the future, but that's the point of holding off on the burial. eBay isn't dead. It has too many friends to fit in a single coffin.
