After the Sale - Why Meg Whitman Doesn't Deserve $11 Million Per Year
According to the Medved charts, eBay listings have fallen to around 11.25 million, lower than the count before the listing sale. As I write this, PowersellersUnite has eBay listings at 11.6 million. Say what you will about Medved and/or PSU, but fact is they are the most accurate tools available for following eBay listing numbers. eBay rarely gives information about listing numbers to anyone - except during the quarterly reports and usually during a listing sale to tout the fact that the numbers have grown y/y with no mention of the fact that there was no sale 52 weeks prior. eBay is looking at going into the slow summer months with a low number of listings not seen since 2003, and Wall Street is turning their backs on eBay - shares have plateaued under the $40 mark - which begs the question.....why is Meg Whitman worth $11 million a year?
Perhaps a better question is: Why is Meg Whitman still employed by eBay Inc. at all? eBay showed increased profits at the last quarterly filing, but it seems that the investing community as a whole is less than impressed, and the selling community on eBay as a whole doesn't seem to want to use the word "impressed" in any manner. Meg's mission to expand eBay's reach into other avenues on the web is a good idea to maintain growth, yet she's failed miserably so far in choosing profitable avenues. Looking back on the road she has taken it's easy to see burnt out carcasses of ideas and a few acquisitions that are still on their feet, wounded, wasted and trying to move forward.
Skype seems to be the golden child of the pro-Meg wing of eBay users and investors, although it has yet to show anything that will resemble profits over operating costs and initial investments, and likely won't (even with 50% growth each quarter) for several years - at least. eBay has invested heavily - in money, stock and human capital - in services like Skype and eBay Express yet customers seem less than awed. In my cynical mind, all I see is a VOIP program that is trying to pass itself off as a world telecommunications leader, and a shopping site (EE) that is nothing more than a separate search engines for only a limited number of eBay products at any given time - and by the looks of the stock price, there must be others that agree.
Another failure that Whitman has orchestrated will go into effect on May 14th, and could possibly do more damage to eBay's bottom line than any glitch, scam or fee increase. I'm speaking of the new USPS rates. The new rates dramatically increase the cost of some overseas shipments and will rely on dimensional weights for domestic shipments and there will be other increases in rates for parcels and first class mail as well. The new pricing structure will make sales of many items on eBay pointless for certain price levels. Probably the most hard hit sellers will be those selling lower priced items in volume to international buyers. The weak dollar has kept many sellers busy with international shipments, but with dramatic increases in postage, it may no longer be cheaper for international users to buy from the US.
So, why is this Meg Whitman's fault and won't it increase the ASP (average selling price) on eBay? First, yes it should increase the ASP as it will no longer be profitable to sell some lower priced items, particularly the items that will now have to be shipped according to dimensional weight. ASP is often used by management as a bellwether of the "vibrancy" or the health of the "dynamics" of the site, but ASP means little if total volume plummets (as it has been lately) to the point where the company could be making more money on higher volume lower priced items. If Wal-Mart stopped selling anything but lawn tractors, their ASP would skyrocket, but that doesn't mean they will be profitable - same thing applies here. Low priced items bring in a small listing fee, regular gallery fee, small FVF and percent & per-transaction Paypal fees. (ie. it's a lot of money to piss away when you consider the volume of low priced items).
Back to why this is Meg's fault.... Any CEO in her position should have had a meeting with the Postmaster General and said, "Look, if you do this, we no longer protect you." Seems sort of mafia-ish, and I'm sure absurd to many, but let me explain. eBay has buoyed revenue at the post office for years. Of the hundreds of millions of items sold on eBay over the past decade, most have been sent via the USPS. eBay sales have greatly increased mail volume - particularly parcel volume. From what I've read, management did try to negotiate with the USPS, but apparently failed as the new rates are going into effect. I'm not going to speculate too much about the impact of these increases, but many others have been speculating. And if the eBay sellers on the eBay community forums are correct, this will not be good for their business or eBay revenue.
Basically I see Meg Whitman as the head employee of a money machine with problems, who had to do little more than keep the company from imploding. I've seen very few decisions that she has made that has increased revenue beyond what the current and past market forces have caused. The anti-management sentiment continues to grow, fraud continues to ravage eBay.com and traffic & listing volume are down in the main US market. Does $11 a year in compensation paid to someone who has helped in reducing eBay's value by close to 25% in the past two years seem like the appropriate salary to you?