EBay and China Again: More Troubling Signs

The Wall Street Journal's Money and Investing section carried a piece about EBay's recent troubles in China. That is to say, it was an 'investing' story, not a 'strategy' story. However, it reminded me of a similar story about Amazon in the WSJ in August, about which I wrote a piece, here.

EBay is now in trouble in both China and Korea. Although the EBay spokesman attempts to paint a rosy picture, in this case, I think one should trust the numbers, not the PR prouncements.

For instance, according to the Journal piece, EBay's market share in China is 29%, a distant second to market leader TaoBao, with 67%. And the former's listings growth has slowed from 300% year-to-year, to a much lower 127% in the recent period.

Here's EBay's spin on the Asian situation. Regarding China, they are “very happy” with business there and are “well positioned” to succeed there over a 5-10 years period. Their spokesman, Mr. Durzy, further says that their Chinese site “is comparable- if not better than- rivals’ sites, because eBay offers communications tools such as Skype and PayPal.” Quotes are of the WSJ article.

The reason for the piece is the 30% decline in EBay's stock price this year, and longer-term decline as well.

In this case, I'd go with the market share and market price numbers. EBay is clearly in trouble in both China and Korea, and the anemic growth in those markets has affected its total returns to shareholders.

As I discussed this piece today over lunch with my partner, he asked if I had reflected this in my recent piece on female CEOs. I had not, since I was focusing that post on Carol Bartz.

However, upon further reflection of EBay's performance since it went public, and this WSJ article, I am beginning to wonder if EBay's early total return performance was not almost pre-ordained, given the environment of that era. It was a new issue, in a hot product/market space. Could it really have taken all that much to simply maintain the early momentum when online auction sites were so new?

Well, we shall soon see. Because it looks like it's crunch time for Meg Whitman and her team now.

I used ebay. I’ve never used skype. I think ebay is probably in serious trouble, because what they offer, and think matters, does not matter to customers.