PayPal is just over a third of eBay's revenue at the moment, but the online payment service will ultimately be bigger than the company's flagship e-commerce site, its chief executive said Thursday.
"PayPal is a business that will be bigger than eBay," CEO John Donahoe said in a talk at the Fortune Brainstorm: Tech conference here. However, he said that shift will take four to six years.
Donahoe's comments came just as the company announced that it is opening up its PayPal platform to third-party developers. "There is this opportunity for an explosion of growth."
Among the uses, Donahoe said we are not that far off from the day where a restaurant beams a bill to your mobile device and you pay via PayPal.
Asked about Facebook's long-rumored payment service, Donahoe noted that online payments require a company to be part financial services outfit and part Internet concern. Those that have been one, but not the other, have failed, he said.
"People will find a much better solution building on top of the PayPal platform," he said.
Donahoe, who has been CEO about 15 months, said the company is a leader that is adjusting to shifts in the market. "We're making the tough changes we need to make," he said. "We need to evolve on an auctions site to an e-commerce site."
There is plenty of room for e-commerce to grow, Donahoe said, noting that only 5 percent of sales are online as compared to in stores. That could eventually grow fourfold, he said. "What portion of everything you buy will you ultimately buy online?" Donahoe said.
He said eBay has already come a long way. "We still get referred to as an online auctioneer, but we have moved way beyond that.
Right now, eBay gets about half its money from eBay.com, with half of that auction-based sales and half from fixed-price sales.
As for the core auction business, eBay plans to announce a number of changes next week. Among those, Donahoe said that the company will expand the "eBay Bucks" loyalty program it has been piloting as well as offering telephone support to more buyers.
Given that PayPal may eventually eclipse eBay.com in sales, moderator Adam Lashinsky asked if the company should change its name.
"That's the least thing I worry about," Donahoe said. "We'll probably hire some big fancy consultant who will give us some strange name," he quipped.
This article was first published as a blog post on CNET News.
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PayPal will be bigger than eBay.com, CEO says
No matter how "Noise" Donahoe and his sycophants spin it, the eBay marketplace is going down the toilet. Why would anyone with even half a brain want to risk crippling this golden goose? Donahoe and his policies are eBay's greatest problem: sellers are leaving in droves; buyers too apparently: the auction system has always been broken as far as protecting buyers from shill bidders is concerned, and made even more insecure by the very changes that eBay, disingenuously, claims will improve such security.
The people currently running eBay are a lot of greedy, unscrupulous, disingenuous, incompetent buffoons, and I predict that there will be no more performance bonuses for them, at least not "above the table" ...
Donahoe and some market analysts seem to believe that PayPal's manning of the pumps will keep the good ship eBay afloat. I certainly would not put my money on the "clunky" PayPal for the long term. Assuming that the parties don't have some agreement to not compete, I have no doubt that eventually those other well known "loan sharks", the major credit card companies, will get off their butts and introduce a similar universal card/terminal-less on-line payments system that the participating banks can incorporate into their internet banking systems and they, at least, will do it properly and that, my friends, will undoubtedly be the end of PayPal outside of the Donahoe-dwarfed eBay marketplace ...
I recall that Donahoe has been quoted somewhere as saying that the door is slightly ajar for a potential spinoff of his company's online payments unit. If this is correct it will be the first logical thought that this guy has ever had; he otherwise clearly has no idea of what he is doing at eBay. If that MBA taught him anything then he should be using whatever skills he does possess to negotiate with the banks to take PayPal and integrate it into their online payments system in exchange for an appropriate interest in the consolidated business, of course. Because, the more successful PayPal is, the more likely it is that the banks will finally get off their butts and introduce a like system; if and when that happens the banks will do the job properly and will exterminate PayPal for being the "irritating insect" that it is.
Shill Bidding on eBay: a Case Study
For eBay "watchers", a detailed case study of the crime of "shill" bidding and the abuse of eBay's proxy bidding system all exacerbated by eBay's introduction of "hidden bidders" plus a detailed general criticism of eBay's "clunky" auction platform, and policies, at
www.auctionbytes.com...
A synopsis thereof:
ï¬ very little of the auction system security, that eBay claims to offer buyers, exists in fact;
ï¬ contrary to their claims, it can be demonstrated that eBay has no "proactive" nor "sophisticated" system in place for the detection of undisclosed vendor ("shill") bidding, and indeed eBay appears to do nothing about such criminal activity except as a reaction to users' reports of suspicious bidding activity;
ï¬ eBay appears to have no effective matter-of-course verification of users: unscrupulous users can apparently have as many user IDs as they may have email addresses;
ï¬ many of eBay's "rules", concerning the retraction of bids, cancellation of auctions, etc, are nominal only and are no bar to the machinations of the unscrupulous seller;
ï¬ as a result, eBay's "proxy" bidding system is so open to abuse by such unscrupulous sellers that to use it, as eBay intends it to be used, can be an invitation to pay your maximum;
ï¬ by the lack of any effectual system to proactively detect shill bidding, eBay has ever effectively, and knowingly, "aided and abetted" unscrupulous shill-bidding sellers to defraud naive buyers;
ï¬ the masking of bidding IDs with non-unique, absolutely anonymous aliases serves no purpose other than to obscure all but the most blatant of shill bidding, and defeats any attempt at comprehensive analysis of individual bidding patterns to expose such activity;
ï¬ the quarterly changing of even these non-unique, absolutely anonymous, bidding aliases serves absolutely no other purpose than to stop even experienced eBay users from attempting to manually track suspicious bidding activity over time;
ï¬ the anonymous, individual bidder Bid History Details pages, supposedly supplied to offset the absolute masking of bidding IDs, although better than nothing, usually present an ambiguous view and, in such circumstances, are of dubious value;
ï¬ anyone naive enough to "nibble" bid on a seller-elected "private" auction (ie, "User ID kept private"), on the balance of probability, is going to be defrauded;
ï¬ when suspected fraud is reported, and is found by eBay to be proved to their satisfaction, eBay will conceal that fact from the victim of the fraud; this then is the concealing of a crime after the fact, surely, a crime in itself;
ï¬ eBay will never acknowledge to a victim that a fraud has been perpetrated, nor indeed will eBay acknowledge that such fraud is even a problem on eBay auctions; eBay therefore sees no reason to provide any mechanism to aid in the recovery of any monies so defrauded;
ï¬ if eBay did have any proactive and truly sophisticated system in place for the detection and control of shill bidding, we would not now be having this debate; and
ï¬ for those buyers (and honest sellers) who embrace eBay believing that eBay acts as an "honest broker" between buyer and seller, I can only say that you may as well believe that there are fairies at the bottom of your garden too; and
ï¬ the ugliest aspect of this matter is that we would quite rightly be upset if our local auctioneer, from whom we were buying, was found to be facilitating and concealing such criminal activity and here is eBay, knowingly, doing this to the whole world!
Posted by Philip Cohen on Thursday, August 13 2009 08:03 PM