EBay Stalls the Engine of Its Auto Sales Unit

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Ebay paypalEBay (EBAY) should just pull the trigger and rename itself PayPal.

Last quarter, a major e-commerce pioneer posted revenue growth of just 11% in its core "Marketplaces" unit. Meanwhile, revenue in the "Payments" business (aka PayPal) raced ahead 32%. At this rate, eBay proper will soon be producing less money than the PayPal "subsidiary" -- and eBay's latest move with its "eBay Motors" business isn't helping matters.

Once ballyhooed as "the Internet's largest marketplace for buying and selling all things automotive," eBay Motors contributes about 12% of Marketplaces' gross merchandise volume. That number's been slipping, however. In eBay's first quarter, Motors' GMV declined 9%, versus a 9% rise in overall Marketplaces GMV.

Now, in what looks like an attempt to goose profits at Motors, eBay is yanking the suspension that supports sales at the unit.

Since 2009, eBay has soothed car-buyer concerns and encouraged sales by offering free vehicle history reports through AutoCheck (a competitor to the better-known "Carfax"). Click on any car advertised for sale on eBay, and the company would tell you everything you wanted to know about its history -- how many owners had played hot potato with this lemon over the years, whether it used to be a rental car, whether it had been involved in any major accidents, and so on.

With such knowledge in hand, a buyer could bid with confidence.

$10: A Steep Price to Pay?

No longer. To little fanfare, eBay quietly changed its policy with regard to AutoCheck last month. Sure, you can still get reports through eBay. But now you must pay for them upfront -- $10 a pop. On the one hand, eBay boasts that this is a "65% savings" off AutoCheck's usual rates. On the other hand, though, $10 is infinitely more expensive than "free."

Will this dissuade looky-loos from wasting car sellers' time with spurious or low-balling bids? Perhaps. Will it save eBay some dough, now that it's no longer footing the bill for AutoCheck? Definitely.

On the other hand, in removing one extra layer of comfort that car buyers could rely upon, eBay's move is almost certain to speed the decline of its Motors unit, and that's bad news for the stock.

Car buyers and investors beware.

Motley Fool contributor Rich Smith holds no position in any company mentioned. Motley Fool newsletter services have recommended buying shares of eBay.

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intellerv

watch sales plummet and scumbags return to eBay motors...oh those were hilarious days when scumbags tried to pull fast ones and then were shocked when the autocheck report popped up and revealed their shenanigans...now they will come slithering back knowing that most people will take the risk and not buy the report.

May 14 2012 at 2:04 PM Report abuse rate up rate down Reply
Philip Cohen

Read it and weep, John Donahoe …

“Visa President Bullish on Mobile Payments as V.me Goes Live”

http://www.auctionbytes.com/cab/abn/y12/m05/i10/s05

“If we do know one thing to be true, it is that secure payments at scale, authenticated in less than a second, and accepted by nearly every merchant on this planet is very hard to do,” Partridge said. “Our approach to making mobile payments a reality will be the same approach we’ve used when we first introduced credit, then debit, and then prepaid cards. We will work in collaboration with financial institutions, mobile network operators, merchants and leading technology partners, and we will continue to make investments in innovative technologies.”—Visa President, John Partridge, on Visa’s V.me, at CTIA Wireless 2012

Goodbye clunky PreyPal; I can’t say that it has been nice knowing you …

“When Do We Start Calling eBay A Payments Company?”

http://forums.auctionbytes.com/vbulletin/showthread.php?t=24590

And, just for a laugh then, some comment on PayPal’s off-eBay products: "The New Way To Pay In-Store" (at Home Depot), PayPal Here, SmartPay, PayPal Digital Wallet, PayPal Debit MasterCard, PayPal Local and Watch With eBay ...

http://forums.auctionbytes.com/vbulletin/showthread.php?t=24611

But don’t take my word for it, see “How PayPal Works”, the full clunky story, at

http://money.howstuffworks.com/paypal7.htm

eBay / PayPal / Donahoe: Dead Men Walking

May 10 2012 at 7:40 PM Report abuse rate up rate down Reply