July 19th, 2007

EBay milking profit from shrinking customer base

buy IT on ebay
Some very interesting and misleading headlines from eBay today. eBay’s 2Q Profit Surges 50 Percent. Sounds like fantastic news, right? But what lurks right under the headline? EBay Inc. is trying to milk more money out of every customer — a strategy that has resulted in record revenue but makes some analysts nervous about the company’s long-term prospects.

If you’ve read what I’ve said about eBay before, you might think the previous sentence came from me circa 2-3 years ago. But that’s actually the Yahoo! news article speaking.

One more key item to note from the article:

But the number of items for sale on the site declined for the third consecutive quarter. Individual listings dropped 2 percent from a year ago, and eBay store listings plunged 25 percent from a year ago.

EBay shares fell 53 cents in extended trading after the results were released. The shares lose 20 cents to close at $34.05 in Wednesday’s regular session.

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