eBay CEO John Donahoe Wants Costco Bargain Hunters

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AuctionBytes Blog
News and insight focusing on
ecommerce and the online auction industry
by Ina Steiner, Editor of AuctionBytes.com

June 11, 2009

eBay CEO John Donahoe Wants Costco Bargain Hunters

By: Ina Steiner

Thu June 11 2009 23:21:29

John Donahoe spoke at the Reuters Global Retail Summit in New York today, where he equated bargain-hunting on eBay to shopping at Costco. Costco is the largest membership warehouse club chain in the world based on sales volume and is the fifth largest general retailer in the United States, according to Wikipedia.

Donahoe said, "Does going into a cement warehouse pushing a bin, does that hold up in a world where retailing is becoming more and more sophisticated? I would say Costco's growth numbers indicate that it does," Donahoe said. "Because people want a deal. And actually you can build brand loyalty ... around having a deal."

However, is eBay really positioned to succeed in the Secondary Markets, given it doesn't take possession of inventory (and at this point, doesn't have a shopping cart or process orders on behalf of third-party sellers)?

Liquidator marketplaces such as Overstock.com and uBid buy their own inventory in addition to offering drop-shipping and third-party sales. In an interview I did last month with uBid's Jeff Hoffman (CEO of Enable Holdings), he said being able to take inventory positions is a big advantage.

Donahoe believes eBay can compete on price to keep shoppers coming back - but it has no control over inventory or prices and must rely on its sellers, who have to factor into their pricing the cost of selling on eBay, including commission fees and higher CRM costs. Does the math work, and is eBay putting (most of) its eggs in one basket?

Comments (99) | Permalink

Readers Comments

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: John

Thu Jun 11 23:47:56 2009

I thought this article from Reuters was must informative.....

http://www.reuters.com/article/rbssConsumerGoodsAndRetailNews/idUSN104
5906320090610

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: Mercy the Mingless

Fri Jun 12 00:31:26 2009

Donahoe is delusional. There is no other explanation.

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: Ming the Merciless

Fri Jun 12 01:24:43 2009

Is The Ho dying his hair? Check out the greying blond look on the Dartmouth College BoD website.

His Costco model is nearly entirely predicated on the success of the Diamonds.

Unique and/or high quality items that might attract several bids if enough eyes viewed them are largely hidden intentionally by Bad Match so they WILL NOT sell at good prices thus reinforcing The Ho's "deal" mentality.

The model will fail.

DEATH to ebay corp. in 2009.

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: For pete's Sake

Fri Jun 12 01:35:08 2009

Gotta fill that big hole of lost sellers John...sadly not gonna work

CosAmBay...what direction is this John?

What will eBay do when the US$ collapses as we are just at the start of this now

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: Nooo!

Fri Jun 12 01:48:20 2009

I love Costco. Can't bear to hear Costco and ebay mentioned in the same sentence.

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: Foothill Web Design

Fri Jun 12 02:23:13 2009

''... where he equated bargain-hunting on eBay to shopping at Costco.''

And eBay's journey to the Dark Side is complete.

You raise a good point about inventory. Lacking inventory allows eBay to be anything it wants to be. One week it's a collectibles site. The next week it's a bargain site. The week after that it's something else. eBay will use fees and DSRs to shape seller behavior (dollar auctions with free shipping). Problem is, WalMart already has a website. There's something fishy going on in the board room.

Oh, did I say ''auctions?'' My bad.

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: Bob

Fri Jun 12 02:23:27 2009

One one hand, I think it won't work for all of the reasons listed. Plus, eBay had an edge since it also offered such a huge variety of used, vintage, collectible, and handmade items along with the new, Costco-type of items, so shoppers really could find just about anything there.

Yet...I'm not so sure anymore. Will Buy.com and the other big box retailers fill in the gaps left by the small sellers and bring in the business? Will they be able to offer great deals because eBay has cut them deals on fees? Will the lack of variety matter? Will they make it possible to for eBay to become eBostco?

I don't know about the future of eBaay anymore. The only thing I do know is that as a collectibles seller, I'd better not put my eggs in one basket anymore. It's time for me to build my business elsewhere with a "flea market" atmosphere is welcome.

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: eBuyer Feedback

Fri Jun 12 03:33:29 2009

I'm still waiting for the buyers I was promised who are willing to pay me more. How does becoming known for being a great place for a deal help with that goal?

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: just me

Fri Jun 12 07:19:55 2009

The hole wants Costco bargain hunters. HAHA I for one would never buy on Fleecebay.

There is no way Fleecebay can even compare to Costco. Overpriced junk, High Shipping, No Customer Service, Fakes are becoming more the norm on Ebay.

Ebay needs a new leader as this one is clearly suffering from hersey squirt of the mouth.

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: fish noir foul

Fri Jun 12 08:21:15 2009

Another tweak of their business model that is meant to buy another ''3 or 4 years'' of 'wait and see' time from Wall Street & investors.

The whole fiasco serves to illustrate how Wall Street & Business writers get taken in by glib CEOs.

Eventually Donahoe will be axed & the new guy will want 3 or 4 years to get things right again.

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: Dman

Fri Jun 12 08:32:50 2009

I decided I’d give you a little more of this Barrons article, cause I liked the treats employees fairly part and how we, as Ebay sellers, CAN’T relate to that with Ebay.

“Costco Wholesale CEO Jim Sinegal is a prime illustration. Sinegal is proud that his stock has consistently maintained one of the highest price/earnings ratios in the retailing industry. Yet Costco is no slave to Wall Street. Sinegal's view is that if a company treats employees fairly and provides good value to customers, shareholders will benefit in the long run.
When commodity prices started to decline in the fall, Costco moved to cut prices, even before its suppliers did. A popular item like rotisserie chickens, for instance, dropped by $1, to $4.99 -- and Costco sells a million of them each week in its 400 domestic stores. "It's easy to raise prices," Sinegal said last week. "It benefits you today, but will hurt you tomorrow" by alienating customers. Costco refuses to mark up the price of any product by more than 15%.”
It’s early today, but doing some simple math, if Costco refuses to mark up by more than 15%, and Ebay/Paypal charges me a combined 14.9% - 15.9% on my fixed price items under $50.00, how do I compete with Costco. I must need to live in Johnnys’ alter-reality, forego any profit for myself, ignore my costs and offer free shipping, all in order to enrich Ebay. Yeah, even I can figure that math out, it’s a lose lose situation for me and Ebay, cause I won’t be selling and they won’t be taking all my profits.

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: YOUR FUTURE IS AT STAKE!

Fri Jun 12 08:45:53 2009

I urge you all to watch this video. It may seem long, however, you will be captivated within the first minute.

See how your future may unravel if corporate America continues on this path of human destruction.

http://video.google.com/videoplay?docid=7886780711843120756>

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: Brenda

Fri Jun 12 09:26:53 2009

Donahoe wants to be CEO of almost any corporation except eBay it seems. I wish one of them would take him up on it, though with his record to date, it's prudent not to.

The economy is no excuse for his failures at eBay. Had he been less greedy, and less determined to morph the company he'd been given to lead into something totally different, eBay could have been flourishing in this economy.

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: lcole

Fri Jun 12 09:34:53 2009

Ebay is on its way to enforcing an almost no questions asked return policy. Costo had that policy for a long time but now because of customer abuse suppliers put their foot down. Now Costco has toughened up it's return policy.

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: Rich

Fri Jun 12 09:54:22 2009

I just want a place to sell my Beanies. Is that so wrong? :O(

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: Karma

Fri Jun 12 10:32:57 2009

@ Brenda:

"Donahoe wants to be CEO of almost any corporation except eBay it seems"

So true!!! Made me laugh and cry at the same time :-)

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: Jim S.

Fri Jun 12 11:15:50 2009

eBay = Costco? Does he live on this planet?

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: Lisa

Fri Jun 12 11:19:40 2009

"eBay CEO John Donahoe Wants Costco Bargain Hunters."

That's just something he wants.

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: Just watching the slow motion train wreck

Fri Jun 12 11:36:38 2009

So, J'Ho FAILED at his attempt to take on Amazon, now it's Costco he's after?

LMAO! :D

What's next, Walmart?

Hey Ho! Being eBay was not a bad thing, you idiot!

Too bad you already DISFIGURED, DISMEMBERED and then MURDERED it.

eBay CEO John Donahoe Wants Costco Bargain Hunters

by: Mindy

Fri Jun 12 11:44:06 2009

I'll have some of what HE'S smoking!

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