Google Checkout vs. eBay's PayPal round II

it is so hard to cancel my pay pal account
(read impossible) andd i get so much spam/phishing i have it marked as spam and will not use it.

I can see where you are coming from. However, I think many sellers will be using Google Checkout in conjunction with their existing PayPal alternatives. We have been processing digital good sales for merchants using the PayPal platform for years and have just enabled the same service with Google Checkout. Many sellers are eager to use the Google Checkout version due to the benefits of getting reduced rates (sometimes free) advertising in their AdWords listings. Just my $.02

Melly,

Just to clarify something I think people will be confused from your blog.

First, the paypal promotion, as you stated in a previous blog, is for _select merchant_ sites, eBay (I presume) being the main one.

Second, Google checkout is banned on eBay, ie there's no competition in that respect.

In other words, any promotion Google does is targetting commerce _outside_ eBay, including the mum & dad sellers who have their own private websites.

It would then make sense to offer the incentive to sellers (rather than buyers), after all those who are not a part of the "selected merchant" group would not attract extra sales over this promotion and wont be swayed either way by customers.

They can however make a saving in offering Google checkout in preference to paypal on their website - and the name "google" already instills customer confidence.

I think it's a wise move on behalf of Google, who are already operating on an uneven footing because of not being allowed on ebay.

The other thing that should be mentioned, is that eBay has been offering these rebate incentives for years (there are even websites openly share discount-postage codes for paypal, such as goofbay forums), and although I haven't checked the details of this particular offer, they are usually only valid for purchases over a specific dollar value.

This might be a dissapointment for first-time buyers. (or it might not - depends where they shop, I guess)

Third, you mentioned "Dell, Starbucks and Barnes & Noble" being a part of the promotion. I followed your link, and it only showed those merchants being part of the 100,000 merchants that accept paypal (not actually a part of any promotion as far as I can see), then later in fine print down the bottom it states:

"Participating PayPal merchants will be displayed on the PayPal Holiday landing page starting 11/23/06".

Have I missed something - or is the list not actually out yet? All those logo's displayed seem to be there only to push the point that the payment system is widely accepted, and nothing more.

Last, I also noticed the fine print that says "The Cash Rebates will be deposited into the participants' PayPal accounts within 6 to 8 weeks after transaction."

There will be angry people over this - guaranteed. You only have to read the eBay forums with regard to previous eBay promotions where rebates/discount offers/ freebies are stated. And in fine print it states up front people need to pay in advance then reimbursed months later, but people being people, don't read the fine print. (sometimes it doesn't even state it at all!)

And the reimbursements usually don't come on time. Some are still waiting for rebates on special promotions months ago.

Regardless of all this, paypal will still come out in front. They'll p*** off more people, but shareholders will no doubt be pleased at the end result.

Actually, Google announced that they were waiving processing fees for their merchants at the beginning of the month. A few days later Paypal then did the same thing.

Here is a link from the 2nd November.

http://www.searchnewz.com/blog/talk/sn-6-20061102FreePaymentProcessingfromGoogleCheckout.html

http://biz.yahoo.com/ap/061108/baidu_ebay.html?.v=1

Baidu, EBay EachNet in Cross-Promote Deal
Wednesday November 8, 8:29 am ET
Baidu, EBay EachNet Sign Multi-Year, Cross-Promotional Agreement for PayPal in China


NEW YORK (AP) -- Chinese Web portal Baidu Inc. said Wednesday it signed a multi-year, cross-promotional partnership with eBay EachNet, a
Chinese commerce site that was bought by eBay in 2002.
Under terms of the agreement, Baidu will promote PayPal Beibao, PayPal's service in China, as the preferred payment method on Baidu. In return, eBay EachNet will use Baidu as the exclusive search provider on eBay EachNet.

The two companies also plan to develop a co-branded toolbar. They expect to test text-based search advertising on eBay EachNet in the first quarter, and plan to implement it by the second quarter.

The partnership is not expected to have a material affect on Baidu's results.

Shares of Baidu were trading at $94.40 in the pre-market session, up 52 cents from Tuesday's close of $93.88 on the Nasdaq. eBay shares slipped 5 cents pre-market from yesterday's close of $32.55, also on the Nasdaq.

sorry melly i noticed your wrote a commentary on the baidu deal already

Google embraces Skype...Wow! So what does this mean to Google talk?

http://pack.google.com/intl/en/pack_installer.html?hl=en&gl=us&utm_source=en_US-et-more&utm_medium=et&utm_campaign=en_US

i didn't realize Paypal had so many big brand merchants and smaller mom and pops

https://www.paypal.com/cgi-bin/webscr?cmd=xpt/cps/general/NewConsumerSafe-outside

https://www.paypal.com/cgi-bin/webscr?cmd=_shop-ext

Here is what I don't understand about this:

If PayPal is the "all in one" on eBay and since this isn't a promotion to increase PayPal subscribership then what's it all about? Why offer discounts for account use when they're holding the pole position on the market? They don't need to offer a discount!

I'll tell you what this is:

This is a plea for people to buy more on eBay. This isn't about PayPal at all. Overall sales on eBay are tanking and this is one way they're trying to prop things up. The game here is that they're attempting to funnel purchasing funds into the place by giving the buyers some spendable discounts.

You better look around. Promotions during Christmas season is standard retail practice.

Does this look like a business tanking? Hardly.

http://files.shareholder.com/downloads/ebay/67390102x0x56576/4c05e8ee-d786-44a9-a9a4-e4dd603b2bee/Q3-06%20Earnings%20Release%20FINAL.pdf

Marketplaces
Our Marketplaces businesses had a good quarter, in line with our expectations, characterized by solid growth in key geographic markets and a strong quarter from Shopping.com.

Marketplaces net revenues totaled a record $1.049 billion in Q3-06, a growth rate of 22% over the $858 million reported in Q3-05. The eBay platform confirmed registered user base at the end of Q3-06 totaled 212 million, representing a 26% increase over the 168 million users reported at the end of Q3-05.

eBay’s users generated a total of 584 million new listings in Q3-06 (which included 95 million new Store Inventory Listings), 27% higher than the 459 million new listings reported in Q3-05 (which included 52 million new Store Inventory Listings).

These listings helped drive eBay Gross Merchandise Volume (GMV), the total value of all successfully closed items on the eBay trading platforms, to $12.6 billion in Q3-06, representing a 17% year-over-year increase from the $10.8 billion reported in Q3-05.

Payments
PayPal had another excellent quarter, highlighted by increasing penetration on-eBay and excellent growth in our Merchant Services business.
PayPal net revenues totaled $350 million in Q3-06, a growth rate of 41% over the $247 million reported in Q3-05. PayPal had nearly 123 million total accounts at the end of Q3-06, a 41% increase from the 87 million reported in Q3-05. Those accounts helped drive record Total Payment Volume (TPV) of $9.1 billion in Q3-06,a 37% increase from the $6.7 billion reported in Q3-05.

PayPal Merchant Services posted a record $3.3 billion in global TPV in Q3-06, representing a 59% increase from the $2.1 billion reported in Q3-05.

Communications
Our Skype business continued to grow at an impressive pace, driven by rapid user growth and continued innovation of Skype’s hardware and software ecosystem.
Skype net revenues totaled $50 million in Q3-06, representing a 13% increase from the $44 million reported in Q2-06.
Skype had 136 million registered users at the end of Q3-06, representing a 20% increase from the 113 million users at the end of Q2-06.

gareth, you better talk to sellers and ask what they think.

I think you will find that noone from eBay will go on record and state whether "solid growth" was due purely to the fee increase, or whether sales are up.

As a regular on eBay forums and as a seller, I already know the answer to that question.

The question now is, whether eBay can sustain the smokescreen long enough until customers start returning.

November 09, 2006
Is Google Checkout a Dud?
Yesterday, Google announced that it was making its new payment service, Google Checkout, free for merchants through the end of the year. Upon hearing this news, some commentators jumped to the usual Google conclusion: another brilliant move by an infallible company that will soon put Microsoft, Yahoo, and eBay out of business. But is this really the right conclusion?

Last summer, you may remember, when Checkout was finally announced (after months of rumors, speculation, and denials that reduced eBay/PayPal shareholders to quivering jello), analysts almost universally concluded that the AdWords/Checkout combination was so potent that PayPal was toast. Yesterday, while suggesting that the PayPal obituaries were a bit premature, the WSJ noted that Google Checkout had signed up "a few hundred merchants."

A few hundred? Unless that number is at least two orders of magnitude too low, the reason Google is making Checkout free is not that it wants to finish eviscerating PayPal, but that Checkout has been an unqualified disaster. Google has hundreds of thousands of advertisers, the majority of which have web sites that could presumably benefit from Checkout. Can it really be true that, six months after the PayPal killer was announced, Google has only managed to persuade "hundreds" of these advertisers to try the service?

I don't know the answer--I'm hoping some of you do.

11....I have carefully took that in consideration.

I'm not sure if you heard of the exercise called price elasticity and sensitivity analysis.

Many industries where there is high volume of business conduct this exercise and find the best price to maximize profitability. Now usually when you raise price a certain segement of consumers will be budgeted to leave but overall profitability and revenue will rise because a larger portion of the existing customer base don't mind the higher price as long as they continue to derive benefit.

Now if you lower price then you need a certain level of incremental customer volume to maximimize profitability.

Should Ebay experience too many sellers are departing and huring their business I'm sure they will lower fees.

Only time will tell and 2007 will be interesting.

#12 Warren, Google checkout as far as I understand it has not been make widely available internationally.

I tried to sign up for the service myself only to find out I couldn't.

Give them time - there are people who absolutely despise paypal (eg, sellers accounts with large amounts of money suddenly frozen for no reason for months, & money still accumulating with no way of withdrawing)

All Google have to do is bide their time, & expand into the key markets. Remember many people use paypal as they offer competitive cross-border transaction rates. Google has not delved into that area yet, as far as I can tell. This will be the key to their growth, as it has been for paypal.

Ok - great posts people .... I've been mulling this over a bit and kind of see a possible game plan here. Indulge me for a minute.

Google you would think is really trying to build their google checkout as it is the spring board into a huge market for them. If eBay had not stopped them from being allowed on their site just imagine if you will....

Google checkout is growing exponentially every single week due to the fact that there are probably more people who trust the name recognition of Google then of Paypal (I know tons of big business owners who were hurt by Paypal due to their the buyers is always right policy - and will never go back - but would be willing to try and probably love google checkout).

Now with the rapidly growing user base for Google checkout - google makes a bold move - they open "gBay". **don't laugh now - google has owned the domain name "googlebay.com" since the year 2000**. "gBay" would have a totally built in audience. Now to combat ebay - they already have huge revenue streams from all their other business ventures, plus they could "pull and ebay" by giving sellers (and buyers) a fee discount for ONLY offering the "google checkout" as a payment method for their auctions. I personally sell about 600K of goods on ebay every year and would move over to that aggressively.

I just think that with all their infrastructure google could very easily unseat the business that I thought was totally unbreakable. Now - this all said, I'm sure there are a lot of improvements that need to be made to google checkouts, as I'm just now trying to get into it some with my new website development due out in about 2 weeks, they are a ways from actually making something like this happen but could do it if they wanted.

Just don't even get me started on how easy it would be for them to come up with a newer, better, easier to use operating system that would absolutely smoke Stinkrosoft.... Happy Thanksgiving Everyone!

Overall I hope Google Checkout takes off. Paypal, in my opinion, is a necessary evil....refuses to listen to sellers side if there is a problem and if a seller refuses to cooperate they act like the gestapo and enforce their decision whether the seller agrees or not. Seller has NO control over their account and their own money in the account. Also, Ebay wants sellers to offer free shipping, etc. but all Ebay is willing go give is a lousy 35 cent discount on an option that most sellers don't use anyway!