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Back in the days when OffTrack Betting was popular in New York City, the ad tagline said "bet with your head, not over it." It may be uncool to say, but eBay's recent conservative retrenching is a solid strategy. A little boring, maybe, but at least the company is betting with its head.
CEO John Donahoe told a group of analysts Wednesday that the company is going to focus on its original mission, which is ecommerce auction. No more eBay Express. No more plans to compete with Amazon for the overall ecommerce business. Donahoe was roundly trashed in the blogosphere. While it might not spike its short term stock price, it's the right move. With Skype and PayPal in its tent, eBay is positioned to play very well in the most active markets. It has communication infrastructure, payment infrastructure, and auction infrastructure. Right now anyway, no one is a serious threat to that trifecta.
And eBay would not be a serious threat for selling new products online to compete with Amazon. Over the next two years too many companies are going to take desperate measures to sell goods online. Nordstrom's, Macy's, and Neiman Marcus are getting absolutely killed at their brick-and-mortar businesses and they're not alone. The only viable strategy for big box retailers over the next two years is ramping up their online presence and revenue. Ebay would spend a lot of money trying to compete with that, and most of it would be wasted.
Donohoe has been quoted as saying "we're going to focus where we can win." Amazing how that will get a CEO brickblogged these days. Imagine if anyone in the banking industry had that attitude instead of inventing businesses they later lost at. Maybe the economic picture would be a bit clearer.