Tuesday, January 18, 2005


EBAY has announced a stiff price increase. Several fees will be increase in a few weeks. In particular the cost for an "EBAY STORE" listing will go up; from $9.95 to $15.95 per month, 60.3%!

Naturally a number of EBAY sellers are not real happy. Some have threatened to leave the service.

I am reminded of an old friend of mine who used to operate a Mr. Dunderbach's restaurant located in Hanes Mall. When Hanes Mall was very pleasantly surprised by the tremendous growth in traffic, the management announced a large expansion project and a sharpe increase in rents. My friend was upset and move his store to a nearby shopping center. His rent was reduced by more than half. The troubles were two fold. His traffic dropped by more than half and he had to reduce his price to hold even the smaller traffic. In the mall, he could simply charge much more for a sandwich because the customers were already there.

Regular readers know that EBAY has been a favorite of mine for a long time. Every few months I talk another reader or two into buying the stock. Can you see today's opportunity? The stock has dropped 10% in the face to the price increases. Sellers are upset but really have no other "Hanes Mall" as an alternative. People will still buy at EBAY and of the few who say BYE-BYE many will return. Yahoo, Overstock and others have nearby shopping centers but no one has the people in the store the way EBAY does. No one else has nearly the selection of goods and services. Now is the time to BUY BUY EBAY!

PS: I can't mention YAHO without mentioning the latest deal between Verizon and Yahoo. Yahoo is the largest internet portal and it is ready to grow by leaps and bonds. GOOG just added a number of new features to PICASA, its internet picture program. The phrase "the rich get richer comes to mind". EBAY, YAHO, and GOOG are high priced by several metrics but they all have solid businesses that are growing rapidly.


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