Ebay CEO Suggests Skype is Failure for Ecommerce Efforts

ecommerce and shopping cart news June 03, 2010
By the ZippyCart Ecommerce Software Reviews Content Team

Ebay CEO, John Donahoe, suggested on Wednesday that Skype is not a useful tool for buyers and sellers, when defending his decision to buy and then sell the company for only a 5% profit. In September of 2005, ebay purchased Skype for $2.6 Billion, hoping to use the VOIP company to improve communications between buyers and sellers, letting them quickly speak with one another to finalize a deal. At the time, market analysts warned that real-time communications could actually harm rather than help online auction sales.

Ian Fogg, senior analyst at Jupiter Research stated that language skills could be a roadblock. He suggested that “It’s one thing to express yourself in a foreign language, say English, via e-mail; but it’s something completely different when you’re on the phone speaking with someone real-time in a foreign language.” Other analysts worried that only early adopters would find Skype as a reputable option, while others would not be willing to enter the VOIP space and prefer online auctions because they don’t require direct contact beyond email.

4 years later, in September of 2009, eBay sold 65% of its Skype ownership for $2.75 Billion to the private equity firm Silver Lake Partners. Now, a minority share holder in Skype, eBay is shifting its focus to its successful acquisitions, like PayPal. “PayPal will be the digital wallet inside your mobile device,” Donahoe suggests, after stating that people won’t use their wallets in three year’s time.

As eBay continues to work out small kinks, like its failed purchase of Skype, the lessons it learns set a trend for ecommerce. Donahoe is banking on the continued growth of ecommerce and has learned that Skype is not the wave of the future for merchants.

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