Wednesday, 8 July 2009

Recklessness, Weetabix and eBay

I am noticing a certain gung-ho approach creeping in to my investing of late. For the last two Sundays, I have lumped a few hundred on the apparent winner of the weekend's golf tournament at short prices and both times the winner delivered. I have done these using my BETDAQ account, for three reasons.

One is that since I am not actively trading the event, then there is no point getting a 20% reduction on any winnings.

The second reason is that I've noticed the BETDAQ prices tend to lag slightly behind those on Betfair, so it is often possible to find value after a price change on Betfair.

The third reason is that whereas I treat my Betfair account as an investment / trading account, and take it rather seriously, I have the dangerous attitude that my BETDAQ account is more of a 'play account' where riskier (i.e. not such good value) investments can be made without fear of messing up my 'real' numbers. This could be a good thing because I tend to be over cautious sometimes, but it could be a bad thing if my assessment of value is wrong. (See previous post).

Of course losing a few hundred from any account is not something I want to happen though, and if I do, then I should really want to lose it from my Betfair account and help out with the Premium Charge. Speaking of which, another hit today, though not as bad as recent weeks, which must mean the summer is here.

Speaking of BETDAQ again, I do find their interface somewhat clunky to use. I have another account with Weetabix (WBX), and their screens and navigation are just as good as Betfair's, but once again, the problem here is the lack of liquidity. Handy for some of my outright punting though.

One day a viable challenge to Betfair will appear. I was reading at the weekend about how once invincible eBay are now facing a serious challenge from Amazon's auction site, and are seeing profits down for the first time. I can see some parallels here - both eBay and Betfair had first-mover advantage, and while I don't know the details, it appears that eBay have managed to upset customers with their pricing strategy and that customers are now 'flocking to Amazon in droves' where word is spreading that the 'auction experience is preferable'. Once tipping point is reached, it will be very hard for eBay to win those customers back. And so far as I know, eBay haven't even started making their most successful x% customers pay a far higher commission rate for their services.

All things being equal, customers stay with the brand they are familiar with, but once they become disenchanted, they're gone. A lesson here for Betfair I think. Abolishing the Premium Charge and refunding (with interest) all Premium Charges taken would go a long way to making this customer very loyal. Actually, I would even forgo the interest right now, since it is pitiful.


Anonymous said...

I think what we forget about that all these Internet companies is that they've been around literally five minutes. What's the long-term pricing structure? Who knows? It'll happen organically but I'm not sure Betfair have been stupid as some of us like to think. Nick

PhilipH said...

eBay are certainly getting worried. I had an email from them asking me to sign a petition about something or other which did not bother me, so I dumped it. I know my daughter, who runs a "shop" on eBay has found her costs rising a good deal of late. She is thinking of closing her account and just selling from her own website. She has built up quite a following worldwide and eBay is no longer so important to her.

Giants (or ogres) like eBay and Betfair will be around for a long time of course but new competitors will eventually emerge. Look at Microsoft. Google is now about to launch a new operating system to compete with Windows. That could shake things up a bit. And what if Google enters the Exchange market... Just a thought.

Laurie said...

re could be that subconciously you are thinking that I have a 20% advantage here if I win and are therefore willing to take on more risk

Cassini said...

Yes, I think that may well be part of it. The same price on BETDAQ is a lot more attractive on a Sunday after a profitable week...