eBay Announces Spring Changes - buyer/seller/wall st analysis.
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Clarification from eBay UK live blogging
Earlier this week I live blogged eBay's comments at our Catalyst UK conference (broader post on the UK ecommerce climate coming later today). It ended up being in three parts:
While it was clear in the live presentation, in my live-blogging haste, it seems I wasn't clear in the timeframe being discussed. All of the data points that eBay presented were based on Q408 results and of course not some sneak peak into Q1 activity.
For example, in Part I, I had this bullet:
- sell side. Sold items are up 15% y/y, which is an acceleration from this time last year.
That datapoint refers to Q4 results in the UK - according to Mark Lewis, they were up 15% from Q407. Apologies to the eBay folks and anyone else that I may have confused by not clarifying that all performance data was based on Q408 data.
In Part I, I also mentioned that I would try and get a copy of the interesting eBay.co.uk “Online Business Index”. This is a piece that eBay UK did based on a survey they did of their sellers. I thought it was pretty interesting and it was well received by attendees.
Our customer (Dangleberry Music), informed me that it's already online in a PDF so I was saved from doing some scanning. You can download the report here. Even if you don't sell directly in the UK, I've found it to be an interesting market to watch from a macro and micro perspective because frequently trends can be identified that work their way to the US sooner or later.
SeekingAlpha Disclosure - I am long Google and Amazon
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Clarification from eBay UK live blogging
Couple of upcoming events of interest…
There are a couple of upcoming events that I wanted to point out to readers that you may find of interest:
- Amazon ProductAds Webinar - ChannelAdvisor is co-hosting a webinar with Amazon around their new ProductAds initiative. This webinar is for customers and non-customers so if you are interested in this topic, feel free to join us. Signup is here.
- ChannelAdvisor Catalyst UK - Our annual ecommerce event is coming up soon - March 30/31 - signup is here and we are closing in on capacity. This is in London.
- ChannelAdvisor Catalyst US - April 30/31 in Raleigh - We are definitely hitting capacity here so I recommend signing up asap here.
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Couple of upcoming events of interest…
eBay analyst day news roundup.
Some news reports are hitting from analyst day that I thought readers would be interested in so I've captured some of them here for your reading+viewing pleasure. Tomorrow and later tonight the stock analysts will chime in as well and I'll try and summarize some of their findings. Also, I have the Citi call with Mahaney (contact him if you want to participate) at 11am ET tomorrow (3/12/09) and after that will be publishing our thoughts on the analyst day and the implications for sellers here.
Before jumping into that, eBay has two downloads up from the day:
- The presentations are all in this jumbo file
- There's a little backgrounder here (financial background and bios).
Most of the press took eBay's lead and talks primarily about the PayPal opportunities.
- ($ub required) The WSJ has an interesting piece out called 'eBay retreats in Web Retailing'. In it Geoff covers the fact that eBay basically said today they won't compete head to head with Amazon on in-season product. Yours truly has a quote in here.
- NYT has a blog post by Brad Stone here. Brad interviewed JD and this quote was concerning. I can guarantee you that Amazon sees eBay as a competitor: ““Everyone is saying, it’s eBay versus Amazon. We aren’t trying to be a retailer. We’re not trying to fill our shelves with every new iPod. If our sellers can find new ones and resell it, that’s fabulous.””
- There are two possibilities here:
- JD is aloof and doesn't want the press to think Amazon is a competitor.
- eBay really doesn't believe Amazon competes, just like McKinsey told them that google isn't a competitive threat. Either way, it's a weird way to approach this.
- Maybe eBay hasn't seen the marketplace that Amazon is operating over there? Last I checked, I think they may have ipods that are both new and used over there -oh, but they are a retailer so that's different. Crazy right? Well read that quote again.
- There are two possibilities here:
- AP story is here -
- JD quote - “..But we were faced with the innovator's dilemma. We were the largest, biggest, successful, profitable, and we knew we needed to make changes but the changes we'd made were always incremental because we didn't want to upset the apple cart,” he said.”
- Analyst quote - Derek Brown (aka Dr. Brown), an analyst with Cantor Fitzgerald, said he got the sense from the presentations that the changes eBay implemented last year didn't quite yield the results it had hoped, and that eBay is now speeding things up in an effort to bring the market back to them.”Are they making the right changes in the right order and will those changes bear the fruit they hope? It remains to be seen,” he said.
- Reuters story is here - JD quote: ““Its (paypal) potential is enormous,” Donahoe told Reuters. “It's not just a stepsister …, it's a second core.”
- Analyst quote (shout out to eBay Strategies friend - SteveW!) “The question is: will those changes make the experience competitive with other online retailers like Amazon or Zappos who aren't standing still. That's hard to say,” Pacific Crest analyst Steve Weinstein said.
- FT is here
There were two CNBC stories today from Jim Goldman. The one early in the day was about eBay vs. Amazon (smackdown!). Then at 8pm ET he interviewed JD - both are embedded here for your viewing pleasure.
SeekingAlpha disclosure - I am long google and amazon.
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eBay analyst day news roundup.
eBay Analyst Day - Part IV - Q+A
This is part 4 (final), part 1 is here, and part 2 is here, part 3 is here and a 'top questions sellers wanted to ask' is here. I recommend reading these in order.
Reminder - if any of the acronyms here are confusing, check the backgrounder here.
The Q+A session was fast paced so I tried to snag the stuff that was most interesting to marketplace participants with a little bit of extra thrown in.
Q: Is eBay working on merchandising?
A: ST - yes, we have more data than anyone and it's something we're working on. LT adds that it will be driven by search
Q: Can you say more about this secondary market opportunity?
A: LT - yes, the old eBay was about cleaning junk out of your house, this is about cleaning junk out of your warehouse. The stuff retailers don't want
Q: Skype - will you split out all three businesses, or sell one?
A: JD got a little tough on this one and reiterated that Skype is something that doesn't fit, but they love it. He wants to win in each business and that's the goal. eBay helps PP win - brings new users, powers BML balance sheet, PP growth enabled Skype to grow without monetization. JD - tell them why they are undervaluing it. BS joked that he wouldn't presume to do that, JD said - well give them some hints (funny).
Long blurb - highlight, BS thinks that marketplace business is valued at zero and thus people get free option on marketplace business is one way to look at it. We work on two things - PP and eBay and stay out of Skype's way.
Q: How concentrated is your seller base? 25m sellers with $60b - Amazon has $10b with 1.5m sellers
A: LN answers - we favor those sellers regardless of size with superior experience and value. We have a very diffuse base. High trust sellers are winning. We believe that over time we will have fragment base for two reasons. 1. Used segment - continue to see diversity/fragmentation. eforcity - fairly small business. 2. you will see large massive inventories in liquidation come into the market. Search will look at all this and bring the best stuff up.
JD - we still embrace the large seller. Lots of small sellers bring great value and provide service. We are only marketplace that can embrace both.
Q: What's the mix of new/used on the site.
A: JD - we won't go out and try and be a retailer. 90% out of season, 10% in-season (LN chimed in). Everyone else has the in-season stuff, we're the only place with the secondary stuff. Consumer can decide
Q: What are you going to do with all this cash that's sitting internationally?
A: First priority is M+A, second is stock repurchase, third is see one/two. Went on long discusion about past M+A's.
Q: What exactly is happening to the auction busines -where is it going? If you're getting it on the fixed-price side, what are the competitive dynamics?
A: LN - FP has always grown faster than auction - all about showing the best results and seller quality.
Q: How do you win when you don't have supply leverage of a big box retailer? On the demand side you are facing pressure on search spend, etc.
A: LN - On the demand side, we will delight buyers and they will use word of mouth. We want the 150m/m buyers to go tell their friends how great eBay is.
On seller side, in general, our sellers want velocity. We are dealing with different inventory of one item. Let's take a jacket that is $150. Liquidators are moving it at $100-120. They won't have as much, maybe 10 jackets. They will move it on eBay because no risk and flexible. That will bring inventory.
JD - the whole point of secondary market is that our sellers don't compete with big guys in an inefficient supply chain.
Q: Of the 6-7b in cashflow you will generate, a lot is in marketplace. Everyone fearful that mp is in decline. Couponing didn't work. The value buyer isn't on the site driving GMV. Is there a risk that even with changes you don't gain share of wallet. Also recommends doing a dividend.
A: LN - In the seller/risk equation that you point out. You made our case! We have to make foundational changes. There are great deals on eBay today. As we get into secondary market with inefficient supply chains, we can bring those deals on.
ST - If we fix the fundamentals, we will get organic growth. We are driving th product and experience. It is working as it's working on inactive buyers.
LN - word of mouth is our best marketing possible.
JD takeaways
JD concluded by saying there are three takeaways:
- Our company is about connecting buyer and sellers - we need to evolve as ecommerce evolves.
- Aiming our company to the future. We now have clarity on where ecommerce is going and we will sail the ship to that point on the horizon.
- We have a portfolio that is positioned to win in that environment and there's a benefit to having a portfolio (except for skype - editorial):
- Paypal - THE online payments network
- eBay - objectivity and commitment to take the business and make it the leader
- Skype - A great business
Finally, we have a leadership team that is absolutely commited to delivering and driving hard. We look forward to this showing up in our results.
SeekingAlpha disclosure - I am long Google and Amazon
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eBay Analyst Day - Part IV - Q+A
