Auction Blog

This is part 3, part 1 is here, and part 2 is here.  I recommend reading these in order.

Reminder - if any of the acronyms here are confusing, check the backgrounder here.

Lorrie Norrington - What's going on at eBay?

• eBay has 25m sellers 3m items a day globally
• Keeps talking about 'secondary market' and how they will own (more later)

• Not retailer, won't compete with sellers. seller competition drives best value for buyers.  - the “Not a retailer” is a swipe at Amazon.
• Creating new eBay where they have largest selection of deals (value) in any format.  Note - not easiest to use.  Good to see some kind of mission statement->

Why aren't we growing faster?

In the slide above, LN admits that the customer experience and 'approach to change' - READ 'eBay culture is calcitrant' - good to see they realize now they are fighting a tech battle.

LN then put forward this roadmap which was referenced throughout the rest, I'll call it the 2010+ roadmap slide if needed:

Of note is that they are now saying this change is going to extend beyond 2010 with 2009 another 'down' year, 2010, flat and then we'll see things grow again in 2011.  If I'm Amazon, I'm licking my chops on this one.

LN covered the 08 changes for a while which are dead horse material on this blog so I won't go into that.  This slide was used to show the progress on foundational changes.  There are so many things wrong with this one, I have to circle back:

One thing I found a little disturbing is that LT kept referring to 4.8+ DSR sellers as “Trusted sellers”.  That seems fine at first, but then what is a seller with a 4.7?  Hmmm.

Lorrie then went on to talk about the 09 initiatives in broad strokes.  They are listed here on this slide:

Probably the most interesting one to me is that they are going to guarantee transactions it seem  starting in US and then UK - no details were offered on how this will work. Embedded sku (parent child as we call it in the Amazon world) will be good and finally enable sellers to offer a 'choice listing'.

Next, LN shed some light on the secondary market.  This was interesting as it seemed like something new they are focused on, but going back to my old analyst day decks, they talked about this as the tail of ecommerce so to me this is just a new chart that says the same thing they've been saying.  Maybe I'm missing the point though.

The middle bubble seems to be where they think they have a huge opportunity - out of season, outlet, overstock and liquidation, which I guess is true, but to me that's where the bulk of eBay is today, so are they saying they aren't growing where they already are?

Here's another slide on the topic, but again, doesn't offer up anything that isn't already what eBay is doing other than maybe a new focus on 'deep' inventories.  They did say that deal of day is driving some volume now which is good/true.

LN handed it over to ST.

Stephanie -Global Product (meaning how does the eBay site operate?)

Lorrie went through no short of about 50 slides showing the user experience changes over the last year.  A couple of tidbits from this:

• I noticed that the banner ad was stripped from all of the screen shots.  I guess ST doesn't find them useful either
• She showed the product-based experience in media that is live now.
• Showed the innovative new “buy box” that eBay has - picks out the best deal for the consumer in the upper right hand side.
• Snapshot view and a 'choice listing' - terrible experience for buyer and seller as it isn't part of the eBay tech platform 
• Showed some Kijiji integration I've never seen before - I was hoping they would kill this brand today, looks like it's here to stay (ugh!)
• Put forth a datapoint that eBay has best value - showed a Tivo HD and said it is 12% cheaper on eBay than anywhere else online (I'm going to check this)
• eBay deal of day
  • sold 8k xbox cards in 6hrs
  • sold 7k logitech remotes (ChannelAdvisor customer!)

Then ST showed a notional view (mockup) of how eBay could drive a great experience - it shows a product-based experience with the top chunk of items coming from “Trusted Sellers”, the next from Marketplace deals and the last from 'whats nearby'.  This is actually very close to what I was thinking of in eBay 2.0, minus the ads at the bottom which I believe add little to no to negative value.

ST then talked about sellers and said that eBay is the best channel for sellers because:

• Velocity - best channel for cash flow
• Efficiency - increased operational efficiency (they want to drive this for sellers)
• Reliability - release management that's controlled (2/yr) for sellers

Mark Carges - SVP+CTO eBay

MC took the stage and didn't go through many slides, but it was actually the best part of the day because it looks like eBay finally has someone there that can help them on the technology/r+d side.

MC talked about 4 areas:

1. Search
   1. Talked about the challenges that are unique to eBay (more real time vs. web-search)
   2. 09 plan:
      1. Improve relevance
      2. Better sorting/bestmatch
      3. search as a platform - deliver custom experiences based on category
2. Catalog - wants to bring structured and unstructured data together on eBay to form a uniquely eBay catalog.  (editorial: Neat idea, hard to execute and starting at zero.
3. User Experience
   1. Showed some mockups of better buying experiences - heavily disclaimed that they are beyond experimental.
   2. One was a color picker like www.like.com
   3. Another was a knock off of bluenile's diamond builder
   4. Nothing innovative IMO
4. Platform
   1. Showed a project echo item - which is an application that can show up in Seller Manager Pro
   2. Likened this to their 'appstore' equivalent to the iphone - that's a real stretch as:
      1. eBay is the king of closed platforms and I haven't seen that change at all culturally, in fact it is going backwards
      2. This is in SMPro - only a small fraction of users see it.
      3. There's like one company (terapeak) that is even thinking of building against this thing.

All in all, I thought this was the best part of the presentation as it seems like they have someone finally thinking about the hard problems and how to solve them.  Going to be key to keep this guy and make him effective given non-tech culture at eBay.

LN wraps

LN concluded by recaping much of what was already said.  She also spent some time on classifieds pointing out that it has grown from $86m in 05 to $270m in 08 - a 46% CAGR.  She postulated that it is a $22B opportunity for eBay by 2010.

The most interesting part is she forecast what the marketplace business will look like in 2011 here:

This is a little bit scary to me given that the low-end is $5B revenue which is LESS than they did in 2008.  Even the high end - $7B is only 25% above where they were in 2008. I don't know what the CAGR is there, but it's very very low.  The mid-point of $6B is 20% growth over a three years period.  I don't think this is what Wall St. is thinking with 10 estimates.

Skype is next which I'll skip and then BS which I'll circle back to later.  Up next from a blog perspective will be Q+A

SeekingAlpha disclosure - I am long amazon and google

View original here:
eBay Analyst day - Part III - eBay marketplaces

This is part 2, part 1 is here, I recommend reading these in order.

Intro
ST started with a very broad overview of PayPal that was really very very basic so I don't have anything to add there.  There was a video of a merchant talking about how great PP is.

For example, here's a slide of Helga who wants to buy on the internet, but look at all the bad guys that are after her!

The highlight of this segment is when ST thew a little SMACK: “Amazon, Google and banks do not have the PP list of competitive advantages.”

PayPal Background + Opportunity

A couple of new slides were interesting

Here they are showing TPV doubling by 2011 to $100-120b. Not sure how this jives with Analyst comments, but it implies a 33% CAGR.

Slide above - PP plan on growing penetration on eBay from 58% today to 73-78% in 2011. By nuking paper on eBay, they have nearly guaranteed that PP will be used for all but autos, so this seems doable faster IMO.  Need to do math to see if this counters the decline of eBay problem.

The above shows the PP penetration in markets.  Interesting that DE is so low - ACH is dominant there and they've had a hard time justifying $ they charge with buyers and merchants.  That could make Asia very hard / near impossible for them.  Notice there is no Asia here.

Slide above - Shows on/off eBay TPV.  Notice how there were basically zero new accounts between 1H07 and 2H08 and how small the TPV bump was as well.  As they try to get to that $120b, eBay will be a drag and they will have to really amp up the off-eBay IMO.

Slide above shows that they expect to go from 5% merchant services coverage (merchant adoption and consumer pref) to 8-9% by 2011.

Slide above shows segments they think about (this has been constant for last 5yrs which is helpful)  Interesting tidbit, that the growth rate seems to be slowing in sole/smb and ramping in large.

They want to go from 9% TPV to 13 by 2011 in the US and from 2, to 5-6% in International as illustrated above.

That would generate $4-5B in revenue by 2011 according to ST.

BML Intro

He went through some basics on BML and how it works.  Says it will be integrated 'later in the year' (come on guys, why so long?)

This one was interesting - shows the priority stack for BML - notice that 'Grow eBay GMV” is at the top - hooray!

Adjacent Payments

He spent some time talking about this nebulous concept about potential ways PP can be used in social networks, non-profits, etc.  Talked about opening the platform later this year.  Not sure this makes sense to me as they have tons of developer programs already (for example, we've been working with PP platform for close to 6yrs now). So not clear what if anything is new here?

SeekingAlpha Disclosure - long Amazon and google

Continued here:
eBay Analyst day - Part II PayPal by Scott Thompson