eBay Q1 results and conf call thoughts...

eBay's Q1 results were out this evening and the company hosted a conference call with analysts to answer their questions.

Note that the PayPal and Skype businesses are doing very well, the focus on this post is the marketplace business.

The most interesting part of the day was the verbal comments of the call.

• JD talked about the changes to fees and BestMatch and how the early indications are that they are working.  Specifically he said that listings are up, conversions are holding/down slightly, completed transactions are up and thus GMV is up.
• In the Q+A they said they are focused less on getting new buyers, but more on generating more gmv/existing active user.
• They also talked a good bit about couponing whenever they see active buyers slow down or start to leave to keep them.

The bullish comments were not really supported by the Q1 marketplace data:

• While GMV grew 12% y/y, when you peel the onion, there were some negatives.
  
  • GMV Q/Q was down 1%
  • The US marketplace business grew at 7% y/y
  • The international marketplace business grew at 8% y/y when you take out the benefit of foreign exchange (FX).  I'll have to check, but I think this is a material deceleration on the International business.
  • Remember that e-commerce is growing at 17-20% y/y in the US and even faster Internationally so this indicates that eBay is losing share overall (it will be interesting to see what Amazon reports).

Active users came in at a paltry 83.9m.  You can see the active user trend in this chart:

More telling is the y/y growth expressed as a %:

Over the course of the year it's going to be interesting to see if eBay can get the GMV to grow (using the existing active buyers) and then from there see if they can accelerate the active buyer growth again.

Comments

[An enterprise seller]

What does ebay expect?
Pigs get fat. Hogs get slaughtered.

He lies to sellers and says “ebay is reducing its listing fees” - when they are really increasing them. Does JD honestly believe we are all stupid and can’t do the math?

Fees we paid ebay climbed by 11.5% in the month after the new fees took effect (which means $13,000 a month more in fees on top of the $120,000 a month we already paid). As a seller, we are doing everything we can to move our products to other marketplaces that cost less to list and get higher final value prices, like our own Website, Amazon, Overstock, Ubid.com, and others.

JD lies to sellers when he says we can earn discounts back. How can we do this? He says we (sellers) should reduce our shipping charges to ZERO so bidders feel like they got a great deal on shipping and then we can have better shipping DSR’s (detailed seller ratings). Our shipping charges are over $500,000 a month – so JD says we should give that away?

In what looks like a desperate grab for loyalty, eBay is telling all sellers they must not offer any other Payment option (ie Google) on their checkout pages. Is this eBay’s way of acting like the desperate housewife trying to use an ultimatum to keep her wandering husband for going elsewhere for satisfaction?

eBay customer service has all but dried up completely. Calling a TSAM (Top seller Account Manager) results in hold times of “forever”, and when your TSR is taking a vacation – good luck trying to talk to anyone else.

eBay is no longer a place for serious sellers to grow their businesses. Most serious sellers are taking their best products and selling them anywhere else they can, and using eBay as the dumping ground for the stuff they can’t sell anywhere else.

If eBay is serious about getting back to being the world’s best marketplace, then they need to get back in touch with what people want.

A marketplace that is not GREEDY.

[BMX]

The numbers don't lie!

I was looking for a 'verizon' cell phone for my friend today. I found a few, but honestly it was somewhat tedious to search ebay. I don't really shop much on ebay, I normally stick to selling.

I like to consdier myself a savvy user and even I have my reservations about buying.

If I had trouble, imagine the buyers who are just getting started with a computer.

Feedback, stars, and shipping won't help that. I hear finding is being worked on but I don't see any swift and material changes to be honest.

Another intersting comment is JD said that shipping prices are down 1% on ebay since the DSR thing was implemented. You can bet the next lever he pulls is to make the shipping price factor in BM be a much heavier one than it is today forcing sellers to eat the shipping cost or lose exposure. Of course ebay will fumble this one around like a greased pig because you are comparing non-similar sku's and thus punish sellers who sell heavier items and I doubt they have any idea on how to implement this properly. Collectible and vintage items are often unique in nature and require different additional expenses to ensure safe delivery. Video game categories are littered with accessories however their are consoles mixed in there which weigh alot more, how will that be handled?

(UPS doesn't ship for free kids, amazon gets a huge discount that you will never be able to achieve).

I usually get excited when ebay starts their rah rah conference calls but this is the first one that I heard nothing that made me happy.

All I heard was:

1. We made a ton of money, profits are up...
2. We are going to improve the buyer experience more by making it harder by squeezing you sellers that are left.

My rebuttal questions would be:

1. How much of that growth in profit was fueled by the ridiculous raise in FVF and rise in e-check rates by tricking buyers and forcing them to use e-checks which is NOT good for the buyer experience??
2. Media discounts helped some but they weren't really a factor as even with the discounts, the raises in FVF more than trumped them, how did this really help media sellers?
3. JD who is going to be around to sell to all your new buyers in a year from now? If sellers can't make money they will stop or go bankrupt. Pure and simple. We don't have the deep pockets ebay has or do you think we do?

[Bob Dobolina]

Ebay's concerns about static revenue is reflected in their bald-faced attempt to restrict sellers to only accepting Paypal or pick-up - their spin is for security purposes. Anyone older than 5 years can see through that one.