ChannelAdvisor Same Store Sales (SSS) for May 2011

Note: This is a monthly feature published by ChannelAdvisor highlighting the Same Store Sales (SSS) across our wide range of over 3000 retailers and ~$3.5b in GMV.  Details on the SSS including methodology and schedule can be found in this post.  If you are interested in last month's (April 2011) results you can find them here.

Today we are releasing May data for Marketplaces (eBay/Amazon), Search and Comparison Shopping Engines (CSE) along with supplemental data.

May 2011 results

May continued the trend we saw in April - strength in the marketplace segment and a bit of a slow down in the other channels.

Here are the highlights:

• Amazon - Amazon came in at  84% y/y growth for May continuing the trend they exhibited in April and showing continued strong growth in Q2.
• eBay -  eBay had a very strong May, coming in at 12.6% up significantly from April's 10.9%, their fastest growth on record since we've been reporting SSS data and fourth straight month of increasing SSS trends. More thoughts on eBay later in the report.
• CSE - Comparison Shopping Engines continued to be hammered by Panda coming in at down 13.5%.  Details on that below.
• Search - Search also slowed again in May, coming in at 10.5%.  The interior numbers are provided below with some thoughts.
• Overall - Overall we see that e-commerce in May came in at 11.7%, up nicely into double digits. Increased fuel prices, rising inflation, UK austerity, etc. are macro pressures continue to weigh on e-commerce.  Also, in the last week we had a litany of bad consumer news that we'll have to wait to se impact June.

SSS Chart

The following chart details the SSS data for 2010 through May 2011: (click to enlarge)

 

Search Details

Search is soft primarily due to a slow down in clicks.  When clicks are flat y/y, the only other variable is conversion rate (CR). CR was up 5% y/y which drove orders up 5%.  On the CPC side, we saw costs rise 15% y/y to $.41 CPC on average.  Historically this is a common trend as we head into the summer seasonality.

One important note - frequently the SSS data is subject to movement from major software releases at ChannelAdvisor.  In March, we released our very popular (already with over 100 customers!) Inventory-Driven-Search search enhancement which is showing significant growth for our customers.

This technology causes signifant movement in three key search metrics:

• Clicks - by exploding out your keyword space into the long-tail, retailers will get many more clicks.
• CPC - Long-tail CPCs are generally in the high .20's CPC, about half of what you see here
• Conversions - Long-tail terms generally convert 50% better than head terms - in th 3-4% range.

When these three variables multiply out the impact is strong growth on the top-line paired with savings on the bottom line.  The impact of IDS won't show up in our SSS data for a year, but behind the scenes we are already seeing some strong growth there.

eBay Observations

Last month we talked about three factors driving eBay's unprecedented growth.  In May those trends continued and pushed eBay's SSS to > 12%. 

Here's an update on the three trends and we've added a new one to consider:

• Format stabilization - In May, Auctions had their first non-negative month, coming in at 0%. While that may not seem like a positive, historically, Auctions have created a significant drag on eBay's SSS growth with their own negative growth.  Now that they are a) neutral/flat/non-negative and b) smaller part of the mix anyway, they are significantly less of a drag.  Fixed-price has bumped up its growth to > 15% growth and is accelerating more than the overall SSS data, but has been muted by the auction format.
• P+A is STILL on fire - The eBay Motors parts and accessories business is doing very well and we have a lot of business there at ChannelAdvisor.  Last month I reported this segment was up > 15% y/y.  Here in May, we saw a material acceleration up to > 25% y/y SSS growth.  We attribute a lot of this to two factors: 1) As part of their vertical strategy, eBay has implemented a very strong buying experience for P+A including fitment and a snazzy parts finder 2) the eBay motors team is aggressive at recruiting and offering deals to large P+A merchants which are really growing rapidly.  This is a category that eBay has little to no competition in and appears to be running away with it with little to no competition from Amazon.
• Large merchants - Large merchants are doing very well on the eBay platform.  They are able to put significant amounts of inventory up and are enjoying more and more exposure on the platform.  Today it's largely through the Deal of the day platform and in the future eBay has messaged clearly they want more an experience in the US similar to the outlet mall they have in the UK.  I the UK they started with fashion and I suspect they will follow that same gameplan in the US.
• Refurbished/recycled products - Outside of the large merchants, some of May's fastest growers on a SSS basis are in the consumer electronics recycling area.  These are companies that power trade-in programs where they offer cash for last year's electronics and then triage them and sell them on eBay.  This category was depressed for a while due to eBay's eTRS and DSR changes which make it very tough for them.  The survivors have turned into thrivers.  It's hard to tell if this is due primarily to the lack of competition left or to an increase in demand, but we'll keep an eye on the trend as it definitely on the rise.

CSE Observations

 We'll be going into this in gorry detail on Thursday's webinar, so stay tuned for more thoughts on CSE, Google Product Search and Panda - suffice it to say there's a lot going on there.  I think the headline is that CSEs face headwinds, but they are adapting quickly and by holiday you'll see them bounce back.

 SeekingAlpha disclosure: I am long Google and Amazon.  eBay is an investor in ChannelAdvisor where I am CEO.