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January 17, 2013

Peeling the onion on eBay's 2012 Q4 Results (from a seller's perspective)

Yesterday, January 16, 2013, eBay announced their 2012 Q4 results.  Long-time readers know the drill, but if you are new, we always take the results and parse through them focusing on a) the marketplace part of the business and b) those metrics that we feel are meaningful and actionable for sellers and retailers.

Overview of eBay's Q4 results

Several years ago eBay said at an analyst meeting that they were going to turn around the then struggling marketplace business.  They outlined the plan in three parts: 

  1. Improve a bunch of core things that were broken (trust, selection, search, etc.)
  2. Get the growth in-line with e-commerce
  3. Grow faster than e-commerce

At the time, it wasn't clear they could hit the second goal and the third felt pretty audacious (everyone at eBay uses the BHAG lingo from Good to Great).

Well eBay's Q4 report showed the company has hit that goal.  The single biggest metric for me (ok well two) was GMV in the US increasing to 19%.  GMV to me is the best metric because unlike revenue or sold items, it is a true reflection of economic/e-commerce going through the platform.  The second metric I think is really impressive is active user growth.  This metric has wallowed in low single digits and even went negative for a bit in the deepest part of the turn-around.  For Q4, eBay announced that active user growth was 12% - the first double digit growth since before 2006 (as best I can figure).

In this post we'll go over the seller-oriented highlights from the release, the analyst presentation and conference call.

Updated Q4 dashboard:

Here are the key metrics from the quarter: (click to enlarge)

Ebay_q4_dashboard_complete

One interestng milestone hit this Q - the marketplace business had its first $2b revenue quarter.  I already mentioned US GMV growth and user growth.  International GMV was pretty strong at 14% y/y growth (ex-fx) given the EU focus eBay has non-domestically and the economic malaise they face over there.

 

Some other metrics of note from the conference call:

  • 59% of eBay's total GMV was non-domestic, 41% domestic (intl actually went down a point compared to Q3, driven by the US super-sized growth)
  • The CSA category was on fire (see below for detailed analysis)
  • Fixed price is now 68% and grew 21% (so Auctions are an anchor on growth, but as they bleed away, eBay's GMV should get up to that 21%)
  • Auctions grew a paltry 5% y/y - we continue to see sellers holding onto this format (100%) and hopefully these metrics are proving that is not a winning strategy on eBay
  • Top Rated Sellers (TRS or eTRS) were 42% of eBay's US GMV and their SSS was 20%.  So like auctions, as eBay bleeds off non-TRS sellers, the overall growth should rise to that 20% (higher actually as this is SSS not total GMV)

Mobile mobile mobile mobile

Some of the most interesting metrics were around mobile:

  • eBay's GMV from mobile was $13b - representing 120% y/y growth (more than doubling folks!)
  • Paypal TPV (Transaction payment volume) from mobile was $14b
  • (note - I can never understand the overlap between these two metrics - most of eBay's GMV is paid with PayPal and I assume that is included, so I think they are saying the non-eBay mobile payments that went through PayPal are $1b?)  If someone knows the answer to that one, shoot me a note or let us know in comments.

The most interesting mobile metric they released (I believe this was a new metric for this Q) was that mobile drove 4.2m new users in 2012.  Active users increased 9.9m, so mobile essentially drove about half of that growth.  They said on the call the rest was from deactivated customers re-activating and new geos.  You can really see from that metric that mobile is a significant factor in the eBay acceleration.

eBay vs. e-commerce

This chart illustrates how far eBay has come since 2008.  The red line is US e-commerce growth (as reported by comscore) and the darker blue line is eBay's US GMV growth rate.  You can see that they lines 'crossed' meaningfully for the first time in Q312 and Q4 accelerates the trend.  The other data points are 'interior' numbers that eBay reports such as top rated seller growth, FP growth, etc.  We omit auction growth, but it is 5% and has been hovering around that level for quite a while.

Ebay_q4_ecomm_growth.jpg

eBay Category Details

Unlike Amazon who is very closed with their category data, eBay releases detailed category metrics every quarter that we analyze for you.  Here is a chart that lists each category from largest to smallest indexed by their Q4 2012 GMV.

Ebay_q4_cats_size

A couple of things to note in the above:

  • H+G is the first category to get up to a $11b run rate - Welcome to the $11B club!  If we assume half of this is US ($5.5b), then eBay's US H+G category (just this one category!) would be number 6 on the IR500 - bigger than Walmart.com's entire online sales which were listed as $4.9b in 2011.  
  • CSA had a HUGE surge - it was $1.8b in Q3 and grew to $2.4b in Q4 - I haven't seen that type of jump in an eBay category in a long time.  Anecdotally I think you had a perfect storm in this category:  CSA is popular on mobile (I just tried on a sweater and want to showroom it), CSA was big this holiday and eBay had some great editions in the large merchant program bringing on some solid premium brands to the category.
  • CE was strong for eBay as well.  That's good news as the category appeared under pressure the last couple of Q's.

The next chart looks at each category by their y/y growth rate (more relevant in our world than sequential Q->Q growth).  The green indicates the category grew faster than e-commerce (comscore reported Q4 at 14%), the yellow is in-line and the red is slower than e-commerce.

Ebay_q4_cats_growth_rate

Outperforming categories

  • Tickets - wow.  eBay is a couple Q's into their deeper stubhub integration and as a ticket buyer, I do like the new UX much better. Apparently I'm not alone!
  • CSA grew 22% y/y - a very strong showing.
  • The CE family of categories (CE @15%, cell phone @25% and computer @13% did very well.  On the cell phone side, we have seen an insatiable demand out there for refurb/used iPhone 4+s and eBay is the place to go for those.
  • B+I - we are seeing a huge sea change in how businesses buy.  Amazon has Amazon Supply and eBay has the B+I category - businesses like the consumer experience vs. the heavy b2b type experience and a sleeper category for eBay (meaning you don't hear any buzz about it, but it continues to outperform) is B+I - now at a $3.7b run-rate and growing at >20%.

In-line categories

  • Toys - I was a little surprised to see toys only grew 12% as we did see a lot of hot items (Furby, Skylander, Doc McStuffins) sell out early this year.  If anyone has any thoughts from that category, chime in on comments.  FYI, looking back a year toys were up the same amount from 2010->2011 and only 2% from 2009->2010, so it is in line with last year's performance.

Underperfoming categories

  • Musical instruments - Like Toys, I'm a bit surprised that MI didn't do better than e-commerce.  They are a popular gift and the site features a diverse selection.  If anyone has ideas on that one, please let us know your thoughts in comments.
  • BMV, video games, coins and stamps, vehicles are all categories that have historically be structurally challenged, so no surprises there. 

Conclusions

For Q4 2012, eBay came in with 19% y/y GMV growth in a 14% e-commerce growth environment, representing its largest growth rate in the Donahoe era.  Accelerating metrics around mobile, active users and fp/trs growth suggest this is not a one time event and that eBay is teeing up to continue to outperform in 2013.

eBay also has 5 > $1b annual run rate categories growing substantially faster than e-commerce .  We continue to be big believers that retailers around the globe should definitely consider eBay as a channel going forward and Q4 2012 has really put an exclamation on that sentence. (!)

Up next, we'll be reporting on Amazon's Q4 which they release on January 29th. Stay tuned to sister site AmazonStrategies for a preview and similar analysis of how they performed.

Scot Wingo wrote this blog post. I am CEO of ChannelAdvisor where eBay is an investor.

 

 

 

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