Last night eBay held their quarterly conference call where they give investors a forecast of future business and the opportunity to ask questions on the state of the eBay business. It was no surprise that profits took a hit from writing off $900m from Skype a few weeks back. To balance that the StubHub business eBay acquired at the begining of the year is booming.
As ever PayPal is the engine behind eBay’s financial success in recent years with revenues up 35% on this time last year. PayPal is the most astute investment eBay have ever made both to enable transactions on eBay and as a burgeoning off eBay business.
What is surprising is that for the last two conference calls there has been no mention of eBay Express! Meg Whitman last mentioned it in January stating “eBay Express continues to experience increased adoption and growing success”. That growing success now appears either to have stalled or simply not worth mentioning. It’s certainly not the focus for investors as a vibrant part of the eBay business portfolio.
What may not please sellers on eBay.com is an expected drop in average selling prices over the next few weeks, however welcome that may be to buyers. Talking about the three week 33% reduction in selling fees Meg said “we expect listings to increase; we except successful items to increase; we anticipate perhaps ASPs will go down”.
It’s an interesting experiment and one that eBay have never tried before, will a significant decrease in listing fees trigger an increase in listings to balance eBay’s finances? Will sellers list in greater volumes and will that drive down prices, but in turn if that increase sell through rates could sellers overall profits increase even if at lower margin per sale? Will it cause a significant shift from Shop Inventory Format to auction and BIN listing formats? eBay themselves are unsure of the impact but “were very much in favor of saying let’s see what happens when we take a pretty significant sustained decrease in insertion fee in our largest market.”
There’s may be something for UK sellers to look forward to. Meg did say “You’ll also see many of our markets around the world launch similar tests this quarter” so massive price decreases just might appear in the UK before Christmas 😀