eBay Analyst Day: Scot Wingo talks to Tamebay

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Scot Wingo is the CEO of ChannelAdvisor and a veteran ‘eBay watcher’. He was ‘in the room’ for eBay’s presentations in San Jose yesterday. Happily, he’s agreed to answer some questions. (Don’t forget, you can meet Scot at the ChannelAdvisor Catalyst event later in the month)

Q: We’ve heard a lot of what eBay executives presented today before, haven’t we? Was there anything new?

A: There was some new boldness around PayPal.  On the eBay marketplace side, the items I noted as new were:

– eBay guaranteeing transactions – there were no details, but it’s an interesting idea and could help with trust on the site.

– Secondary market – eBay rolled out some new terminology that I thought was uniquely eBay (or in other words, I’ve never heard anywhere before).  In this secondary market, see the picture, they pointed out the huge liquidation market they can get to now.  Well, most people just call it end of life or liquidation so it’s interesting they came up with a fancy new name for this.  Also on this chart, it wasn’t said, but I’m left wondering what the big grey bubble is.  Is that Amazon?  Did they really intend for the Amazon bubble to be bigger than their two bubbles combined?
Q: As a veteran eBay watcher, what are your most significant impressions of the day?

A: They are clearly moving PayPal from the back burner to the front burner and even called it their ‘second core’ business, which is an oxymoron of course.  It’s pretty easy to see that the company could very easily transition from a portfolio of companies, to the PayPal company that happens to have a declining marketplace and a telecomm software as pieces that hang on.

The eBay marketplace side was disappointing as they didn’t sign up for a big number there and basically capitulated that they will be down in 09, flat in 10 and up in 11.  This business unit does $5b today in revenue and they said it will do $5-7b in 2011.  The low end of that range is pretty scary if you are an eBay seller.  In essence, eBay could very well be a flat channel over the next three years.  Even at the high end of the range, the growth over that period will be materially slower than ecommerce so the message to diversify couldn’t be clearer to me.

While I hope they are successful, I don’t think the changes they highlighted today to the marketplaces business are near fast enough and drastic enough to turn things around.  If I were Amazon and watched that today, I would have been cheering that I had three more years before my competitor got really serious about competing.

The one bright spot in the day was the technology talk given by Mark Carges, the new CTO.

Q: You saw eBay’s top talent in action today, are you confident that they’re a team that can successfully lead a company that so many people in the US and Europe depend on?

A: I think the folks that presented are all smart, capable leaders.  I’m not in the ‘Fire Donahoe’ camp, for example. I worry when I remember that eBay has 13,000 employees.  When I talk to employees at eBay, there are so many layers between the folks at analyst day and the folks at the bottom of the org chart and the messages we heard today don’t make it out to the troops and don’t get executed the way the top folks would like. That’s why I think eBay probably needs some kind of cultural change to really shake things up and enable them to execute faster.

Q: The presentation seemed to be quite ‘US-centric’, is there anything in particular that professional eBay sellers on this side of the pond should be latching on to?

A: I noticed a couple of international datapoints of interest.

– They talked about no listing fees for c2c sellers.

– They showed the PayPal penetration rate in the UK as being second only to North America.

– They are showing advertising growing 2X from 08-11, I’ve been watching eBay.co.uk and you guys look to be enjoying some really vibrant advertising over there. I can’t decide if I like the 2 banners on the front page or the 3-5 sponsored listings BEFORE the eBay listings.

Q: How favourably do you think the Wall St. analysts present received the information?

A: Wall St. analysts tend to be in three camps:

– Perma-bulls – always positive on a company, they will find datapoints that support their case. Most likely they will highlight PayPal, and look at the value of the company’s different pieces to show that it is undervalued even if you assume marketplaces is a train wreck.

– Perma-bears – always negative – there were plenty of datapoints to support a bearish case.

– Middle of the road – Let’s face it with the stock at an 8yr low, it’s not too risky to recommend the stock.  There’s more probability that it will go up than down right now.  So I think you’ll see this camp seriously think about an upgrade here and they will use management’s guidance to support it.  The trick eBay will face here is that if they can’t executed on the growth rates they put out there today – and I think they are actually pretty aggressive given what we’re seeing out there – then the management team could really be on the hook (read: sacked) if they don’t deliver.

7 Responses

  1. Yep, good points on ebay predicting 3 years out quite happily, but no ideas on the next year or

    so, and analysts’ concerns with actual execution. You’d think that good management could have grown the company while transforming it, instead they’ve managed to build up a negative branding to die for. Folks now, far from being loyal, want ebay to fail – takes real genius to create that.

    PAYPAL is the one bright spot in Ebay’s self generated panoply of disasters, but I’m pretty sure PAYPAL has done so well because Donahoe and company have been focussing on ruining Ebay – that jobs pretty well completed now, so onto other areas! Great! The black thumbs have arrived – I suspect we’ll see a ton of well-meant but misguided decisions on PAYPAL and it’ll join EBAY in its dive. No number of colorful PowerPoint ballons will be able to keep it up.

  2. Spot on, Scot (and Dan).

    I don’t think the changes they highlighted today to the marketplaces business are near fast enough and drastic enough to turn things around
    Totally agree.

  3. Now that they see Ebay as a bit player in Ebay Inc perhaps they will desist from making the continous changes that were made in the course of the past 18 months.

    Wonder how long before they rename it Paypal Inc.

  4. well seen some interesting articles today,
    it looks a bit like on one hand that ebay are turning their back on the small sellers and opting to favour the big boys,

    The Diamond powersellers (the big companies selling liquidation, end of line products) will be trading on or through ebay will get priority in the search results so ebay’s level playing field will no longer exsist.

    the small hobbyist sellers helped make ebay what it is today will be slowly pushed off the site due to dwindling sales / visibility caused by the diamond powersellers increased exposure,
    but remember a lot of these sellers are also buyers, if they are forced off the site they won’t shop there either.

    The search will continue to change with possibly being based on an amazon type catalogue and buyers will be able to choose the results from clasifieds, hand vetted trusted sellers, local sellers, or from the so called Secondary market.
    anything with a UPC, EAN code can be listed on the site, I’m not sure about non barcoded items whether they could be listed.

    To me the whole process ebay will have for searching is just to complicated, 50% of ebay users haven’t got much of a clue about searching and fine tuning their searches. they simply want to enter keywords and check out the listings,
    unfortunately looking at the way ebay are heading the search is going to be more complicated than ever with numerous amounts of button pressing to display the results a user wants.

    personally i think the rate at which ebay are self destructing the site could become nothing more than a glorified shopping portal / comparisson website within the next 5 years.


  5. Summed up nicely
    “Several analysts noted that at current valuation levels the stock largely reflects the value of PayPal, Skype (which many think is available for sale at the right price) and the company’s cash position, and effectively puts zero value on the core business”

  6. I believe, after a short period, there’ll be a boost in other sell-platform and individule B2C websites.



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