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.