eBay Q309 earnings call "cautiously optimistic"

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“These are strong results from a strong company which is getting stronger,” said John Donahoe, eBay’s CEO, at the beginning of tonight’s Q3 earnings call, adding that the company is “executing well” the three year strategy that plans to have them back in real profits by 2011. He might have been upbeat but Wall Street was disappointed, and eBay’s shares fell in late trading, apparently in disappointment at pessimism towards the all-important fourth quarter: “we’re cautiously optimistic about consumer spending going into the holiday season,” JD said.

For sellers, the news was generally not bad, though frankly nothing to set the world on fire. Marketplaces revenues fell 1% in comparison to the same quarter last year, but rose 9% on Q2 09. GMV was up 10% on the same quarter last year, and sold items increased 30%: we’re selling more, albeit at lower average prices. eBay’s take rate (the percentage of the average transaction which goes in fees) has fallen and is expected to continue to fall due to fee restructuring which has taken place throughout 2009.

Some numbers:

  • Fixed price sales now represent 56% of eBay sales, up from 46% a year ago. There is considerable variation though between categories, with collectables predictably strong still for auction sales.
  • Around 30% of listings offer free shipping: this has stabilised even though the fee incentive for sellers has now been removed.
  • US Top Sellers see their sales increasing by an average of 15%, way ahead of ecommerce generally.

For the future, US holiday marketing will be an integrated mix of online and offline advertising: free shipping will not be emphasised during this campaign. JD sounded close to enthusiastic about eBay’s plans here, so I can’t wait to see what holiday fun eBay has in store for us.

Predictably though, PayPal and now Bill Me Later are the stars in eBay’s heaven, now supplying 66% of eBay’s profits globally (from 60% last year). Total payment volume (i.e. how much money they processed) is up 35%. Next year will see an integrated product with BML a part of PayPal’s normal payment processing offering, so merchants will only have to integrate one gateway to benefit from both payment methods.

There are also a couple of cheering signs that eBay are dragging their site in the twenty-first century. Expect to see catalogue data in more categories. For those categories which don’t naturally have manufacturer data (e.g. cameras or DVDs), user generated tagging might serve a similar purpose. There’s also a diamond ring builder being trialled on site: were I a Freudian, I’d wonder why JD took about three goes to get his words out about that. But there was still no mention of a shopping cart.



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