eBay Analyst Day 2011: Planting Seeds for the Future
By Ina Steiner
While it was called eBay Analyst Day, PayPal took center stage at eBay Inc.'s event for analysts on Thursday. PayPal President Scott Thompson outlined the enormous opportunity for PayPal, and why he believed competitors could not touch them. Other PayPal managers said PayPal is only "just scratching the surface," and talked about "new seeds for the future."
PayPal is not content to simply grow its share of ecommerce, it is looking at other opportunities as well:
- Digital goods ($20 billion market and will grow exponentially);
- Mobile ($180 billion market, poised to explode);
- Consumer credit ($5 trillion);
- Point of Sale (offline) in the global retail market ($8 trillion).
Compare those trillion-dollar markets with the $500 billion-dollar opportunity eBay outlined 2 years ago at its last Analyst Day, and you get a sense of the confidence eBay and PayPal executives exuded. This was a very different Analyst Day than in 2009, when eBay was on the defensive about its lagging Marketplaces business and Skype, which it has since spun off.
Chief Financial Officer Bob Swan said, "Now we see the crystal ball full of opportunities. We have unmatched competitive advantages that position us to win."
eBay as a Technology Company
eBay would have you believe it is a technology company, and its Chief Technology Officer got as much airtime at Analyst Day as its Chief Financial Officer. CTO Mark Carges said analysts want to know if eBay Marketplaces has fixed its search functionality and improved the user experience. He said it had done both ("Two years from now, search will be a competitive advantage for eBay"), and outlined his priorities: search, catalog, the user experience, and platform.
"Platform is the reason why eBay can build tailored shopping experiences over devices including mobile."
Carges shared eBay's vision of what shopping will look like, and pitched eBay as being positioned to take advantage with the eBay Marketplaces catalog and image technology, PayPal, and "seed" business (Milo, Critical Path, Red Laser, and its investments in Appcelerator and Magento). "The synergies across our businesses are clear," he said.
When talking about the eBay Marketplaces business, the phrase, "we've done what we said we were going to do" was stated several times, and Donahoe reminded analysts those tasks were to fix the foundation, focus where eBay can win (in the Secondary Markets), and grow complementary formats.
Chris Payne, VP of eBay Marketplaces North America, addressed the changes made in North America last March, and he said the focus on customers has driven a better eBay experience for both buyer and seller.
UK is eBay's most successful market, and Douglas McCallum, Senior Vice President of eBay Marketplaces Europe, said the five components of its strategy there (Trust; Product selection; Tailored shopping experience; "Engaging customers" marketing approach; and Innovation) was working.
PayPal and Credit Products
PayPal owns financing service Bill Me Later, but it sounds like eBay has additional ideas in the consumer credit space ("the next step is to create a better credit market"). The only hint of what that might mean came from PayPal Vice President of Global Product and Experience Sam Shrauger. He said PayPal would allow consumers to log into their PayPal wallet and change the funding source so that, for example, the consumer could direct PayPal to take out three monthly payments from their savings accounts to pay for a transaction. That's not how Bill Me Later works now, and he said, "First PayPal changed the way that we pay, next, we're going to allow you to change the way that you paid."
eBay also gave guidance, projecting double-digit annual revenue and earnings growth for 2011-2013 for its global PayPal and eBay Marketplaces businesses, with revenues expected to reach at least $13 billion in 2013 compared to approximately $9 billion in 2010.
Wall Street analyst Mark Mahaney of Citi summed up Analyst Day, with a subtitle for PayPal reading, "A Relatively Bullish Outlook For Payments Segment" (he called it "a great growth asset"), and for eBay, "A Relatively Muted Outlook For the Marketplace Segment" (calling it "a solid but not stellar asset").
"There were no more sweeping statements about eBay's ability to outpace eCommerce," Mahaney wrote, "which we view as an honest self-assessment. There was a detailed overview of the many Search, UI & functionality improvements that eBay has launched in the Marketplace and a commitment to a revamped advertising campaign in H2:11."
See related article, eBay Analyst Day News for Sellers
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About the author:
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to email@example.com.
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