EcommerceBytes-NewsFlash, Number 2656 - October 20, 2011     1 of 3

eBay Marketplaces GMV up 11 Percent while Auctions Lag

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Wall Street Journal reporters said eBay's 32% revenue growth in the third quarter suggested signs of a comeback and endorsed its strategy. "Since (2009), eBay has revamped its marketplace website to reduce clutter and improve search results," wrote Stu Woo and John Letzing. "The company also changed policies to encourage merchants to sell new items instantly - something that consumers increasingly prefer - rather than to peddle used products via the auction model," they wrote on Wednesday.

But the 32% rise in revenue to $3 billion, which the Journal called eBay's biggest year-over-year percentage gain since early 2006, was actually a 23% gain in an apples-to-apples comparison. That's because GSI Commerce, which eBay acquired in June for over $2.4 billion, added $203 million to eBay's third-quarter revenue that was absent in Q3 of 2010. GSI Commerce powers the websites of large brands and is unrelated to Marketplaces GMV, though there are potential synergies going forward.

In fact, the Marketplaces business that the Journal says shows signs of a comeback grew GMV 16% excluding vehicles, or 11% FX-neutral, and it grew revenue 17%, or 12% FX-neutral. The rest of the gains were due to PayPal, which grew revenue by 32% and accounted for 37% of eBay's Q3 revenue.

eBay sellers are also wondering how much of the increase in eBay Marketplaces revenue came from fees they must now pay eBay on the shipping and handling costs they charge customers. eBay does not break down its Marketplaces revenue by type of fee.

However, eBay does break down Marketplaces GMV by geography and listing format:

  • U.S. non-vehicle GMV grew 14% while international non-vehicle GMV grew 10% FX neutral. Total non-vehicle GMV was 16%, or 11% FX neutral.

  • International GMV excluding vehicles increased 18% year over year to $9.1 billion, reflecting solid growth in Europe, continued improved performance in Korea, as well as a positive impact from foreign exchange. The growth was 10% FX neutral.

  • eBay CEO John Donahoe revealed during a conference call with analysts that cross-border trade out of China grew 29% in the third quarter.

  • Fixed-price GMV grew 16% FX neutral, while auction GMV grew 3% and vehicles GMV was down 4%.

  • Fixed-price listings accounted for 60% of GMV for the quarter, auction listings 27%, and vehicles 13%.

eBay also said Marketplaces grew its number of global active users 6% year-over-year to 98.7 million. PayPal grew its number of active registered accounts 14% to 103 million.

PayPal revenue increased 32% year over year driven primarily by increased penetration on eBay as well as continued merchant and consumer adoption. Its net total payment volume (TPV) grew 31% to $29.3 billion in the third quarter of 2011 compared to the same period of last year.

GSI generated $608 million in global ecommerce merchandise sales during the quarter. GMS was up 18% on a comp store basis.

Wall Street analyst Mark Mahaney of Citi wrote of eBay Marketplaces results, "Overall, seems like Marketplace U.S. acceleration phase has ended, but growth is still very solid, especially at this valuation." He also noted eBay reported the highest growth rate in active users since 2008 that eBay attributed to U.S., UK, and Australia markets.

eBay's third quarter net income was $490.5 million, a 14% increase year over year. In the press release announcing eBay's third quarter earnings, CEO John Donahoe said, "We are focused on enabling commerce, helping consumers shop anytime, anywhere, and being the commerce partner of choice for retailers of all sizes."

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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 ina@ecommercebytes.com.


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