EcommerceBytes-NewsFlash, Number 2591 - July 21, 2011     1 of 7

eBay Revenue up 25% as It Eyes the Offline Payments World

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eBay believes it can bring its PayPal payment method to cash registers in the offline world. After reporting second-quarter revenue growth of 25% to $2.8 billion, eBay CEO John Donahoe told analysts on Wednesday that there is a blending of online and offline into a new global commerce landscape.

Donahoe said in the new retail world, physical stores will become just another point of access for shoppers, and he said PayPal would extend payment capability to point-of-sale in the offline world.

"By the end of this year we expect PayPal to be testing point-of-sale innovation with a major U.S. retailer, and during 2012, we expect to be rolling out new point-of-sale experiences with up to 20 national retailers." He also said that it would lead to material growth 3-5 years after that.

eBay's CEO also said the company would increase its marketing spend in the second half. It had been waiting to improve its user experience before marketing to new customers. eBay will use the advertising to try to raise the visibility of its brand and to engage its buyers.

"You'll see us on TV in late Q3 and Q4 in the U.S.," and he said the message would emphasize the brand and would target inactive users to "come back and try eBay again."

Marketplace Revenue
eBay Marketplaces total revenue for the second quarter was up 19% year-over-year (or 12% foreign-exchange neutral) to $1.66 billion. This includes Marketplaces transaction revenue, which was up 14% to 1.35 billion, and "Marketing Services & Other," which was up 45% to $314 million.

The latter is what eBay refers to as its Marketplaces adjacent formats and is comprised of Advertising, Classifieds, Shopping.com, Rent.com and Brands4Friends, a German private sale marketplace, which added 22 points to FX-neutral Y/Y growth.

"Marketing Services & Other" accounted for 19% of Marketplaces revenue (compared to 15% in the second quarter, 2010).

eBay said 59% of its Marketplaces revenue was international.

Marketplace GMV
Total Marketplaces GMV was $16.9 billion. Broken down by format:

  • Fixed Price GMV FX-neutral was up 15% year-over-year to $9.8 billion and comprised 58% of total GMV;
  • Auction GMV FX-neutral was up 2% year-over-year to $4.9 billion and comprised 29% of total GMV;
  • Vehicles GMV FX-neutral was down 3% year-over-year to $2.2 billion and comprised 13% of total GMV.

US non-vehicle GMV was up 14% year-over-year to $5.49 billion, international non-vehicle GMV was up 8% FX-neutral to $9.19 billion.

PayPal and GSI
PayPal's total payment volume increased to $28.7 billion, up 34%; $9.8 billion was generated on eBay (where for the most part, merchants are required to offer it as a payment method), and $18.86 was generated through Merchant Services (incudes TPF for Bill Me Later). Total payments revenue was $1.073 billion, representing growth of 31%.

eBay is now reporting GSI as the third segment in financial results. The GSI segment contributed $23.8 million to revenue for the period from June 17 - 30, 2011.

eBay said there were five GSI merchants on eBay, and 56 use PayPal - "the pipeline is building," the company said.

Additional Q2-2011 Notes of Interest
The number of global active users for Marketplaces was up 6% to 97.2 million driven by UK, U.S. and Australia. eBay said the growth in non-vehicles GMV in the U.S. was due to improvements in search, ASP increases, and stronger performance in consumer selling.

Donahoe said eBay's shopping cart is available and completely developed. "It's now roughly in about 10% in the UK and 2% - 5% in the U.S. and we are rolling it out carefully because it turns out that while some consumers like the cart where we can cross-merchandise, other consumers like buying directly from the product page."

  • eBay is testing a local shopping tab in search results.
  • "We've improved our financial flexibility by funding over one-third of the U.S. BML loan receivables portfolio with our offshore cash," according to eBay CFO Bob Swan.
  • BML penetration in the U.S. has quadrupled in the past year to nearly 1 percent in the second quarter, reducing its funding costs as consumers shift away from credit cards to BML.

Donahoe and Swan referenced its 3-year plan that it outlined during analyst day in February, and during the call, referenced its target of reaching $15 billion in revenue in 2013. Swan said eBay was pleased with its progress, and the company raised guidance.

Donahoe told analysts during the conference call, "We're playing offense."

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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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