eBay’s chief executive told Wall Street analysts on Wednesday that third-quarter growth of its Marketplaces business was not what he wanted, and not what he expected. eBay Marketplaces GMV (gross merchandise volume) grew only 7% in the third quarter compared to the same period a year ago.
Global fixed price listings grew 15% while auctions were down 7%.
CEO John Donahoe and Chief Financial Officer Bob Swan blamed this year’s Cyber Attack and Google SEO changes for the disappointing growth.
Swan revealed that eBay users were having problems resetting their passwords after eBay required they be reset after the hacking incident. “We’re making adjustments to the login process and increasing customer service to address the pain points.”
Analysts asked many questions about the impact of Google’s SEO changes on eBay’s traffic.
Donahoe said eBay continues to be blessed with the majority of its traffic being organic. “SEO is a relatively small portion of our traffic, but it’s a portion that’s important, and in particular, it brought us new users.”
One analyst said there were estimates that SEO represents 15% to 20% of eBay’s traffic.
Donahoe replied, “I’m not going to say how much our SEO traffic was, but it’s certainly less than what you said as a portion of our traffic.”
Big Changes ahead?
Donahoe said eBay’s dilemma in the SEO world was that it had the world’s largest collection of unstructured data – 800 million listings – that tend to turnover every 14 days, which makes it a challenge for search engines to index eBay inventory.
He said Google made a change in May that had a significant negative impact on eBay SEO traffic. This is not the first time eBay has been impacted by search engine changes, he said.
Donahoe indicated eBay was working on a solution to put listings in a form and format that offered more sustainability – but it will take a little longer to do, and was a more manual process. “It’s not going to pop back up in the next one, two or three quarters. It’ll come up a little bit at a time as we index more and more of that inventory back in.” He also said he didn’t like the volatility of SEO.
It’s not clear what the CEO meant by putting listings in a new format or whether sellers would be impacted by eBay’s efforts to optimize listings for the search engines.
Significant Marketing Spend in Q4
One analyst asked why eBay wasn’t being much more aggressive to get people re-engaged on eBay marketplaces. Swan replied that eBay was anticipating a fairly significant spend in marketing in the fourth quarter, including working on PayPal brand awareness.
Donahoe said the new global brand campaign that includes television ads and kicked off on Monday was the largest brand campaign since ’08 or ’09.
Among the questions analysts asked the two chief executives were issues relating to the upcoming breakup of eBay and PayPal; Apple’s online payment service Apple Pay; margins; competition from Amazon and Google; NFC; the tax implications of a post-spinoff acquisition of eBay or PayPal; and cross-border trade.
Q3 Earnings Report
eBay’s revenue for the third quarter ended September 30, 2014 increased 12% year-over-year to $4.4 billion.
eBay Inc.’s company-wide cross-border trade grew 27%.
PayPal net total payment volume (TPV) grew 29% with Merchant Services volume up 37% and on-eBay volume up 9%. Revenue grew to $2.0 billion. PayPal gained 4.4 million new active registered accounts to end the quarter at 157 million, up 14%. Global on-eBay penetration increased to 80.5%. Mobile payment volume grew 72% to $12 billion, representing 20% of TPV. Active accounts acquired on mobile were 2.9 million. Newly rebranded PayPal Credit grew 29%.
eBay Marketplaces gross merchandise volume (GMV) grew 9%, with the U.S. up 7% and international up 11%. Revenue grew to $2.2 billion. Marketplaces gained 3.4 million new buyers to end the quarter with 152 million active buyers, up 13%.
Complete financials were reported in eBay’s press release
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