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Wed July 18 2007 21:47:58

eBay Listings Down, GMV, Revenues Up in Marketplaces

By: Ina Steiner

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This is a follow-up to my previous blog post. eBay explained the fact that listings are down yet GMV is up in its Marketplaces business during its analyst conference call on Wednesday afternoon. eBay did not attribute the listings decline to China, rather, it said that globally, across the board, listings declined 6 percent year-over-year. The explanation can be found on slide #8 shown in the investor call, which should remain available online for at least a few days.

In the second quarter 2006, listings were up 35% year-over-year to 596 million; in the second quarter 2007, listings were down 6% year-over-year to 559 million. In Q2-2007, the US accounted for an 8% decline, international accounted for a 5% decline.

The 6 percent decline in total listings is broken down as follows: a 2 percent decline in Core, and a 25 percent decline in Store listings. When eBay raised Store fees last summer, it said it wanted sellers to shift listings from Store to Core, so the decline in Store listings is not a surprise. But the 2 percent decline in Core indicates sellers did not rush to list on Core.

eBay's own Trust & Safety initiatives may have contributed to some of the decline in listings: its anti-counterfeiting initiative; cross-border trading restrictions; and the crackdown on lowest 2% (1%?) of sellers, all reduced the ability of sellers to list on the site.  

What's interesting is that eBay said ASP and conversion rates are improved. In some ways, this makes sense: in a supply and demand marketplace, less supply with the same amount of demand usually means higher prices. But I'm not hearing sellers crowing about great ASPs and conversion rates. (And, after all, how much could iPhone sales have contributed to higher average selling prices?)

Bob Swan said, "The gap between listings growth and GMV growth is driven primarily by improved core Average Selling Prices and conversion rates. FX drove the remaining 3 points to total GMV growth of 12%." Note: FX is currency exchange rate.

On the slide, 4 of the 6 percent listing decline is attributed to "core vs. store inventory mix." The other two points are due to "core conversion rate and ASP." (Which is puzzling, can anyone figure out how improved core conversion rate and ASPs could contribute to a decline in listings?) "Core conversion rate and ASP" also contribute to the increase in GMV year-over year by about 9 percent (the logic does work going that way).  

Then regarding revenue growth, Swan said, "The gap between revenue growth and GMV growth is driven by several factors. First, continued strength in our non-GMV businesses, such as,, classifieds, and advertising, is contributing 4 points of growth."

Swan also cited the recently acquired StubHub tickets business, "which features a higher take rate than our eBay platform, as well as our joint ventures in China and Taiwan, where we're no longer recognizing local GMV, because we now hold a minority interest, drove 4 points in the difference."

Swan said the format of the vehicles business has been shifting. "While GMV for vehicles is slowing, we are monetizing this business through other platforms such as our classifieds business, and our local motors format,....These factors combine to account for 3 points of the gap between revenue and GMV growth. Pricing actions we've taken in the last 12 months drove the remaining 2 points of growth."

So as far as squeezing more revenue out of GMV business, this accounts for 2 percent of the difference between the 26 percent revenue growth and 12 percent GMV growth. (Removing the effect of the currency exchange rate brings GMV growth to 9 percent.)

Comments (11) | Permalink

Readers Comments

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by: Randy Smythe

Wed Jul 18 23:06:56 2007

Look for more acquisitions in the Non-GMV area in the next year or so. That appears to be where the growth is. They seem to just be treading water in the GMV area while Amazon is growing theirs. Maybe that's why Amazon's stock price is flying and eBay's dropped 1.5% after hours.

eBay is certainly more profitable than Amazon

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by: Michelle

Thu Jul 19 09:44:37 2007

Here's a possible solution your logic puzzle:
''The other two points are due to ''core conversion rate and ASP.'' (Which is puzzling, can anyone figure out how improved core conversion rate and ASPs could contribute to a decline in listings?)''  

Perhaps a higher conversion rate leads to a more efficient marketplace.

As conversion rates increase, the number of relisted items that failed to sell the first time will decrease.

If you sell 10 items at 100% success rate, you will have created 10 listings.  If the success rate is only 40%, and you relist the 6 items that did not sell, then you will have a total of 16 listings.  

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by: Violette

Thu Jul 19 15:04:24 2007

What exactly does the "lowest 2% of sellers" mean?  I've seen this term bandied about lately, but haven't seen a clear explanation of it.  Is it the lowest 2% by volume of sales?  By dollar value?  By rating?  And what kind of "crackdown" is occurring?  

As for the rest, Michelle is correct.  If there is more conversion, then there will be fewer relists.  Though I have to say, I'm seeing lower conversion and sale prices, not higher.

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by: Gobi

Thu Jul 19 21:07:07 2007

The article begins saying that eBay reported record CONSOLIDATED Q2 net revenues.
This is quite likely the result of eBay's poor performance being hidden amongst the higher performers.  PayPal may be contributing more and more to revenue outside of eBay.  That's just an example - the other eBay affiliates may be doing quite well.  I just can't believe that it's eBay on it's own.  It would be great if someone with the know how would look at the SEC 10Q filings to see what the "consolidated" company is comprised of and where the revenues really come from.

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by: trevor ginn

Sat Jul 21 12:47:44 2007

I think that is no surprise taht ASPs are up.  The reason for upping SIF fees is because they were becoming clogged with low price crap with low conversion rates.  Getting rid of this is naturally going to ASP overall

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by: Dean

Sun Jul 22 08:04:38 2007

I think the analysis on the comments is fair.  What I have noticed in our category  (just in the last 30 days) is that lead merchants in our categories have added Amazon as a channel.  Also, we have noticed the quality of the buyers to have changed for the worse. They are not reading anything before making a purchase. The relative number of questions that could be answered by reading the listing have gone up more than our business.  

What we have done in the last 30 days is to delist a significant number of <$9.99 listings from the auction / fixed format .  If you want something for less, go to the store.  We have heavily concentrated on listings that do not perform and are aggressively driving traffic to our integrated website through our auction management company.  
I still believe ebay to be the lowest customer acquisition cost we have.  The issue for us is their company polices, their ability to keep down the fraud risk, overall spam risks related to ebay cause of their size, and buyer quality.

In referring to the buyer quality I really believe this limits the size of the total order that can be achieved on ebay for our category.  I am sure some of our experiences are category related but these experienced contribute to our strategy reduce our ebay budget and look at other marketing programs.

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by: Sandy Scarce

Sun Jul 22 10:50:43 2007

As a store owner I used Fixed Price listings as advertisements to drive traffic to my Ebay store. Then Ebay began this organized drive to disadvantage store owners. It made it useless to list in core anymore. If Ebay is throwing everything they have to disadvantage me why am I hustling to sell on this site? So I withdrew my listings from core and my full business support from their site.
  Ebay added UK sellers onto the US site as a time traffic is already at an all time seasonal low. I needed more competition like another hole in my head. Ebay has altered search with changes that don't include store inventory. They routinely hide store inventory visibility on the site. They are advantaging Ebay Express over store listings- including the use of physically placing Express items above store on the search return format. Now add in the new wave of adwords ads that draws buyers off the site to competitors and it just no longer was financially feasible to list to core. You have to fight Ebay to sell on Ebay's site as a store owner.
  It became a strictly business decision. I pulled back from core. I also chose to show Ebay my displeasure and removed two thirds of my selling inventory from the site. I went from a peak of 1400 items to my current 500 listings. I left just enough inventory to effectively drive traffic to my new website. The bulk of the Ebay inventory will go into my newly opened Amazon webstore. I plan to compete against Ebay under the same selling platform to teach them a good lesson. I already sold on Amazon with good success with the Merchant program but Amazon just became my number one selling platform until my own website can surpass it with sales and revenue. First and foremost I am a business. If Ebay wants to play games I am removing my business from their site.    

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by: J.D.

Sun Jul 22 11:22:22 2007

I agree with Trevor.  Listings are down and GMV is up because Ebay's  increased listing fees for lower priced items (items under $25) have driven those sellers our of business.  These sellers have seen their profit margins decrease every year.  Add up all the expenses (such as Ebay listing fees, Ebay final value fees, Paypal fees, materials for packaging, gas for travelling to the post office, etc.), and you will find very few low-cost item sellers who can afford to work that hard for peanuts in profit.

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This user has validated their user name. by: Bob

Sun Jul 22 12:13:42 2007

Hello.... ??
Is anyone there???
Is there anyone at eBay who is LISTENING?????


We don't need no stinking Wiki, Blog, Reviews, Feedback Stars, and the myriad of garbage you have added to the site, to try to fix a problem that you DON'T UNDERSTAND...

You ARE NOT LISTENING, to your Sellers and your Buyers  (not the new ones), you loyal faithful Sellers who got you where are today, lining the pockets of the executives with millions of shares of stock and money and perks.

You don't seem to understand your OWN Marketplace.  Maybe Meg and Pierre and others need to actually sit down and "de-clutter" and sell a few things on eBay.  It will be an education for them.

eBay keeps making more money, at the EXPENSE of its core sellers, and then doesn't understand why listings are down?

They have to add more companies to keep their numbers strong, since they can't fix the "real" problem.


Are you listening???  (I honestly doubt it)...

Your core sellers are not listing as much, bottom line, because it is not as profitable as it once was.  And the fees have gone up drastically, you have squeezed the exact person that you NEED to keep growing.
No incentives to consistent sellers (not necessarily Titanium or higher sellers), but your "bread-n-butter" the Bronze & Gold PowerSeller...
That is where your growth has come from, and where it is consistently sliding away from...

It is the BASICS...
Help nuture your base, the mid-level seller, where most of your real long-term income comes from.
Try to protect the MarketPlace, it should not be viewed as a giant Flea Market selling junk, but rather a gallery of neat and interesting STUFF.

And the re-focus you have done towards NEW items is absolutely ridiculous.  eBay Express is a joke.  
You experienced your greatest growth in stores when you did the SIS (stores in search), why not capitalize on this??  Your Sellers were talking LOUDLY, and that is what they wanted!!
They were happy and excited for the first time in years...

But did you LISTEN???
NO, you over-reacted and killed the momentum of the excited sellers.   Now they are upset and un-motivated, and with the declining prices, and higher fees, there is just NO incentive to keep listing a lot of items, it simply put, IS JUST NOT WORTH IT!!!!


Is this thing on?????
Earth to eBay...........

Want to improve, then...

Did this fall on deaf ears??
Worse yet, did it not fall anywhere, because no one is even listening or attempting to listen...   SAD.....

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by: JoeS

Mon Jul 23 14:07:29 2007

Very good points Bob! It makes you wonder why Meg and her management still collects a paycheck.

I will also add what greatly disrupted a buyer/seller type of eco-sytem by many of their bad policies. The biggest part is that Ebay sellers were also Ebay buyers. Sellers sell their items on Ebay and then turn around and use some of that money to purchase items on EBay. When many sellers left or reduced their presence on Ebay, you also lost good buyers. You can really tell in the low sell-through rates that many buyers have left.

Not all buyers are sellers but this management team has implemented strategies or ignored issues that have caused them to leave too. The biggest issue they've ignored for too long is the fraud and scams on their site. My biggest issue is the off-Ebay sites they own and the on-site ads. Both may be good to help bring in record profits but it takes buyers away from the core business and it hurts the sellers who pay much of the revenue to Ebay. It causes its own buyer confusion. How long will sellers put up with this, I see numbers suggesting they aren't.  

It's a robbing Peter to pay Paul strategy and it will eventually catch up with this company.

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by: Tony P.

Tue Jul 24 11:12:02 2007

Statistics. The worse of the 3 lies.

First - I would just love to see, as most sellers would, an actual breakdown of ASP and Conversion Rate (aka Sell Through Rate - STR). To aggregate the two metrics is nothing more than an effort to obfusicate. It certainly seems to work.

Perhaps I am missing something here. A large portion of the Quarter's revenue growth is attributed to the aforementioned STR and ASP - 11% of the 26% growth.

But, isn't that 11% related to the final amount of a successful transaction? So, the seller that used to start the item at $8.95, now starts it at $9.99 (and hopes for that ONE bid!).

Big deal - 11%. But wait a minute; ebay doesn't make 11% more. They only make THEIR PERCENTAGE of that 11%.

A good, conservative average of ebay's take on any transaction is 6%. A more liberal average is 10%...let's use that figure and give them the benfit of the doubt. Say, all of the items were Store items and under $25.

That statistic would then read:

1.2% in ACTUAL earnings, from increased STR/ASP, accounts for a major portion of the 26% growth in ACTUAL revenue.

Let's keep the apples together, and separate from the oranges. Earnings with Earnings, and not mixed in with another metric. 1.2%  =  26% ??????

No, sorry, that doesn't compute. The lion's share of their increased revenue is derived from increased fees. Period.

That notion seemed to spark concern within the major investors of ebay, last summer. This year, they apparently don't care about that. And, they're obviously too ignorant of basic math as to even question that which is plainly obvious.

Good thing they're not involved in a *Financial* sort of business. Oh, wait...D'OH!

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