|Thu July 23 2009 10:50:54|
eBay CEO John Donahoe Shares Thoughts on Q2 Results
By: Ina Steiner
eBay announced second quarter earnings yesterday, and CEO John Donahoe and CFO Bob Swan presented them to analysts in a conference call and took questions. Here are some excerpts from the presentation and Q&A. You can read more in today's AuctionBytes Newsflash article.
On Progress of Marketplace Business
"We feel good about the progress we made in the core marketplace business in the second quarter, and I think Lorrie and her team are doing a nice job of steady progress in addressing the fundamentals of that business. And the user metrics and the customer metrics are showing signs of improvement."
On Free Shipping
"Free shipping has basically held up because in many ways, all we did was to use a carrot to make our sellers aware of how much buyers were responding to free shipping. And now our sellers are aware of it, and they'll respond and they are responding. So in certain categories it’s essential and it makes a big difference. In other categories, it makes less of a difference and we'll do what we usually do, is, we'll let the marketplace determine the right level of free shipping by category, and sellers will respond to what buyers do."
On Monday's Forthcomng Announcement to Sellers
"I will make an editorial comment - one of the things we've gotten better at is not surprising our sellers with a set of constant changes, and so as you know, we are only making two sets of changes a year and we have pre-wired or previewed these changes with several sellers and gotten good feedback. And you'll hear things around rolling out our buyers resolution's process and rolling out multi-SKU, and a variety of other things that will be announced on Monday, and the impact has been reflected in our guidance."
On Fourth-Quarter Marketing Plans
"We'll do in Q4 like we have the last couple of Q4s, is do what we need to to support our sellers to be successful. A couple of years ago, that was TV advertising. Last year, we used coupons, and we'll make the decision going into Q4 about what elements of the marketing mix we'll do to support our sellers during the holiday season."
On Bill Me Later's Availability on eBay
"In time for this holiday season, we expect Bill Me Later to be available as a payment choice within the PayPal wallet, both on eBay and everywhere PayPal is offered in the U.S."
On eBay's Push into Secondary Markets
"The area we are really focusing early on is in our deals of the day, because often these merchants want to move a deep SKU, which is they want to move a lot of items quickly. And so, we have examples where 6,000 and 7,000 items will sell out in a matter of a couple of hours. So we are very pleased with the progress on this. These merchants really like the ability to move high volumes of SKU and the margins are good. There's no material difference in the margins there because they pay a take rate, they have a lower cost to serve and we do a lot of volume. So I think this is the way of really accentuating an opportunity in the market as more and more new in-season inventory is coming into the secondary market"
On Search and Catalog
"Our search platform continues to make strong progress. In early July, we completed the infrastructure that will allow cataloging eBay items for search to be scalable a lot easier, and you heard Mark Carges just talk about that at our Analyst Day. And so, we are seeing an increased number of items being cataloged, and I think we're well-positioned to make continued advancements in search on the eBay marketplace."
On Opening PayPal Platform to Developers
"Now in both eBay and in PayPal, we are making progress on opening our platforms up to third-party developers so that others can innovate on top of those platforms. And let me just draw your attention to tomorrow, we'll be announcing that the beta phase for the PayPal platform, which is I think just tremendously exciting, because it will be the first global payments platform that is open to third-party developers, and you are going to see the beginnings of application innovation done by third-party developers that I think will be analogous to the iPhone. You are going to see PayPal being pulled into more and more situations and more and more applications where payment is necessary, and I think it's going to absolutely accelerate the pace and direction of innovation of PayPal, so we are very excited about that."
eBay Webcast of earnings call (with link to slide presentation)
Transcript of Earnings Call via SeekingAlpha