|Sat Apr 17 2010 13:00:06|
Wall Street Longs for Good Old Days of eBay Growth
By: Ina Steiner
Remember the days when eBay CEO Meg Whitman and Chief Financial Officer Rajiv Dutta had Wall Street analysts swooning during quarterly conference calls with their reports of meteoric (and what seemed like never-ending) growth? On Thursday, it will be CEO John Donahoe and CFO Bob Swan on the line, and analysts are prepared for underwhelming news from the duo.
In their pre-earnings reports, analysts note eBay's under-performing traffic relative to other ecommerce sites and point out Amazon.com's traffic growth and success in attracting eBay sellers. CitiGroup's Mark Mahaney's graphic of ComScore data paints the picture, and he points to what he believes is a cause for decreasing traffic: "We believe that Buyers will continue to migrate away from eBay - taking Sellers along with them - until the overall convenience and trust & safety of the eBay marketplace has materially improved." (eBay's traffic is the orange line, Amazon.com's traffic is the blue line, and Craigslist traffic is the green line.)
Jim Friedland of Cowen Group cites Amazon statistics that confirm the marketplace has been attracting eBay sellers: "Third party sales on Amazon are growing rapidly - slightly faster than first party sales - despite Amazon's aggressive expansion of its own product selection. Third party sellers accounted for 30% of unit sales in 2009, up from 29% of units in 2007-2008 and 28% in 2005-2006. We expect the trend to continue and possibly accelerate as Amazon attracts more sellers from eBay and other channels. The number of third party sellers on Amazon increased 24% y/y in 2009 to more than 1.9 million, compared to 15% growth in 2008 and 18% growth in 2007."
Friedland noted that "eBay's active Marketplaces users increased 3% y/y in Q4:09 to 90.1 million (excluding the Gmarket acquisition), compared to 19% growth in active Amazon customers in the fourth quarter." Here's a nice graphic comparing Amazon.com and eBay.com U.S. GMV (gross sales) from 2001 - 2010 (estimated).
An analyst inclined to be bullish on eBay wrote in an email that he believes with eBay's recent changes to its fee structure, "top merchants have incentive to list more items on eBay.com, helping eBay to offer higher selection and not lose merchants/listings to Amazon." (Let us know how the changes affected your sales in a new survey AuctionBytes is conducting.)
Most analysts remain optimistic about the potential of eBay's PayPal business. Colin Sebastian of Lazard Capital Markets wrote, "Over the coming year, we expect eBay to build off of its current leadership position in online payments, in particular by leveraging its developer network to facilitate product and platform innovations, such as mobile, social networking, and social gaming."
Cowen's Jim Friedland raised an interesting issue in his report: "Is there a chance that eBay will have to collect sales tax on behalf of sellers in the U.S.?" I'll be listening to eBay's conference call Wednesday to see if this issue is something John and Bob are prepared to address. They've certainly got a lot on their plate for Thursday's chat with analysts.
The earnings call is scheduled for April 21 at 2 pm Pacific, and will be webcast through a link on eBay's Investor Relations page. Amazon.com's call is scheduled for the following day.