|Thu July 8 2010 18:56:12|
Amazon Kicks eBay's Butt in Q2, Craigslist Tie for Traffic
By: Ina Steiner
Mark Mahaney of Citi Group expects Amazon traffic to grow 21% year over year in Q2, while it expects eBay's traffic to drop 2% year over year. Mahaney likes Amazon's management strength, competitive moats, significant long-term growth opportunity, and its inherently attractive business model.
He wrote, "The headline here is that Amazon continues to offer industry-leading selection, with pricing that is close to parity with that offered on eBay, Wal-Mart.com, and Buy.com."
Remarkably, not only is eBay's traffic now below Amazon.com's, it will soon be surpassed by traffic on Craigslist, as shown in the chart above.
Mahaney expect eBay revenue growth deceleration in Q2, with key factors being materially tougher comps, FX headwinds (currency), and arguably some transition/execution issues in the U.S. with the new pricing policies and Search algorithms, along with modest bottom line leverage.
He anticipates Amazon's Q1 results will show organic revenue growth at 36% Y/Y, excluding FX and the Zappos acquisition.
The GMV growth rate chart shows that while Amazon's lead over ecommerce narrows, it keeps a steady lead over eBay, which can't keep up with U.S. ecommerce growth.
eBay Board of Directors have been extremely patient with John Donahoe's performance. He's been a master of managing expectations, giving himself 3 years (a long time in ecommerce!) to turn the eBay marketplace around. And with the SR2 changes to which Mahaney referred (new pricing and search algorithms, aka Stores in Core), John gave himself "a few quarters" before anyone should expect to see positive results.
eBay's Board may be numbingly patient, but sellers don't have the luxury of waiting a few quarters - or years - for things to turn around.
You can see the full Citi Group report here. eBay releases second-quarter earnings on July 21st; Amazon usually releases figures the day after eBay.