|Tue June 24 2014 06:32:37|
eBay May Be on Path to Recovery from May Slowdown
By: Ina Steiner
It's been a tough spring for eBay between Google's manual action/Panda and revelations about a hacking incident that compromised eBay's user database. But one Wall Street analyst said things appear to be improving after a late-May "slowdown" for the ecommerce giant - though it warns volumes have not recovered to previous levels.
Colin Sebastian of Robert W. Baird & Co. wrote in a report today:
"Data suggests some recovery in transaction volumes. We are updating our monthly eBay tracker with a one-time checkup through mid-June to gauge the ongoing impact to transaction volumes from the May security breach disclosure and Google Panda search alteration.
"Specifically, over the past two weeks, our Tracker reflects slightly improving sequential Marketplace volume and year-over-year growth rates following the late-May slowdown.
"Overall, in the five weeks since the events, aggregate transaction volume in our tracker declined 6% compared to the five weeks prior. While volumes have not yet recovered to pre-breach/Panda levels, eBay has offered coupons to customers and likely ramped up search and other marketing efforts in order to stimulate sales.
"As such, we are slightly lowering our Q2 and 2014 revenue and EPS estimates to $4.36 billion and $0.68 and $18.26 billion and $2.98, respectively. We remain within eBay's guidance range, although now towards the lower end."
In an accompanying graph (shown below), Baird estimates the rolling 4-week growth of eBay Gross Merchandise Volume (not year-over-year growth).
In his research note, Sebastian is referring to the EcommerceBytes news story in which we reported eBay distributed coupons to many users in the wake of the breach. Some coupons are buyer-oriented, others are seller-oriented, but all of the coupons we've seen are for $20 coming right out of eBay's pocket. It's a bold move to get users to return to eBay after the breach. It comes at a huge cost - but once a user makes a purchase to redeem the coupon, eBay has got those users back.
The analyst also noted that he believed eBay has likely ramped up search and other marketing efforts in order to stimulate sales.
The problem is that when eBay has a bad stretch, so do its sellers, yet they are paying the same Store subscription fees and insertion fees. What would you do to bring back customers after a security breach? Is eBay on the right track?