EcommerceBytes-NewsFlash, Number 2461 - January 20, 2011     2 of 4

eBay CEO Takes Questions, Opens up on PayPal and Mobile Opportunities

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"We made solid progress in the fourth quarter," eBay CEO John Donahoe said during a post-earnings release conference call with Wall Street analysts on Wednesday. He was referring to eBay's U.S. Marketplaces business. He reported that buyer Net Promoter Scores (NPS) improved for the sixth consecutive quarter in Q4-2010, and said that buyers saw improved trust and improved searchability, with sold-item growth of 8%. (See eBay's fourth quarter earnings release.)

However, he said, "I'm not satisfied with where we are, in the U.S. market, our GMV growth is still behind that of the market, but I feel like we're on track and now will begin implementing the vertical shopping experiences and other search related activity that will build on the fundamental change we made last year that will allow us to close the gap between our growth and that of ecommerce."

Donahoe was specifically asked about the Marketplaces turnaround strategy he had first mentioned at an analyst day in 2009. He said in 2010, eBay grew global marketplace revenue 9% on an FX-neutral basis and GMV 11%, "roughly in line with the markets in which we participate in."

He said he was confident and optimistic eBay would make continued progress into 2011, "and our goal is still to grow at or faster than the market."

Donahoe said he saw changes and trends in the market that increase the fundamental attractiveness of eBay's market and play to the advantage of the company - in particular, mobile is blurring the line between offline and online. "We tell merchants, we will never compete with them." This seemed to refer to some merchants' concerns about selling on the Amazon.com marketplace, where they must compete with Amazon's own listings.

One analyst asked about the synergies between PayPal and eBay and whether he would keep the two companies together. Donahoe said there were synergies - one was eBay Inc.'s balance sheet that allowed it to make acquisitions and investments in PayPal, another was the shared efforts in mobile commerce and mobile payments. eBay's recently acquired mobile apps developer Critical Path, which helps both units.

He also said synergies work in local: when eBay approaches retailers, it can offer them multi-channel and payments capability. And, "increasingly you'll hear us talk about opening up our overall commerce platform."

Donahoe discussed PayPal Mobile Express Checkout, launched last year, and said any merchant that has implemented Mobile Express Checkout has a mobile payments capability. "Those merchants want to have their inventory accessible on mobile devices, and we know consumers don't like putting credit cards into mobile devices."

He said offline merchants are pulling eBay/PayPal in, and referred to "the last inch in point of sale mobile payments technology," where there is a lot of innovation going on.

PayPal can not only offer merchants a mobile payments capability, but it also offers merchants the ability to use PayPal to offer coupon and offers. It repositions PayPal not just as being a payment mechanism at point of sale, but as a demand generator and a customer loyalty engager.

He said eBay was working on some "very interesting things" with very large retailers, and referred to Starbucks use of a PayPal mobile app (see this PayPal blog post from Wednesday).

"It's almost opening up a whole new field of opportunity for PayPal that we weren't even thinking about a year ago."

Another area covered during the call was eBay Bucks, a program for top eBay buyers, who buy more frequently as a result of the program. It's not a way to attract new customers, it's "one element of our marketing mix."

eBay's CFO Bob Swan discussed the Durbin bill and its possible effect on PayPal.

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About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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