This has been a good news/bad news week for eBay. On the one hand, earnings were up 73 percent over the period just one year ago, on the other hand, the Wall Street Journal reports that eBay's newly acquired PayPal payment service may encounter trouble due to legislation aimed at stopping terrorism. And while eBay stock traded up at Friday's close ($59.96), the stock declined in after-hours trading on Friday, possibly on the expectation the company will not be able to meet its earnings goals in the fourth quarter and on into 2003.
The company needs to grow in order to meet its estimates. It needs to grow in the face of a poor economy and despite the possibility it may simply have reached a saturation point in terms of its customer base. What's a company to do when it has ambitious goals but may have reached a plateau in its planned ascension? In eBay's case, they've decided to put more resources into making the company even more attractive to the converted. Current customers will be inveigled into buying more. Site users, who may be fence-sitting about selling, will be convinced to take the plunge.
"For example, some eBay users may visit the site three or four times a month to purchase a compact disc," eBay spokesman Kevin Pursglove told AuctionBytes. "We want to introduce this group to other categories that may be of interest to them, such as cassette tapes, posters or collectible autographs. In each case, the idea is to expand a buyer's awareness of the available merchandise, introduce them to new sellers and increase their activity on the site."
Attendees of the eBay Live user conference last June will remember learning of eBay's plans for a big push to get users to use the site more for Christmas shopping. While December has traditionally been a very slow period for eBay sellers, as customers return to traditional stores and catalogs to make their holiday purchases, eBay hopes to remind their community what a great shopping resource they have right at their fingertips without ever leaving the comforts of home.
"Last year's holiday campaign is one such example," Pursglove said. "We wanted to educate our community about the appeal of eBay as a holiday shopping destination. Shortly after Thanksgiving we placed a 10 page supplement for Sunday newspapers in the country's top metropolitan markets. The supplement highlighted last years hot holiday gift items such as DVD players, PDAs, household appliances and collectible holiday decoratives. We will introduce a few new campaigns over the next several weeks."
One of these campaigns appears to be eBay's new Gift Services feature, a listings upgrade designed to help sellers gain greater exposure for their items. On Wednesday, October 23, eBay will be hosting a workshop to help buyers and sellers get acquainted with this feature. Consult the eBay General Announcements Board for details.
The road to meeting and exceeding its earnings estimates will not be without bumps for eBay. It has to go head-to-head with not only its Internet competitors but the rest of the retail universe as well. Analysts, investors and community members alike will be awaiting the outcome when next quarter's results are announced.
