Investment banking firm SG Cowen & Co. released the results of a survey of eBay PowerSellers conducted in October and November 2005. It concluded that the eBay franchise is strong, ASPs and conversion rates are generally improving, but growth is slowing. The firm makes a market in eBay securities and does business with companies covered in its research reports.

SG Cowen & Co. analysts Jim Friedland and David Geisler said in their report, "We believe that concerns about the long-term viability of the eBay platform are unfounded,..." but also said they believe that "the growth of the core business is slowing materially."

The company surveyed 823 PowerSellers on eBay representing over $200 million in annual GMV (Gross Merchandise Volume). Of those, 296 were members of the Professional eBay Sellers Alliance (PESA). They surveyed all levels of PowerSellers, from those earning a minimum of $1,000 in monthly sales to those attaining over $150,000 in monthly sales. Forty-five percent of respondents had a standalone website, and 31 percent had a traditional brick & mortar store. Twenty-five percent of respondents expect to build a standalone website over the next year, with in-house, eBay ProStores and Yahoo Small Business the most likely methods of building those sites.

Respondents said they expect eBay to account for an increasing percentage of sales over the next few years (an average of 60.4 over the next two to three years compared to the average of 53.8 percent of total annual sales currently generated on eBay). Sixty-five percent of respondents did not experience growth in eBay revenues in 2005, yet respondents expect eBay to remain their most important channel over the next few years, and expect retail store and direct marketing channels to decline in importance over time.

Average Selling Prices (ASP) have remained flat for 66 percent of the respondents over the past year, and 26 percent have experienced an increase in ASP. PowerSellers in the consumer electronics category experienced the biggest decline in ASPs in 2005. PowerSellers are optimistic about ASP trends in 2006, especially in the Arts & Antique and Business and Industrial categories. Conversion rates (the percentage of listings that result in sales) increased in 2005, and respondents expect that trend to continue in 2006.

PowerSellers were happier with the Return on Investment on keyword ad purchases they received from Google than from Yahoo; have a positive view of shopping comparison engines (Froogle is the most popular shopping comparison engine); and expect to increase spending the most on Yahoo shopping, Shopping.com, and PriceGrabber in 2006.

PowerSellers said they were concerned with eBay fee increases; fraud; competition; PayPal or payment sercurity; inadequate demand from buyers; and poor PowerSeller support from eBay.

http://www.sgcowen.com