eBay President and CEO John Donahoe and CFO Bob Swan gave a presentation and took questions from Wall Street analysts on Wednesday afternoon after releasing third quarter 2009 earnings (see related article).
In his presentation, John Donahoe said eBay's most trusted sellers continue to win - sellers with detailed ratings of 4.8 continue to grow their businesses at double-digit rates, faster than ecommerce. Year-over-year, same-store sales for these sellers in the U.S. were up about 13 percent in Q3, and accounted for almost 40 percent of total U.S. GMV.
eBay is seeing increased traction with its Daily Deals, reinforcing its value message and demonstrating its ability to engage new buyers and move large volumes of merchandise in short time periods. It is also bringing more secondary market inventory onto eBay, working with trusted retailers and brands to help them move merchandise at great value.
John Donahoe mentioned the move toward developing tools that enable richer shopping experiences in certain categories, and the catalog style shopping experience in consumer electronics and media categories.
eBay just launched a design a ring diamond tool at diamonds.ebay.com, in beta testing. And Mr. Donahoe spoke about mobile commerce and the eBay iPhone app, expected to generate more than half a billion dollars in GMV this year.
eBay will launch its holiday ad campaign around the great values you find and great deals you find on eBay. Unlike previous campaigns, which were advertised heavily on TV, or last year in coupons, this one will be one of the most integrated holiday campaigns they've ever done with a more balanced online and offline media mix. It breaks on November 2 with digital spots featured on the homepage of eBay.
Some abbreviated notes from the Q&A session with analysts follow, there is a link to the transcript at the end of this article.
Search
eBay has the most unstructured data and largest data set of any ecommerce provider. This year the focus was on getting categories with catalog filled out. Catalog-based GMV hit 17 percent of eBay's GMV on Tuesday of this week - more than double where it was at the beginning of this year. eBay is rapidly adding catalog in those categories where it exists.
The second part is building a search platform that will allow eBay to start cataloging the un-cataloged categories through community generated tagging and other ways, which will start to happen in the first half of 2010, particularly in the Clothing, Shoes & Accessories category.
Sold Items versus ASPs (Average Selling Price)
John Donahoe said he was pleased with sold item metric, which was up 8% globally. ASPs continue to fall as people continue to trade down, for example, purchasing a refurbished Blackberry instead of a new one. He also sees ASP come down on PayPal in the off-eBay business as well. Bob Swan said ASPs went down late last summer and into the fall, but haven't gotten any worse or better in the last 6 months.
Auctions versus Fixed Price
John Donahoe said buyers and sellers choose the format, and eBay is indifferent to format because the take rates are roughly the same (in other words, eBay makes about the same amount of money from an auction versus a fixed-price listing). He also said formats vary significantly by category - collectibles is an auction-heavy category, for example.
Advertising Revenue
Advertising went from essentially a non-existing business to a quarter-billion dollar business; eBay went wtih Google text ads in the U.S. because eBay thinks it can provide more relevant ads for its community of users, while continuing to use Yahoo banner ads.
Miscellaneous
eBay said it had not reserved for the Skype lawsuit.
eBay expects to be a player in Japan, but do not expect a meaningful impact on eBay's business in 2010.
eBay is expecting well over $2 billion in free cash flow for the year, so coupled with the sale of Skype, it expects to have over $5 billion in cash on hand at the end of the year.
Free shipping is at about 30 percent, no dramatic change.
Link to eBay Investor page with link to slide presentation and press release.
Link to Seeking Alpha transcript
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