Amazon vs. eBay: Follow Up Q&A 20 comments
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Earlier in the week, I started a series around the battle between eBay (EBAY) and Amazon (AMZN) - here.
Before I get into Episode II, I wanted to answer some of the more common questions that have come in from Episode I to make sure everyone understands the foundation we're building here. Many of these were in comments, but I also received several calls and emails with interesting questions/clarifications from the data in Episode I that I thought everyone would find of interest. Here they are in Q+A format.
Q: What 'counts' in eBay's active user base? How about Amazon's?
A: This question was spurred by the datapoints that eBay's active user base grew 4% vs. Amazon's 10%. Here's my understanding of these metrics. eBay's active user base counts anyone who bid, bought or sold in the last 365 days.
Amazon's active BUYER metric just includes anyone that purchased.
Q: Several people asked for the actual data behind eBay and Amazon's active user counts.
A: As of Q408, eBay had 86.3m active users. Amazon reported 88m customers (buyers) and 1.5m seller accounts (for a apples to apples of 89.5m vs. eBay's 86.3m). What's impressive about this is that Amazon is in only a fraction of the geographies of eBay and has a tighter definition (doesn't include sellers or bidders) and even given those disadvantages has already surpassed eBay AND is growing faster. This is another datapoint that supports the theory that eBay has hit a tipping point.
Q: How does eBay count someone's second, third or fourth ID on the site? For example, many sellers have 2+ buyer accounts and 3+ seller accounts.
A: If ANY ID has activity in the last year, it will count. If it does not, it will not. eBay doesn't do any 'de-duplication' of IDs to match them to individual people or anything. To be fair, Amazon doesn't either, but I don't know many people with multiple amazon IDs, and most eBayers have at least 2.
Q: If active buyers increased, but the GMV of fixed-price and auction were down, what did those buyers do?
Similar Q: If active buyers are up, why are pageviews down?
A: There is much less activity per buyer (you see it for example in the GMV/user stat in my post). If active buyers goes up 3% and activity (gmv/buyer, ASP/purchase and pageviews/user) goes down 10%, you're going to get a massive decrease in page views as that 10% decrease goes across 86m buyers. Said another way - A 10% drop is the equivalent of 8m users 'lost' activity. A 3% increase in active users is 2m - so there's a net 6m user activity loss.
Q: Does the eBay data include international sites?
A: Unless I specifically called it International or Domestic, yes, the eBay data includes all international sites (GMV-based - not stuff like kijijijijijijiji).
Q: How many visitors are leaving eBay due to marketing?
A: That's a really good question and one that only eBay knows the answer to. eBay stopped reporting the advertising revenue specifically from the marketplace business. They do report a 'bigger' advertising number that includes classified revenue, shopping.com and some other areas like rent.com which is $228m/Q or $901m/yr. I think we could say that on a Q basis, there's $100m of advertising from marketplaces. Now some of that's going to be based on pageviews and some clicks, but if we assume a $.50 effective revenue per click that blends industry average $30 CPM and .40 CPC, we can back into 200m off-site clicks/Q If eBay has about 80m unique visitors/m, then I believe they are essentially putting 20-30m of them off-site with ads (2 clicks/visitor/m - normalize the 200m/q to 66/m). More on advertising later.
Q: What's up at Shopping.com?
A: In the conference call, eBay's CFO, Bob Swan, made a short remark that shopping.com's revenue was down 50%. We've seen this with our comparison shopping retailers we work with. Google changed the quality score algorithm and the result has been the destruction of the paid-search arbitrage that kept shopping.com chugging all these years. Score one for google in the behind-the-scenes battle that has continued on since the more public Boston Tea Party a couple of years ago. If eBay's business is in a decline, shopping.com has had the wings come off the plane and the pilot is standing at the door with a parachute.
Q: You say that autos GMV is down 30% - does that include auto-parts?
A: No, I should have been clearer. Passenger vehicle GMV was down 30% - that does not include auto parts. eBay actually produces this data, but for some reason, I can never find it. I was able to get a friend to send it and have provided it for anyone that wants to look via this PDF: Download Ebay_categories_q4 .
Here's some quick Q4 highlights:
- auto-parts was down 12%
- consumer electronics down 14%
- apparel down 10%
- Wow, now that I look at it y/y, no single category is up. Yikes.
Q: You say eBay is down 12%, but I'm up on eBay 5% - how is that possible.
A: Congratulations my friend, you are taking share (on eBay)! BUT, depending on ecommerce, you are neutral or losing share and you are clearly losing share to Amazon.
Q: Are auctions really down 26% y/y?
A: Yes, auction-GMV is down that much y/y. You can really see this if you look at this graph that was in the original article. You can see that in Q407, auctions was at 9.4B and in Q408 it is down to 7B for a 2.4B difference. That equates to a 25.6% decrease. I don't make this stuff up folks ;-)
Q: Bonanzle! I love bonanzle why didn't you cover them? They are replacing eBay soon and have 1m listings!
A: While Bonanzle seems to have picked up a huge following with expatriated eBay sellers, it is just starting to get some buyer traffic. You can see this in the comscore data or if you look at sites like compete or quantcast, they show 300k/visitors/month - compare that with Amazon/eBay's scale of 80m+ visitors/month and you'll see they have a loooong way to go. I think it's more interesting to think of someone like a Yahoo!, Google or Microsoft jumping into the competitive mix, because they each have buyer scale that could be married to supply. Without a good mix of both in the recipe, you don't have a sufficiently liquid marketplace.
Q: Why did eBay change their discussion boards - I hate them! Why did JOhn Donahoe do that to me?
A: I have no idea. I doubt that Donahoe even notices they were changed or was consulted in that decision.
Q: Aren't sellers worried that Amazon competes with them essentially?
A: Yes and there are stories where sellers have had a hot product that Amazon has come in and started competing with them on. The safest strategy for a seller is to build your own website, brand and buyers - potentially leveraging eBay/Amazon to help move this along.
Q: You used this term "tipping point" - isn't that the point where something goes from being a niche to a phenomenon?
A: Yes, but I use the term here because I think it works both ways. Some folks have suggested "Negative network effects" or "exponential death". Yes, I think these all describe what I'm trying to get at - the potential accelerating descent of eBay's business. A snowball going down hill - pick your metaphor, I think it's happening.
Disclosure: Author is long Google and Amazon.
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This article has 20 comments:
ebaystrategies.blogs.c.../
"This is the first of a four part series focusing in on eBay and Amazon. This series comes from many questions we are receiving at ChannelAdvisor from our customers and prospects (and the press/Wall st.) about what is going on at the two companies and what retaliers strategically should do about it.
Here's an outline of the series:
* Episode I - Q408 in-depth analysis
* Episode II - Introducing the ChannelAdvisor Ecommerce Framework (CEF)
* Episode III - eBay, Amazon and the CEF
* Episode IV - How to fix eBay"
So apparently his suggestions will be in Episode IV.
Note Mr. Wingo has a lot more skin in the game than simply being long Amazon and Google. He is CEO of Channeladvisor:
"ChannelAdvisor Corporation provides technology and services that enable online retailers to maximize their profits across multiple e-commerce marketplaces such as eBay, Amazon.com and Overstock.com, comparison shopping engines"
ChannelAdvisor doesn't seem to be doing too well lately, as it is laying off more people after laying off 20% of its workforce in September:
onlinesaleschannels.wo.../
"Q: What 'counts' in eBay's active user base? How about Amazon's?
A: This question was spurred by the datapoints that eBay's active user base grew 4% vs. Amazon's 10%. Here's my understanding of these metrics. eBay's active user base counts anyone who bid, bought or sold in the last 365 days.
Amazon's active BUYER metric just includes anyone that purchased."
Well I'm sure no math whiz, but if eBay reports a 4% increase, and counts every bid, buy, and sell activity, you can cut this to 2% if you take away the seller count, and only God & JD know the bid count.
So, one must surmise that taking away the bid count too could put them into negative territory.
Tipping point indeed!
The outhouse is on its side, and the contents are starting to smell!
Does this mean Scott Wingo has finally sold all his eBay stock?
Or does this infer that Scott Wingos's ChannelAdvisor is long on the Amazon marketplace and shorting it's eBay venue participation?
On Feb 08 03:50 PM redbaron wrote:
> Scott, good work and nice reporting. (We are eBay power sellers
> from nearly the beginning, and still hold out hope that the site
> can be turned around, or saved in some fashion. At the same time,
> one cannot operate a business on hope, so we have been forced to
> look at other alternatives.) Looking forward to the upcoming chapters.
For everybody's information, Amazon DOES NOT ALLOW more than (1) account unless you get their permission beforehand. Permission is rarely granted & the penalty for ignoring the rule is PERMANENT suspension from Amazon.
Go to Amazon boards & you will see threads regarding suspended accounts, they don't fool around with mere threats!
Ebay on the other hand doesn't care, probably because they then double, triple, quadruple, etc count their figures to make them look more impressive. Like the old saw "figures lie & liars figures."
Ayuh
It now appears that if it was not for PayPay furiously manning the bilge pumps the good ship “eBay” would undoubtedly be considerably lower in the water. Does Captain Donahoe intend going down with the ship (like Captain Smith) or will he finally see the ice berg ahead and realise the error of his course and hand over to a more competent officer who will allow the ship to be towed back into port for some much needed repairs? (The old classic Fonda/Cagney movie “Mr Roberts” comes to mind.)
And a detailed critique on my pet peeve, “hidden bidders”, at
www.auctionbytes.com/f...
"To be fair, Amazon doesn't either, but I don't know many people with multiple amazon IDs, and most eBayers have at least 2."
For everybody's information, Amazon DOES NOT ALLOW more than (1) account unless you get their permission beforehand. Permission is rarely granted & the penalty for ignoring the rule is PERMANENT suspension from Amazon.
~~~~~~~~~~~~~~~~~~~~~~...
Absolutely correct. Amazon does NOT fool around. One seller account and THAT IS IT! They have ways to track you down and suspend. Again as stated, go to the Amazon Seller Forum, full of suspended threads.
Amazon says what it means, and means what it says!
It is Titanium, where as ebay is fool's gold.
The really successful dealers in our product area at the present time (here in the midwest where we are located), are ones with B&B outlets to supplement on-line sales. And if present trends continue, we will do move more into that area to replace lost eBay revenue.
I know that is not what etailers want to hear, but that is the way it looks to us.
Ebay had it all, but the key word 'had' is past tense, and one cannot live in the past.
A: This question was spurred by the datapoints that eBay's active user base grew 4% vs. Amazon's 10%. Here's my understanding of these metrics. eBay's active user base counts anyone who bid, bought or sold in the last 365 days.
===============
Just a reminder, that even that 4% growth might not be accurate in a sense.
Simply most sellers now have 3-4 accounts to combat the STUPID DSR effect!
In the old days, a seller would have one account listing hundreds/thousands of listing.
But now they have 2-3 and even 4 accounts, listing just fewer on each one. Just in case they get the boots on one account, they would have the others as a reserve to continue selling.
Does that mean EBay REALLY had a 4% growth????
===============
FIRE JD THE DEVIL NOW and send him back to business school!!!!!
www.amazon.com/Mousepa...
What will it take to change this. Amazon and eBay could both be winning here but eBay just needs to lay dawn on the mat and take the count.
To be clear, Auction GMV may be down by 2.4 billion YOY, or 26%. But, marketplace net revenue is only down 16%. An owner of the business would like to see GMV going up, to be sure. But ultimately, it's the net revenue that propels the profit. Moreover, a huge chunk of the drop in GMV (over a third) is a result of falling GMV for vehicles. Everyone knows that new auto sales are nearly 50% YOY, and Ebay's vehicle GMV is down only 30%, or about 1 billion YOY.
Auctions are declining, no doubt. But a business owner has to focus on the whole, and where the profit will come in the future. Net cash from operating activities is up YOY, from 2.64 billion in 2007 to 2.88 billion in 2008. Non-GAAP net income is up .18 per share, or 12%, to 1.71.
Ebay can still grow earnings and cash flow while auctions decline. Of course, if they fix the auction problem, even better.
Lets say you have an auction:
One item at a time comes onto the "Block" at a time, right? (or top of the list on Ebay)
Well with Ebays "Best Match" search your item almost never see's the "Auction Block" ... its sort of like having an auction and having a table full of items in the basment somewhere hoping someone will wander down there and bid on one of your items, because now on Ebay your item almost never comes to the top of the catagory list (I call it your time in the light) no one really can auction on Ebay anymore because there's is about a 99.999% chance that your item wont reach the top of the list when its ending and thats a Huge, Huge problem for Auctions!
Thats is the whole premise of "Auctioning" an item because it gets total attention at some point, (once it reaches the top of the list or "Auction Block")
On Ebay this doesnt happen anymore with the "Best Match" search engine, so people are forced to only used fixed price or risk not getting a bid or even worse getting only the opening bid.'
Best Match search killed the Auction business and thats a 100% guaranteed fact ... I mean this is common sense here, not hard to figure out why this is happening at all.
They made best match to cater to Diamond sellers so their fixed price items would always be near the top of the list or the top of the list, because they dont auction items and Best Match was the only way they could manage to do this.
Yes, but that's not much lower than Bush's approval rating was for the past 5 years. And of course we know the ending to that story. Unfortunately, I do not think that eBay can last 5 years under Donahoe.
"To remove ebay's CEO, Donahoe = 1621 signatures"
Petitions are great, but only 1621 out of 10s of millions of active members just won't cut it, unless of course the 1621 number is comprised of a few major shareholders.
On Feb 09 01:17 AM fairytrixy wrote:
> I am now a victim of eBay's continued abuse of their customers. Due
> to my micro selling volume and one negative feedback (that was offered
> prior to resolution and a complete transaction. It was my mistake
> I put the wrong bracelet in and envelope headed for France. the buyer
> contacted me twice within 2 days and by the time I was going over
> my messages she had already left the negative and filed dispute with
> paypal. I also had a gentleman from the NY decide that because I
> had this negative he demanded in a message that I answer him immeadiatly
> or there would be trouble. Even though his item reached him the very
> next day he left a neutral stating that the product was fine but
> we are slow with customer service and this was after 7 business days
> from cleared payment. the next day I logged in and I had 0 items
> for sale and a restriction from selling for 30 days, due to "non
> seller performance" whatever that means I am at the bottom 1% of
> all sellers on ebay. My DSR scores are not low enough to cause this
> my feedback is 99.5% so if you think that the guy who just hit 1
> mil. stars is allowed to have 2356 negatives in a twelve month period
> which is ripe for that person to rip people off on a weekly basis.
> I know I am spouting but I wish that someone anyone would just give
> back my ability to make ends meet. This is not just about stock and
> corp. it is about I think 50,000 or more sellers who have been added
> to the mix of the unemployed. I am worried that even after the 30
> days they will have been paid the fees I still owe and I will be
> left wondering how I will pay the bills. I do not think that the
> stock I had on ebay of collectible vintage and antique items will
> fly on Amazon.
> What will it take to change this. Amazon and eBay could both be winning
> here but eBay just needs to lay dawn on the mat and take the count.