There has been copious amount of ink around eBay's Q4 targeted towards investors, but sellers are scratching their heads wondering what it means. In this post, let's look at the seller-oriented highlights of the release. Also, historically eBay (EBAY) has used the period from mid Jan to early Feb to announce it's first set of changes for a year. Seller's are on pins and needles expecting something soon, and listening to the Q4 conference call, I think Donahoe and team dropped some hints on what we can expect. We'll highlight those hints and give a little speculation on what the announcements could hold.
Follow the GMV
Now that Skype is no longer in the eBay portfolio, the company is spending more time on the eBay and Paypal metrics (positive). That being said there is a fair amount of data in any eBay quarterly release and it can be hard to pick out the pieces that are relevant to sellers. I advise sellers of all sizes to 'follow the GMV'. One caveat is it's best to look at FX-neutral, non-autos GMV (unless you are a car seller) to understand what really is going on at the eBay marketplace. Here are the relevant GMV datapoints from the release:
- FX-neutral international GMV (ex-gmarket) was up 11% y/y
- Domestic GMV (ex autos) was up 4% y/y
- Overall GMV was up 8% (ex-autos, ex-gmarket, ex-fx)
- But be sure to note that international is growing a solid 7% faster than domestic, so something is definitely 'working' there.
These numbers definitely show (especially when viewed with the last 2yrs y/y data) that eBay indeed appears to be turning the corner as they are about half way through their turnaround strategy.
This picture illustrates the acceleration in international GMV: (click to enlarge)
On the domestic side, remember that Comscore is reporting that ecommerce came in at 3% for Q4 (which I disagree with, but I digress), so by that measure, eBay appears to have hit a goal they set for themselves at analyst day - to grow as fast as ecommerce. This figure illustrates the growth rates of eBay, Amazon and ecommerce (comscore): (click to enlarge)
This chart also shows the continued (estimated, more details on Thurs) market share gains of Amazon (AMZN). It's one thing to grow as fast as comscore's 3% number, it's another to catch Amazon.
Fixed Price / Auction Mix
For Q4, fixed price came in at 53% (up from 52% in Q3) and auctions came in at 34%. Fixed price GMV grew at an impressive 35% with auctions at negative 3% (actually a strong improvement from Q3's negative 12%). So fixed price listing GMV stayed at a good > 35% pace and auctions were 'less worse' so they helped with growth by not hurting growth. It will be interesting to see if auctions have bottomed out or if this was a seasonal improvement. You can see the trends for these two metrics in this chart from eBay's conference call:
Donahoe hints at changes to come...
If you missed the call, you can read this handy transcript at SeekingAlpha. I found this comment to be the most interesting (and it's actually shown in the data above, but interesting to hear JD say it):
Bottom line, sellers who deliver the very best experience are succeeding on eBay and buyers are benefiting. These turnaround efforts are paying off. Market share gains are evident internationally where we are further along in our turnaround. In the U.K. for example, we posted 17% growth during the second half of 2009, significantly outperforming the market.
Followed up by this tidbit in the Q+A:
So I think what we’ll do in 2010 is take some of the learnings that we generated outside the U.S. and apply them as appropriate and as tailored to the U.S. market. I think we feel we’ve proven out some of these things outside the U.S. and they will apply inside the U.S.
If you look at the UK's seller fees (here), back in 09 they actually took the lower insertion fee move that eBay US did when they lowered FP30 to $.35 to an additional extreme. First, they eliminated the store format, and second they allowed business sellers to 'pay down' the FP30 insertion with a monthly store subscription. For example, if you pay £349.99 (approx $500) you now get essentially one penny insertion fees for FP30.
What this model has done in the UK is allow business sellers to focus on selling and not managing selection, so I view this as a win-win that we would definitely LOVE to see in the US and an important step towards 'really' competing with the Amazon business model.
What do you think? Reminder - Amazon reports on Thursday.
Given the strength of international results and the foreshadowing by Donahoe, I think the takeaway for seller are:
- Look for a continued movement from auction to fixed price
- eBay seems to believe the feedback changes (DSRs, eTRS, etc.) are working, so I don't expect any big changes there.
- eBay continues to be very focused on NPS so it's important for sellers to learn more about that system (look for future blog post on that).
- eBay needs to replicate the international success in the usa, so I wouldn't be surprised to see a more UK-like pricing model come to the US.
- Note that in the UK, our data indicates a 80% fp / 20% auction mix, so if you thought auctions had a headwind before, I think if that change comes to the US you'll see auctions cut in essentially half again.
Sellers, what did you think about Q4? Any other predictions on changes coming in early 2010?
BTW, we'll be covering the Amazon earnings Thursday over at Amazon Strategies. There will be a lot of noise around the Apple vaporTablet, but don't let that distract you from the real story - Amazon's 3P is ON FIRE.
Disclosure - I am long Amazon and Google. eBay is a minority investor in ChannelAdvisor where I am CEO.