This is part two of a two part series covering eBay's Q2 results which were released last week Wednesday (July 20th, 2011). Every quarter we provide a highlights of eBay (NASDAQ:EBAY) and Amazon's (NASDAQ:AMZN) results from a seller's perspective. eBay revealed quite a bit of information so I split this report into two segments:
- Part I - Q2 by the numbers (which you can find here)
- Part II - Paypal goes brick-and-mortar and eBay's Holiday Push
There were two revelations in eBay's Q2 results that were very interesting that I wanted to cover.
Paypal goes Brick-and-mortar
While the purview of this blog is really eBay and not PayPal, I'm fascinated by the payment wars we see unraveling between Google (NASDAQ:GOOG), Apple (NASDAQ:AAPL) and PayPal. We covered Google Wallet's launch by ex-PayPal'er Stephanie Tilenius here if you want to catch up on where things stand.
On the Q2 conference call, Donahoe announced that PayPal is officially going 'off-line' and will be available in a point of sale test by the End of Year 2011 with a 'Major Retailer and then rolled out to 20 retailers by the end of 2012. In comments/Q+A he added:
We’re in a strong position in online payments to expand to point of sale. We intend to help retailers grow offline in the same way we helped merchants grow online.
And took a pretty firm jab at Google Wallet with this one:
...our starting point is we have 100 million active wallets in the cloud with each 2 financial instruments. And I don't know if you call that the de facto wallet or not, but I think it is an enormous advantage and starting point as we enter in to what is going to be an emerging point-of-sale environment.
Finally, there's a lot of speculation that Apple will enter the payments war by including a NFC chip on the rumored Fall iPhone 5. Donahoe pre-empted that and said that a retailer told him that NFC stands for "Not for Commerce." OUCH!
The interesting angle of this war is going to be which position has the most leverage. Do the platform providers have the most leverage because they control the phone? Does eBay have more leverage because of the large user base and merchant relationships?
One of GSI/eBay's largest customers Toys-R-Us is squarely in the GWallet camp so it will be interesting to see who the mystery large retailer is.
Of course the holy grail is Wal-mart which does take Paypal. You have to believe that Walmart is being courted by Google and Apple hard as well.
This Ain't your Momma's eBay!
Perhaps, most interestingly, eBay's CEO, John Donahoe took the covers off of eBay's plans for an aggressive holiday push in 2011. Stating:
I've said for now a couple of years that we're holding off increasing marketing and focusing on our current customers until we get our user experience to the place where we feel it's ready and we feel like we've passed that point now.
You'll see us on TV in late Q3 and Q4 in the U.S. And we think that will have benefits for the business. And that's both in the U.S. as well as in Europe.
I have to admit that I was pretty excited to see eBay finally get back to getting the word out. The Q2 results show that they've definitely made improvements in areas of trust and usability. In fact, I think the last major ad campaign was in 2009 when they had comedians do the 'Come to think of it......eBay' (which made it seem like eBay is an afterthought, but I digress).
So there I was after the call thinking of some of the things that eBay could highlight - hard to find items, great selection, 100% buyer guarantees, top rated sellers.... Then I saw an article from the WSJ/AllthingsD that provided more details:
In an interview, eBay’s CEO John Donahoe told me that for the past few years, the company has been focused on improving the user experience, and when they saw a pick-up in spending from its current user base, it would begin to increase marketing.
It’s hit that inflection point, he said. ”It’s not your mother’s eBay anymore.”
While Donahoe promised that won’t be the company’s new tagline, he said the campaign will help people’s understanding of eBay.
Whoa. I think what they are saying here is the whole theme for this massive ad campaign is going to be: "It's not your mother's eBay anymore."
The first thing I did was Google that phrase because it was oddly familiar and low and behold it was actually first coined (queue the ironic music!) by Stephanie Tilenius at our 2008 catalyst event!
Regardless of pedigree, I'm trying hard to be up-beat about the ad campaign, but I honestly can't see how eBay's going to make this work. Taken at face value, you are basically saying that Moms aren't hip and now eBay is hip because your Mom won't shop there any more?! I've shopped at eBay for 10yrs and I'm not a mom - what's that mean about me? Actually, my mom has never shopped at eBay, so what's that mean? What's this mean for Mother's Day?!
I was shocked that I haven't heard more seller concern about this - maybe I'm the only one that doesn't get it?! let me know your thoughts in comments - or your Mom's - I actually am very pro-moms and hope they continue to shop on eBay....
Seriously though, it's going to be interesting to see if eBay can pull this off - I guess it would have to be very tongue in cheek and craftily done to avoid a Groupon-scale disaster. The good news I guess is that JD promises it won't be the new tagline.
eBay's ad agency always loves NFL games and late-night TV, so keep an eye out for any maternally disparaging ads or Mother Funny and let us know when you've seen your first one.
Disclosure: I am long Google and Amazon. eBay is an investor in ChannelAdvisor.