The Long Slide Of eBAY's Gross Merchandise Volume Growth

A number of key developments to note for eBay (EBAY) watchers: Well, here it is. The reason EBAY stock price has not done much since the end of 2003. Even though Gross Merchandise Volume [GMV] has more than doubled since Q4 03, the TTM Y/Y growth rate has continued its constant slide.

The big question in most investor's minds is 'where does the slide end?' And the bad news, it will still take a few quarters longer to stabilize. We already have some visibility on Q3 and unfortunately, it's not great. Listings data is down Q/Q and Y/Y and based on this run rate, I predict Q3 GMV of around $14.32B, only a 13.3% growth rate Y/Y.

The good news? Apart from the fact that non-GMV based businesses are compensating this decline, GMV growth should hit bottom at around 13% as we start lapsing the higher fees of Q306 that caused a significant slowdown in store inventory on the system and as new initiatives to spur growth start to kick in.

Comments

[c1ue:]

Increasing Ebay fees coupled with the Paypal virtual monopoly is not holding up in the face of services like Craigslist.

Ebay has become more and more exclusively an outlet for 'hot' merchandise, cut-rate accessories from wholesalers operating out of China, and overstock retailers.

Only those with ridiculously large profit margins can build a lasting business on Ebay.

These issues coupled with Ebay's loss of place as the 'cool' way to sell stuff online, means that Ebay will continue to grow due to the even larger issues facing print classified ad media, but in turn Ebay will lose the long tail which led to its emergence.

2007 Aug 03 02:37 PM