Ebay Secrets Blog

Archive for January, 2010

All,
I’m still answering specific questions through email and comments here on Ink but in the meantime, I wanted to share a little sneak peak into what is happening behind the scenes. In addition to our usual Customer Service call center and PR efforts around news like this, we have also established two dedicated Communications rooms to allow for real-time collaboration across social media platforms and chat rooms to ensure we could get answers out to folks as quickly as possible. These have been staffed since 6am PT yesterday morning and include folks, such as myself, focused on communicating through a specific channel (forums, blogs, Twitter, email, etc.).

I took a quick video of our Comms Room here in San Jose HQ to give folks a behind-the-scenes look at how we’re working together to communicate information in real-time. The desks are set up in a horseshoe so we can easily ask questions to anyone in the room (representatives from the Buyer & Seller team, Corp Comms, Social Media, Engineering, eBay Annnouncements, etc. are all in here) for quick response…

Out in Salt Lake City, in addition to the Customer Service center, we have another comms room devoted to social media outreach and response. What follows is a sequence of photos taken out of that room where you can see folks on Twitter, Facebook, etc…

Personally, it has been great to see so many people involved in proactively communicating information – regardless of channel or platform. As a global organization, I am hoping we can build on this for the future.

Back to it…

Cheers,
RBH

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The following video was recorded earlier today at eBay’s Customer Service HQ in Salt Lake City, Utah. Andrew Chase (aka @ebay_andy) has joined me on past podcasts to help answer seller questions around previous announcements we’ve made in the marketplace. I find him an extremely knowledgeable and unsung hero for our community – similar to a number of Customer Service folks out in SLC – who has made it his mission to get information out to as many people as possible.

Here, he talks about the first few hours of reaction to the eBay Seller Release of earlier today…

Cheers,
RBH

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All,
I was also able to spend some time with Lynda Talgo, Senior Director of Resolutions at eBay, to discuss the eBay Buyer Protection news coming out of today’s Seller Release in more detail. What follows is a 3-part, face-to-face with Lynda in the lobby of the Community building at San Jose HQ. Again, like the video conversation with Dinesh, I’ve embedded the questions right into the videos.

Lynda gives an overview of the eBay Buyer Protection announcement…

Lynda discusses how the program differs from PayPal Buyer Protection and how this differs from last year’s initial launch…

Lynda talks about how this will benefit both buyers & sellers on eBay…

Cheers,
RBH

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All,
I was able to spend some time with Dinesh Lathi, VP of Buyer and Seller Experience at eBay, to discuss the news coming out of today’s Seller Release (eBaySR) in more detail. I did my best to anticipate some of the more challenging questions that may be on Ink reader’s minds and posed them to Dinesh (I realize you’ll have a ton more… and I’m happy to ask those too). What follows is a 7-part, comprehensive sit-down discussion with Dinesh in the lobby of the Community building at San Jose HQ. I’ve embedded the questions right into the videos.

Part 1: Dinesh Lathi, VP of Buyer & Seller Experience for eBay, sits down with eBay Ink blogger RBH to answer some questions. Here he explains what he believes to be the top three messages coming out of today’s Seller Release…

Part 2: Dinesh addresses smaller sellers in the eBay marketplace and the new zero Insertion Fee pricing for auctions starting under $1…

Part 3: Dinesh talks about eBay’s “level playing field” and how it still applies with the Seller Release news of January 2010…

Part 4: Here, I ask Dinesh why the focus on Auctions again (e.g. zero up-front Insertion Fees), even though we’ve been emphasizing Fixed Price in the last year and a half. Dinesh also talks about why some up-front insertion fees remain…

Part 5: Dinesh addresses the concern some smaller sellers may have with regard to their ranking in search coming out of the changes made in the Seller Release announcement…

Part 6: I ask Dinesh about Best Match…

Part 7: Dinesh talks about what this news will mean for buyers and sellers and for the eBay Marketplace as a whole…

In addition to feedback regarding the news itself, I’m interested to hear if you find this new format of interviewing helpful. I’m trying to evolve the video integration here on Ink to accompany trends and news that I cover. Let me know.

Cheers,
RBH

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eBay announced some significant changes to the selling and buying experience in the US marketplace today. Beginning March 30, sellers across the board will be able to experience lower up-front cost (in some instances zero up-front cost) when listing items on ebay.com.

Here’s a look at what’s new for sellers and buyers:

New standard rates
…
For sellers who list items occasionally, new “eBay Everyday” rates are available. Auction-style listings with a start price of 99 cents or less will be free (with no insertion fees for up to 100 listings per month). When an item sells, the seller will pay a flat final value fee of 9% of the sale price — and never more than $50. If an item doesn’t sell, the seller pays nothing.

New Stores subscription packages…
For sellers who list often, new “eBay Stores” subscription rates offer insertion fees as low as 3 cents per listing for 30 days — a 90% reduction over current rates. Larger volume sellers with this “3-cent store” premium rate can move thousands of items at high velocity with full search exposure.

Subscription rates offer basic, anchor and premium store pricing options, depending on the size of a seller’s business. With the new pricing a seller with 250 listings per month would save $80 or $960 a year in insertion fees. With these changes eBay’s current store inventory format will no longer have separate search functionality from core fixed-price listings.

With the new eBay Stores rate package, all fixed priced inventory on eBay will have exposure through eBay’s core search functionality, increasing visibility for sellers and improving the search experience for buyers.

“Moving to one Fixed-Price listing format is another benefit sellers will soon experience,” said Dinesh Lathi, vice president, Seller and Buyer Experience. “Store Inventory Format listings automatically will become regular Fixed-Price listings, with the same duration. They’ll also renew at the new rates, and appear in ‘Search results’ with all other listings.”

Sellers who want to determine which pricing option will work best for their listings when the changes take place in March can use eBay’s Fee Illustrator: http://pages.ebay.com/sellerinformation/news/FeeIllustrator2010.html.

Buyer Protection Program…

“We’re also making a big move to bring buyers and keep them with us through our new eBay Buyer Protection Program,” Lathi explains. “All over eBay, the message to buyers will be loud and clear: buy on eBay with the confidence, satisfaction, and quick response you expect from a trusted retailer.”

Boosting seller efficiency…

*** Sellers in eBay Motors Parts & Accessories will be able to create one listing with a complete list of compatible vehicles.

*** The ability to list multiple variations of a product in one Fixed Price listing in many more categories.

*** Return policy and handling time will be required for new listings and re-listings in eBay Motors Parts & Accessories in June — editing tools make updating listings easy.

***Category and Item Specifics changes are also coming with the rest of these updates.

Additional Resources…

*** A dedicated website regarding the Seller Release.
*** Take part in the upcoming webinar on Thursday, Jan. 28.
*** Join Dinesh and other leaders from eBay and PayPal in a Town Hall meeting on Thursday, Jan. 29. Check the Announcement Board for more details.
***Talk with eBay staff members during the next two days on a special discussion board set up for this purpose.

Twitter…

For those of you on Twitter, follow the #eBaySR (eBay Seller Release) hashtag for all discussion around today’s news.

I’ll be updating this post and providing video interviews with additional background information in the near future.

Cheers,
RBH

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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 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.  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.

SeekingAlpha disclosure – I am long Amazon and Google. eBay is a minority investor in ChannelAdvisor where I am CEO.

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Every time I think I’ve seen it all, the power of the individual, coming together with their fellow man/woman, comes face-to-face with my expectations and blows them out of the water. I received a very brief but powerful email overnight that contained two statistics I wanted to share with all of you.

eBay
A reminder that you can buy, sell and/or donate items via a dedicated landing page on eBay.com, with proceeds going to Save the Children, The American Red Cross, and other nonprofits involved in the relief effort. The eBay Community (over 326,000 donors) has now raised over $1 Million as of Midnight EST last night across the US & UK sites. This excludes funds raised for charity sales on the site, and reflects only cash donations through Give at Checkout and Donate Now.

PayPal
A reminder that PayPal is waiving fees for all U.S. 501(c)3 charitable organizations collecting for disaster relief in Haiti. For fee waiver consideration, send an email to nonprofit@paypal.com. To date, PayPal donations are at $4.5 Million.

I realize that the need for relief and help in Haiti is still in its infancy but what individuals have accomplished together over such a short period of time is nothing short of remarkable. I’m sure in a few weeks you’ll be resetting my expectations once again. For now, I just wanted to say thank you and let’s keep giving in anyway we can.

-RBH

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For those of you who don’t know, my previous “job” (I put the term in quotes because neither feel like your typical job) was acting as a kind of A&R agent for independent producers on a network called Mevio (then called PodShow). As a result, I still find myself following the hundreds of shows of people that have become friends and like to refresh my podcast lineup every other week with 10 rotating shows. However, there are 10 shows that never get taken out of rotation. They consist of a small number of sports, film and BBC shows and four eCommerce related shows. I thought it would be nice to share those four shows with folks here on Ink.

First, I conducted a search in the podcast directory of iTunes, using the term “ebay”, to see which shows I was missing. Ahem. I got over 500 results. So… I’m sticking with the 4 shows I’ve been listening to for a while now. However, please, given the amount of results I got back, I know there must be others out there that you’re listening to. If you could add your own favorites to the comments below, that would be awesome.

In the meantime, here are my four…

eBay Radio
Website
Twitter
Overview: The only official podcast coming out of eBay that is focused on the marketplace is hosted by long-time eBay resident, evangelist and guru Jim “Griff” Griffith. He mixes guest appearances (I’ve been on once or twice) with dial-in calls and questions from eBayers. I always find tuning into eBay Radio most helpful after one of the handful of significant announcements we’ve made specific to the marketplace over the past 2 years to see what sellers are focusing on most. Average episode length: 2 hours.

ColderICE (Internet eCommerce & eBay)
Website
Twitter
Overview: Sometimes not for the overly sensitive, host John Lawson’s show covers all things ecommerce with a focus on eBay. Never one to pull any punches, John provides experienced insight into the world of eCommerce and all things Web 2.0. His unique and passionate delivery makes the show incredibly entertaining as well as informative. Average episode length: Varies. Anywhere from 20 to 45 minutes.

eBay & Beyond: Basics to Business
Website
Twitter
Overview: Recorded more as a conversation between friends that share a common interest than a straight info channel, this show hosted by longtime eBayer Dave White, addresses all things eCommerce including eBay, Amazon & Zappos to name just three. He is coming up on his three year anniversary show next month and I’m hoping to join him to celebrate the occasion. Average episode length: 2 hours.

The River, The Ranch & The Bay
Website
Twitter
Overview: Building upon the conversational approach of eBay & Beyond, RRB Radio Show brings together a number of the key bloggers and podcasters focused on eCommerce into one chat room for a larger, free-form type of discussion. I find myself in the chat room nearly every week and find the online written discussion just as informative as the show itself. Average episode length: 1 hour 30 minutes.

For those of you unfamiliar with podcasts, you can find out how to subscribe and/or listen to podcasts through iTunes by clicking HERE. The non-iTunes specific instructions can be found HERE.

Cheers,
RBH

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This twitter session contains non-GAAP measures relating to the company’s performance. You can find the reconciliation of those measures to the nearest comparable GAAP measures here.

This Twitter session may make forward-looking statements relating to our future performance that are based on our current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding expected financial results for the first quarter and full year 2010, the focus the Payments and Marketplaces business units going forward, and future growth in the Marketplaces and Payments businesses.

Our actual results may differ materially from those discussed in this Twitter session for a variety of reasons, including, but not limited to, the further impact of the credit crisis; continued or worsening global economic downturn; changes in political, business, and economic conditions; foreign-exchange-rate fluctuations; the impact and integration of recent and future acquisitions; our increasing need to grow revenues from existing users in established markets; an increasingly competitive environment for our businesses; the complexity of managing an increasingly large enterprise, with a broad range of businesses, our need to manage regulatory, tax, IP and litigation risks (including risks specific to PayPal, Bill Me Later and the financial industry); and our need to upgrade our technology and customer service infrastructure at reasonable cost while adding new features and maintaining site stability.

You can find more information about factors that could affect our operating results in our most recent annual report on our Form 10-K and our subsequent quarterly reports on Form 10-Q (available at http://investor.ebayinc.com). You should not unduly rely on any forward-looking statements, and we assume no obligation to update them. All information in the presentation is as of January 20, 2010, and we do not intend, and undertake no duty, to update this presentation.

Cheers,
RBH

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eBay Inc. announced earnings for Q4 and full year ended December 31, 2009. Fourth-quarter revenue was $2.4 billion, up 16% from the same period last year. This includes the $112 million in revenue from Skype during the period that we still fully owned it. The year-over-year increase was attributed primarily to “excellent growth in PayPal and StubHub and improvement in growth rates in the core eBay business, as well as the positive impact from foreign currency movements.”

The company recorded net income on a GAAP basis of $1.4 billion or $1.02 per diluted share, and non-GAAP net income of $585.8 million or $0.44 per diluted share for the fourth quarter of 2009. For the full year, eBay Inc. posted $8.7 billion in revenue, net income on a GAAP basis of $2.4 billion or $1.83 per diluted share, and non-GAAP net income of $2.1 billion or $1.58 per diluted share.

“We delivered a strong fourth quarter with double-digit revenue growth driven by exceptional performance at PayPal and turnaround progress and momentum in our core eBay business,” said eBay Inc. President and CEO John Donahoe. “PayPal significantly expanded its presence globally and, for the first time, processed more than $20 billion in total payment volume in a quarter. Gross merchandise volume and sold items, accelerated for the third consecutive quarter. We are starting 2010 with significant progress against our three-year growth strategies for PayPal and eBay and a clear focus on our priorities going forward.”

eBay Inc. generated $770.6 million of operating cash flow $597.7 million of free cash flow during the fourth quarter.

After taking a break last quarter I will be back live-blogging our earnings via Twitter this afternoon. Therefore, if you are unable to listen along to the live earnings call by clicking here, you can follow along with my tweets in real-time, beginning at 2pm PT. Also, you can get up-to-the-minute information here and access the full press release here.

For folks interested in following the entire conversation on Twitter, the hashtag is #eBayQ409.

Cheers,
RBH

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