A few minutes with eBay Inc. CFO, Bob Swan

Randy SmytheOn April 16, 2008 at 6:58 pm Said:

Richard,

Active User growth in the Marketplace biz is stagnant at 1% Y/Y, I believe new active users are still coming to eBay, so it appears existing users are disengaging at roughly the same clip as the new users sign-up.

According to Marketwatch “… In the first quarter [2007], active users were up only 1% compared to a year ago. In the December quarter, active users grew 2%, 4% in the September quarter, and 7% in the June quarter. A year ago, in the March, 2007 quarter, the number of active users was up 10%.

This is a global number and I’m guessing that many International markets are still seeing double digit Active User increases Y/Y.

I can’t see any way that Active Users are not declining on the US marketplace. Slow growth is one thing, but declines in Active Users are not a good sign.

Are US Active User numbers declining Y/Y?

In the past, the response to that question would be “we do not break out Active Users for each marketplace”.

A simple yes or no would suffice.

CrunchyPostingGoodnessOn April 16, 2008 at 9:57 pm Said:

The main problem with these figures is that it represents the money that eBay took in, but is that reflective of what sellers took in?

For instance, if a buyer pays for and receives the item, yet performs a charge back, the seller is out their money, yet eBay retains all of their fees collected.

If a buyer files a Significantly Not As Described complaint, simply because they have remorse and wins the dispute, the seller loses their money, yet eBay retains all of their fees. Then the seller must hope that at least the buyer sends back the same item, in good condition, so they can re-list it and the seller has to pay listing fees a second time.

If a buyer claims an Item Not Received, simply because the post office made an error in not scanning the package, the seller is out their money, item, and still eBay retains its fees.

A buyer leaves negative feedback for a seller who refused to lie on a customs form by marking it as “gift”, hurting the sellers ability to sell successfully, and possibly have their funds held in the future, yet eBay keeps its fees.

My worry is that eBay is primarily concerned with getting more buyers(numbers only), yet it seems to care very little as to exactly what type of buyers (quality)are attracted to the recent changes. The fact that eBay is making more money means very little to me as a sign of success. It simply means they are collecting more fees. What would impress me more is the number of complaints and reports from sellers during that time period.

If the sales were higher and the number of reports and complaints lower, then that would impress me. However, if there is no change in the number of reports, or better yet an increase during that time period, then I would see that as a cause for concern on the part of sellers.

Perhaps someone would be able to provide a comparison of those values in relation to one another during the time period being discussed?

MechelleOn April 16, 2008 at 10:14 pm Said:

How is active defined? Active in the past year, 2 , 3 decade? What about the last 2 months- it certainly doesn’t feel as active and certainly not more than January and most of February

FreddyOn April 17, 2008 at 12:29 am Said:

Actually, if you take the time to look through the actual earnings release/slides, you will see that active user growth is up 6% from last year when you exclude China/Taiwan (which is now its own operation). This means active user growth in the markets that really count (US, UK and Germany) has stabilized and is even starting to increase. This is great news for sellers.

Chris @ TameBayOn April 17, 2008 at 12:41 am Said:

Bob dodged answering your first question re the strike quite nicely then? :-p Did the it or did it not make a difference?

Or am I being a bit harsh and he did answer it meaning: The strike was “a lot of good feedback” or in other words it was so insignificant we were aware of disgruntled sellers but it made no discernable difference to the bottom line?

JamesOn April 17, 2008 at 6:19 am Said:

What I don’t understand is why Ebay is fine with not getting new users. They’ve publicly stated that they have “enough” buyers, and are just trying to figure out how to get them to spend more.

How does ebay plan to sustain the 1q numbers without growing active users? I fear that all the new changes we are seeing are a short term fix to bring the stock back up and make the company attractive to a buyer.

KarlOn April 17, 2008 at 11:50 am Said:

“he also indicated that the strike made no real difference to the bottom line because eBay had such a strong financial quarter.”

Finical analyst are reporting that eBay.com,the core auction site had little to do with the strong Q1 showing.

Investors evidently has drawn the same conclusion.

Time will tell if the changes will have any significant positive impact.

Like most situations,it can be viewed from several different angles.

….for instance,if the strike had not taken place eBay could have had an even stronger Q1.

Randy SmytheOn April 17, 2008 at 12:21 pm Said:

@Michelle

Active Users are defined as: (Source 2007 eBay Annual report)

“All users, excluding users of Half.com, StubHub and Internet Auction Co., our Korean subsidiary, who bid on, bought, or listed an item within the previous 12-month period. Users may register more than once and as a result, may have more than one account.”

@Freddy, that 6% number could just as easily be pulled from a hat. We don’t have the base numbers for China and Taiwan and if you look at last years Annual report they weren’t even mentioned in the Active User numbers.

Patricia 1On April 17, 2008 at 3:29 pm Said:

“However, one of my 5 outstanding questions was if it didn’t have any real impact on Q1, is it realistic to assume that we could see the impact of it in Q2?”

And what about the upcoming May boycott?

Chris @ TameBayOn April 17, 2008 at 4:21 pm Said:

@Patricia1 I’d be surprised if the expected May boycott makes much of a difference either. It’s not that a few (and in the grand scheme of things it is likly to be only “a few”) sellers won’t list, but there are so many variables it’ll be nigh on impossible to attribute an up or down in figures to a strike.

MechelleOn April 17, 2008 at 7:28 pm Said:

There doesn’t need to be a strike to see significant decrease in revenue- they have best match- it’s doing the job on its own

Patricia 1On April 17, 2008 at 8:32 pm Said:

Chris – yes, I’m sure. Along will come another listing special… I did boycott in Feb. but won’t in May – instead from Feb to May I made it my business scope out other venues and to start listing on other sites besides ebay. Sellers made the mistake of putting all their eggs in ebay’s basket, we need viable alternatives and I guess this is the only way to do it. I think we’re all finally wising up.

Chris @ TameBayOn April 18, 2008 at 3:32 am Said:

Patricia – Going multi-channel is probably the single best thing that a seller can do to protect their business and that also protects eBay’s business. As you becomes a part of a larger operation it becomes easier to ride the highs and lows of eBay change, instead of potentially affecting your income so much it kills you outright. Good for you, but also (in the long run) good for eBay.

wandaOn April 18, 2008 at 4:08 am Said:

My take from Mr. Swan’s perfunctory, can’t really be bothered with all this nonsense, I’ll give you two minutes, response is: Ebay is still passing out the corporate KoolAid. Sellers may expect the same short shrift they’ve become accustomed to. We’ll continue to lie and spin this anyway we want to and may even do so when our active users base dives into negative, which, undeniably will be next quarter.

Ebay has the same approval rating as George Bush about now. Many alternate auction sites are seeing unprecedented growth, yet Ebay blames their woes on the economy. If they do get with the program, they will still leech users as they have done nothing to garner loyalty and everything to destroy any iota of trust they might have had.

JJHOn April 18, 2008 at 4:40 am Said:

@Patricia1

So how have your sales been at other venues?

I’m been looking at a number of them too, but I haven’t listed on any. I don’t see the traffic, I don’t see any items being bought, and I don’t see the type of items I sell even listed there. So why would anybody be looking for them? The one site everyone raves about wants money up front for the privilege of listing. I can’t afford to throw good money out for bad, not even with an experiment.

implogOn April 18, 2008 at 7:51 am Said:

A Reuters news article and the market response beg to differ.
~~~~~~

EBay shares fall on auction weakness
Thu Apr 17, 2008 1:19pm EDT

Citi analyst Mark Mahaney said internally generated growth in its U.S. marketplaces business was around a modest 5 percent, excluding recent acquisitions. He reiterated his “hold” rating on the stock and said a good re-entry point would be if it fell to $28.

Sanford C. Bernstein analyst Jeffrey Lindsay raised his price target on eBay to $38 from $36, but noted that the company had cobbled together “bits and pieces into a reasonable quarter.”

“EBay reported a good first quarter but analysis reveals that it was patched together out of better-than-expected performances at PayPal, Skype, StubHub, Classifieds and Advertising,” Lindsay said in a research note.”

Full Reuters article at link below.

http://www.reuters.com/article/hotStocksNews/idINN1745481420080417?rpc=77

wandaOn April 18, 2008 at 9:08 am Said:

@IMPLOG

Thanks for the link… this is what I was referencing and it exposes the truth behind the spin. Ebay hoped no one would notice that the user base devolved in light of the overall increase in $$$$$. What’s next for us? Totally free listings and 25% FVFs?

Scott @ TradingAssistantJournalOn April 18, 2008 at 9:09 am Said:

The thing of it is… is…

eBay is present profits from all of it’s holdings, when all the numbers are lumped in together, as a stock it looks great.

As eBay grows with PayPal, Stub Hub, et al (Even Skype is showing a profit) is it any wonder that the auction market which started it all really is not the focus any longer?

eBay as a company no longer needs the loyal sellers in the auction marketplace as it once did. Moving towards fixed price is the only avenue for growth eBay can see. When eBay presents auctions side by side next to fixed price by the end of this year it will be a crucial juncture in the platform.

Earnings figures for eBay as a whole – do they really relate to the eBay sellers are concerned with, or are they more of a positive reflection of diversification?

Patricia 1On April 18, 2008 at 12:08 pm Said:

They’re outright stumbling and still don’t realize it – core auctions are stagnant and the news of that is already getting around in spite of their glowing first quarter report that was comprised of everything else. Its being analyzed and the weakness in core is showing up loud and clear. Once they set aside auctions in preference for fixed price sales they become just another online retailer in an ever growing line of retailers…who needs yet another one? (yawn)

wandaOn April 18, 2008 at 3:22 pm Said:

@ SCOTT @ TRADINGASSIST…

It appears to me that the investor segment may be split with many higly concerned about the devolution of core listings and ebay’s inability to retain user base and others happy with the bottom line, as you point out.

I’m missing the relevance of the split screen. You can only view one thing at a time – scientificallly, this is a fact, or why this should be such a hot commodity. Is it to spur people into snappy buys? I’m not thinking that will work… and look at all the other “bright” ideas they’ve had… the neighborhood, the playground, skype, donahoe, floating the idea of lower fees as a smoke screen for much higher final value fees, hiding i.d.’s on auctions -c’mon – these people are giving Ivy League schools a bad name.

I wish they would obviate the ebay seller…. then maybe everyone would do what is inevitable… MOVE ON ALREADY !!! How much abuse can you take? Let another site like us.ebid.net take the reins. Isn’t it time to make money and be respected again? You are business people, aren’t you?

Scott @ TradingAssistantJournalOn April 18, 2008 at 9:25 pm Said:

Wanda,

Not sure if that was a pitch for ebid or not…?

In any case, my point about the split screen, if eBay actually does go to one (and some sources in the investor community seem quite confident they will) is that upon instituting the new eBay way of presenting products, the real future will be told.

I have heard from some very large powersellers that the split screen idea will not go over well for them. I have also heard from straight auction sellers that the split screen will end their involvement on the site. It seems to me that those who do take advantage of eBay stores should be pleased with the idea (if stores items are included in the split screen).

What are the advantages and disadvantages of a split screen format? If your selling a eBay stores product and your item is presented right next to a auction listing you will see the advantage quickly. If it is your auction listing presented next to a stores item, the disadvantages become quite clear. We simply do not know enough about how it will work to really speculate.

Split screen is a big risk for eBay, yet eBay seems to be saying “Damn the torpedoes – full speed ahead”!

When Stephanie Tilenius warned that eBay would not look the same in 2009, I took her seriously. So if this warning is not about split screen, then what? Amazon product reviews? More Yahoo advertising? Your guess is as good as any…

permacrisisOn April 19, 2008 at 5:49 am Said:

@crunchy

“The main problem with these figures is that it represents the money that eBay took in, but is that reflective of what sellers took in?
For instance, if a buyer pays for and receives the item, yet performs a charge back, the seller is out their money, yet eBay retains all of their fees collected.”

So true… they’ve got no skin in the game! And when Best Match assigns your item a %score it should adjust the listing fee that same % but again… no skin in the game.

CrunchyPostingGoodnessOn April 19, 2008 at 8:05 pm Said:

@ Permacrisis

True, eBay takes no risk when implementing any of these changes. Furthermore, it doesn’t appear that any of their data is investigated to see if it really applies to the well being of the marketplace or simply eBay’s bottom line.

I would really like to see a comparison of the fees collected vs. the reports filed, but I doubt such information will be forthcoming.