eBay Analyst Day Notes, Part 3

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AuctionBytes Blog
News and insight focusing on
ecommerce and the online auction industry
by Ina Steiner, Editor of AuctionBytes.com

March 11, 2009

eBay Analyst Day Notes, Part 3

By: Ina Steiner

Wed Mar 11 2009 16:09:10

John Donahoe
Bob Swan will dimensionize everything for you. Joined in 2006, had an impact on eBay. Focus on capital discipline. He guards our capital very closely. Brings cost focus to the company. Enable us to go after opportunity.

Bob Swan

Will talk about a quick recap, little bit about bus model, secondly what you can expect in the future - our assumptions and #s are if global economy returns to some sense of normalcy in 2010 & 11

We play in big markets, early stages of their development. We have 3 of biggest brands on the web.

Marketplace: leading player today in ecommerce. PayPal. Skype. We believe a powerful portfolio of bus in a relatively attractive markets. Proven business model.

Naturual synergies between eBay and PayPal. One makes the other better. Flexibility to deply captial on acquisitions to make us stronger

M&A: Geographic strengthening. Extend formats & products by leverage large user base. New technologies. (Gave examples of acquisitions.)

While full year (2008) performance relatively okay was truly a tale of two halves. 2nd half flat. We said in January, 2009 will be challenging. (talked about some of those challenges in financial speak)

We're pretty confident we're taking right steps to position our portfolio of businesses in the future. Recipe to win:

1) Capitalize on PayPal's potential. (We're only beg. to win in Merchant Services game. PayPal on eBay - more merchants get us more consumers gets us more merchants. Focused on its enormous potential.)

2) Transition eBay platform for today's consumer multi format. (FP format - doubled in last 2.5 years, now $22 billion format. will continue to grow by double digits. Complementary formats - essentially did not exist in our portfolio 4 years ago. Advertising & Classifieds - in relatively early days, will double over next years. Auction format - $23 Billion in GMV, $2 billion in revenue, auction format has been declining. We expect auction bus to decline over next several years. Marketplaces going through transition. Will be smaller in 2009 than in 2008. Will get back to growth rates in 2010, 2011.)

3) Enable Skype to make it all it can be. (Generated 0 revenues in 2003. Expect well over 1 billion in 2011. More active users, more minutes, more monetization; more devices; not just in the home or on the road, but in work environment. Will double over next 3 years.)

4) Operate smarter

PayPal will be single biggest contributor to growth going forward. Will grow portfolio 20 - 40 percent, but we have to make some investments. We need to operate smarter to fund those investments. To make portfolio all we think it can be. Can save $2 Billion. Job cuts ("simplifying"), customer support, lower payment processing costs

We have a great portfolio, ... attractive business models, summary slide.

Comments (42) | Permalink

Readers Comments

eBay Analyst Day Notes, Part 3

by: Pat

Wed Mar 11 16:46:59 2009

I hope you recap the Q&A too, Ina. It's priceless to hear JD and Bob Swan essentially pandering to the analysts. I almost lost it when Swan sounded like he was on the verge of tears saying how "miffed" he was at the undervaluation of the eBay portfolio of companies.

God, give me a break. eBay doesn't call an analyst day for 3 years, but suddenly, when Meg wants to fund her "Fulton's Folly" of a gubernatorial run, and sees that her stock portfolio is in the toilet, they bring analysts together for the new eBay Transparency?!?

And these WS analysts are probably just dumb enough to fall for this dog and pony show...

eBay Analyst Day Notes, Part 3

by: Davey

Wed Mar 11 16:55:03 2009

I see Mr. Swan is looking to further cut costs in customer service. Really? They don't appear to have anyone working there right now anyway!

eBay Analyst Day Notes, Part 3

by: o.c.d.collectibles

Wed Mar 11 18:16:20 2009

Apparently Lorrie N cursed at one of the "small selllers" who was typing into twitter? #ebayinc ? I'm not sure, but there weren't too many of us, maybe 3 or 4 ..she said something very rude, apparently, but I didn't hear it, someone else passed the word along. I just hope it wasn't me!LOL!
Anyway, we really already knew what they were going to say and do. Cover everythigng bad, with whatever they could find, that was good. Like paypal, and skype making money, that's all they really had. Then they had a cheerleader from Mercent who probably is one of their clients, who was very happy that ebay wants to drive sales to the retail sector of secondary goods (old stock, new) Similar to the overtock model, that's what ebay is aiming for. It's really just a mess, they really don't "get it" at all. Maybe it's just too much work for them, and they just want to make themselves an easy life?

eBay Analyst Day Notes, Part 3

by: jeff

Wed Mar 11 18:46:14 2009

ebay is using the listing site to propel the Paypal service. The hate for the auction site is very visible. Ebay Corporate intent is very clear. they plan on using Paypal to be apart of every transaction on the Internet.
They plan to make ebay a smaller and smaller part of their business until it will seem very reasonable to sell it. They want to be the NEXT Visa credit card for the Internet. Visa and Mastercard make tons of money on transaction fees. that's ebay's goal. they want out of the Internet Listing Business and they want to be the biggest online transaction processor.

the ebay site and name will be sold off, some time down the line. Diminishing returns only make it easier to do. pretty sneaky. Look for them to change the name of the company from ebay to Paypal.

Karnack the Magnificent : Predicts

Paypal Payments via Twitter.
Paypal Payment via Facebook.
Paypal Virtual Bank

ebay part of Purina Dogfood family of Brands

eBay Analyst Day Notes, Part 3

by: mutley

Wed Mar 11 19:34:24 2009

Having scanned through parts 1-3 it's clear Ebay have decided auction format is not part of their strategic direction. This seems a strange decision - apart from live auctions, Ebay is about the only viable site which small sellers can run auctions with reasonable certainty that they will attain market value. Others have tried and failed, yet Ebay seem to see no value in having this unique selling point.

The analysts were focussed on Ebay spinning off Paypal / Skype. It looks as though Ebay is completey re-alligning the business and spinning off the auctions would be the logical move.

Collectibles, which has been moribund over the past year or so will go into terminal decline without direction. Given the management seem hellbound on making auctions ever less attractive for sellers, please please Ebay, split auctions off completely and then see which market has long time viability.

I'd love to have access to verified FP v Auction Sell Thru Rates and GMV - if Medved data is to be believed, auctions are anything but dead.

Lastly it's pretty clear Ebay see's the revenue stream from sales continuing to decrease. Hardly a surprise - concentrating on high volume / diamond sellers, Ebay's take rate from the auctions (sorry fixed price sales) will plummet. Allowing a generous 15% STR , and applying discounts @ 10% above Titanium level, listings growth will have to be exponential to even stand still.

Will Ebay's focus on transaction payment processing augmented with large volume commodity listings work - possibly for Ebay yes - for the myriad of small to medium sellers definitely not.

Time to move on

eBay Analyst Day Notes, Part 3

by: Rob

Wed Mar 11 19:56:04 2009

How does Ebay know that fixed price listings will continue to have double digit growth UNLESS they have made alot more behind the scenes sweetheart deals with mega retailers like buy.com?

eBay Analyst Day Notes, Part 3

by: YES123

Wed Mar 11 20:19:35 2009

I am just amazed at the stupidity of ebay.They make rules and do not enforce them.I wonder why these two auctions==370170061600 & 370170049373 have been posted all week with MONEY ORDERS AND CHECKS IN AUCTION DESCRIPTION????.I know that ebay spies watch this site so please give all the folks an answer to this question-----------

eBay Analyst Day Notes, Part 3

by: Fools Gold

Wed Mar 11 21:05:31 2009

JD if you think Paypal will continue as is after the US Finacial meltdown then you are in Wonderland ...get ready for massive controls coming your way and soon (about time too ..just this week I've had 5 payments lost!!! 3 to bank ACH refusal to pay {buyer cancels payments after items arrive}and 2 Scammers who file Item not recieved ....Paypal = Fraud ;nothing else)

eBay Analyst Day Notes, Part 3

by: Ming the Moronic

Wed Mar 11 21:07:58 2009

I think that seller is getting away with it because he's using an abbreviation for Money order ( m.o) Of course you'd think that they'd be able to pick up on that. Then again, you'd think they'd have the sense to make Ebay successful. LOL

eBay Analyst Day Notes, Part 3

by: nadine

Thu Mar 12 02:28:00 2009

jeff, yes I agree with you that eBay's hatred for auctions was palpable. They think they're dying and they regard them as a millstone around their necks. If it weren't for those dratted auctions, they could put everything onto catalog and become an Amazon clone entirely. Whose purpose would be to feed Paypal, their real business.

But their attitude is weirdly disconnected from the numbers. Auctions STILL account for the majority of GMV sold on the Marketplace, and Marketpalce sales STILL account for most of Paypal transactions - and thus revenues.

Normal businesses are not so disdainful of the lines that bring in most of their revenue. But then normal businesses are not so disdainful of their paying customers. It's clear that, lip service aside, small sellers will be tolerated, not valued.

Curious that nobody asked what's going to happen to margins under the brave new eBay. The Diamond Sellers don't pay listing fees and have the leverage to renegotiate their contracts if their profits are disappointing. It's not like eBay is THEIR only channel, after all.

Do the analysts even realize that the multi-sku listings (one good thing they introduced - FINALLY) will crater the listing numbers? Now maybe they could verify user ids instead of prattling about "trust" without doing anything to improve matters. Then we would all see the real usage of the site.

eBay Analyst Day Notes, Part 3

by: CHAIRMAN

Thu Mar 12 04:24:19 2009

True....read that and see Skype and Paypal as flagships. Ebay has lost its way as far as venue for the average person or small biz

eBay Analyst Day Notes, Part 3

by: @ yes 123

Thu Mar 12 06:30:41 2009

because they called it M.O not Money Order. Spelling it out triggers that NO maoney orders page. Clever right?
We still reported them for 370170061600. Hey if WE can't do it, neither should they.

eBay Analyst Day Notes, Part 3

by: LOL @ yes 123

Thu Mar 12 06:34:17 2009

I see someone already did :
Listing Violations > Listing policy violations (improper keywords, outside links, excessive shipping, etc) > Circumvention of eBay fees > Charges associated with offered payment methods (surcharges)

Item Numbers(s):
370170061600

Message: Why are they allowed to accept MONEY ORDERS, but no one else is?

eBay Analyst Day Notes, Part 3

by: Kitty

Thu Mar 12 07:44:24 2009

reading point #4, I'm having serious second thoughts about my PayPal shopping carts on my website. Really? They are planning on remaking PayPal customer service into what? (a version of eBay?)
Lowering fees? Last time that was promised to me by these people, my costs rose 10%.

eBay Analyst Day Notes, Part 3

by: 8673976a31P47hj5

Thu Mar 12 08:29:17 2009

Ina- once again.. thanks for keeping all of us up to date. YOU should be running Ebay.

Those who run the show there (EBAY) now.. are nothing more than 'SEAT WARMERS'

I wonder.. if it's just me.. or does everyone see the same thing....

Donahoe and the rest of his 'BANSHEES'..... keep bantering a whole lot of nothing... it's all dribble...

Will someone tell Donahoe and Ebay's other Execs.. to SPIT IT OUT ALREADY... SUBJECT, VERB AND OBJECT...
Elementary school children could do better. Are they trying to justify their jobs with the graphics, and charts... ??????

ugh... Is it Monday yet... SOS... different day.. blah blah.. blah...
Is is April Fool's day?

Ebay is a joke... What a waste of energy, oxygen and time....
ZZZZZZZzzzzzzzzzz.......

eBay Analyst Day Notes, Part 3

by: giovanni cappellotto

Thu Mar 12 09:23:04 2009

I made a translation for the italian readers, quoting your post.
Thanks a lot.

eBay Analyst Day Notes, Part 3

by: Monterobug

Thu Mar 12 10:25:08 2009

I am glad I signed up on Bonanzle.com this morning. I am moving the items I am selling over there, where the smaller seller is appreciated.

eBay Analyst Day Notes, Part 3

by: ebay=penny stock

Thu Mar 12 10:44:30 2009

Now that the dust has settled and everyone got rid of the dizzy spin all the ananlyst are barfing.

Management needs to bail faster as the ship is sinking.

eBay Analyst Day Notes, Part 3

by: karma

Thu Mar 12 11:02:33 2009

So why does Griff keep saying, on the discussion board, that auctions are there to stay (on ebay) ??????

eBay Analyst Day Notes, Part 3

by: Dman

Thu Mar 12 11:03:32 2009

Ebay may think that Paypal will be their savior, but down here on my level I continue to look for ways to move away from both Ebay and Paypal. During the last quarter of 2008 I collected half my revenue off of Ebay, versus nearly 100% on Ebay the year before. Still using Paypal. But now during the first quarter of 2009 I’ve continued work with buyers off Ebay and have begun to use Bank transfers for the larger transactions and will soon add Moneybookers to my payment options on Ebay, thus removing Paypal from the equation as well.

In the last 6 months, I’ve diverted $40,000 away from Ebay and $17,000 away from Paypal. I’m sure I’m not the biggest fish doing this type of thing, but I’m positive I’m one of many doing this very same type of thing.

It all adds up in the end, so don’t bet the house on Paypal Johnny boy. For if tomorrow, next week or next month my Ebay sales would plummet to the floor, I’d never spend another dime with Paypal ever again.

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