I figured I would write a positive post about eBay for a change. We all know what is not working so I figured I would write about what I see that is working -- don't start calling me a cheerleader.
Here is what we know is working: ("Growth was once again propelled by PayPal and in particular merchant services, Skype, classifieds, and advertising." source Seeking Alpha Earnings Call transcript)
- PayPal - PayPal is the crown jewel of the eBay empire and continues to grow. It is the single best acquisition eBay ever made. (BTW, it was pretty much forced on them by their users and they paid more than they should have by waiting.)
- StubHub - Second best acquisition after PayPal and I still don't know why they aren't expanding this business globally. StubHub is the main reason eBay's Marketplace numbers weren't actually in the toilet. (Best $300 Million ever spent by eBay)
- Classifieds - Another acquisition that is thriving and will continue to add value to eBay.com 3P Merchants should find ways to utilize classifieds in their marketing plans.
- Advertising - 150% revenue growth Y/Y and by far the most profitable business segment on eBay, the only cost for this business is the team that manages it.
BTW, this is a partnership arrangement with Yahoo (US and Canada) and Google (internationally). Imagine if eBay owned their own sponsored ad business, they wouldn't need to split the money with their partners.
Seeing as the Affiliate program was just moved in-house and eBay now thinks of themselves as a search company (Finding 2.0 and Best Match), how long do you think it will be before they start serving up their own sponsored ads.
Amazon, does this currently with ClickRiver. My guess is that eBay will either acquire a company in this field or bring it in-house. It makes sense to me and is what I would be working on.
- Skype - While Skype still looks like an odd business for eBay to be in, it is growing and making some money. My feeling on this though, is that the improved performance of Skype will just allow for a higher price when eBay sells it later this year. They may actually be able to make some money on the deal. (Of course, this is another acquisition)
- Category Based Pricing - So far, this is the most beneficial change in the marketplace business and I would look for a rapid number of fee changes in other categories as the year progresses.
Media sellers have been asking for category specific pricing since 2004 (I sure did) and it took a new management team to actually make this happen. IMO, this is the single most important change eBay has made and it reflects in the numbers.
Listings were up 10% Y/Y and this was attributed to media and apparel. When you think about it. The category specific pricing brought back the media selection that had left and free gallery really helped out Apparel
If eBay can move aggressively with their category specific initiatives, they may be able to turn the corner.
As you can see the businesses that are thriving and growing are not businesses that were created in-house, so if eBay wants to keep growing my suggestion is to keep buying.
Okay, they still have some very serious issues like stagnant Active User growth, slowing GMV etc. and I certainly have some ideas on how to improve these metrics but that will be for another day.
Just my 6% (I gave you the other 6% yesterday)