eBay endures revenue shrinkage deja vu
But all will be fine in 2011
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At the end of 2008, for the first time in its history, eBay stomached a year-over-year decline in quarterly revenue. And at the beginning of 2009, it happened again.
For three months ending March 31, the online tat house pulled in revenues of $2.02bn, an eight per cent dip from the first quarter of 2008, while profits topped out at $357m, a 22 per cent shrinkage from Q1 2008.
Chief executive John Donahoe played the party line. "We delivered solid Q1 results, exceeding expectations in a tough economy," he told analysts and reporters during the company's requisite quarterly earnings call. "Overall, we're a strong company operating in a challenging economic environment."
Last month, Donahoe told the world his waning outfit would refocus efforts on its online marketplace and payment units. And one of those units is in the tank. The marketplace business - which consists of eBay, Shopping.com, StubHub, Kijiji, and other e-commerce sites - pulled in revenues of $1.22bn during the first quarter, a 18 per cent drop.
Gross merchandising volume - or GMV, the sum of all auctions closed on eBay during the quarter and prime indicator of tat house health - shrunk 16 per cent. That's three quarters of shrinkage on the hop. The primary culprit is the company's core auction biz, which accounts for roughly half of GMV, according to Donahoe. Online classifieds revenue from sites like Kijiji actually increased, jumping 23 per cent.
Though Donahoe put the blame squarely on the worldwide economy and a strengthening US dollar, he admitted that in 2009, his marketplace unit would continue to grow at a slower rate than the net's overall e-commerce biz. But he insisted that by 2011, as the company expands its classifieds and secondhand ticket businesses (read: StubHub), growth rates will exceed those of the net as a whole.
By 2011, he said, the company's auction biz will account for only 30 to 40 per cent of the all-important GMV. But auctions are still very much on Donahoe 2011-obsessed brain. Last week, eBay said it would pay $1.2bn for South Korea's leading online auction house, Gmarket.
eBay's payments unit, anchored PayPal, is a different story. The company's online payment boondoggle raked in $643m in revenue, a 11 per cent leap. Net total payment volume, or TPV, was $15.86bn, a 10 per cent from last year, thanks in part to the recent acquisition of instant-credit outfit Bill Me Later.
Donahoe insists he will double PayPal's business over the next three years.
eBay's communications unit - aka Skype - pulled in revenues of $153.2m, a 21 per cent increase, as the VoIP service added another 37.9 million users. But the company will soon part ways with Skype, after belatedly realizing its not a comms company. eBay claims it will spin Skype off with an IPO sometime in 2010, five years after paying $2.6bn for the Luxembourg-based outfit. ®
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COMMENTS
@ Neil Lewis
Agree entirley, Although byt the sounds of it I am not a seller of your calibre, I although more often then not sell unwanted items via ebay, But I have found it is increasingly more and more difficult to make any money from the smaller items, by the time listing fees, final valuation fees ,paypal fees and postage have all been taken into consideration. I also do not agree with the postive feedback for buyers and have been shafted a couple of times by no payers and cannot leave any warning for other users. Think i will stick to my local classified ads from now on at least they are free to list under a certain amount.
Auction volume shrinkage is down to policies
I've been selling on ebay for a few years, have a solid multi-thousand sales record and feedback at 100%. Ebay sales consttute a viable secondary income for me but even I have been reducing the quantity of my listings because of new seller-hostile listing policies. They recently started to dictate maximum p&p charges on some types of items. On the face of it, this is okay, but in practice it;s just not flexible enough and so many items I would have listed I now won't, because I can't charge realistic p&p on them and I'm not prepared to make a loss just to make ebay look good. Then there's the much publicised "positive feedback only for buyers" policy. I've hardly ever had to leave anything else, but now when a buyer clearly takes the piss, I can't warn other sellers about them. That rankles, so I've stopped shipping to many parts of the world to minimise the problems. That means less auction sales too. Increased FV fees are another problem. I sell a lot of items on commission for other people, and that means I have to reduce the percentage I pay them. They don't like that, so they don't give me so many items to sell. The list of problems goes on. Ebay is still a viable opportunity if you do it right, but it's not the route to sensible profits it was.
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