eBay Q4 news – part IV – Q+A

January 23, 2008

Here are my quick and dirty notes from the analyst Q+A on eBay’s Q4 call today. My editorial is usually in parens (like this).

Devitt – eBay express and fees

  • MW -EE is going to get more traffic in 08 (yuck could this be the ‘fixed-price/auction’ offering?)
    • JD -EE was a learning lab, we’ll take that an put into our innovative mixed fixed-price/auction stuff that is uniquely eBay (? this sounds interesting)
  • Pricing – fee rebalance will apply to fp and auction (hmmm!)

Imran – 1) competitors doing prime shipping, how can you match that?! 2) you beat guidance, how conservative are you being?

  • JD – we don’t control shipping, our sellers do.  We intend to alter policies to incent+reward (DSRs) those sellers with best shipping, feedback, etc.
  • BS – we were cautious

Lehman – 1) finding 2.0 – can it handle listings?  2) customer loyalty programs?

  • JD – learned alot around relevence-based search (BestMatch) (ee/kr/fr), they are confident can handle increase listings and can serve buyers the best value.
    • Rajiv already talking about the ‘race to the top’ of the best value, best service listings.
    • auctions will be time ending soonest
  • BS – couponing
  • JD – top buyers – making it easier, feedback, customer support, etc.
  • Lehman – can you quantify?
  • JD – it’s factored in

Heath Terry (eBay bull!) – BestMatch – any early metrics?

  • JD – Bestmatch is not a silver bullet
    • Rolled it out in KR and seen acceleration
    • FR – seeing BM increase ability of buyers to find what they want in auction/fp and a bump in conversion/gmv
    • As we roll in 08, going to be aggressive, yet balanced and thoughtful

BOA – Bri Pitz – Fees – we nuking listing fees or ? Second – lots of advertising, what’s up?

  • JD – Pricing will shift the balance, but there will still be insertion fees (IN CORE – he specifically called this out).  In stores, we historically have a very lower fee.  We have a second format that allows sellers to upload lots of listings in a lower upfront way.  We’ll build these products together that will balance finding/fees in the right format
  • BS – some stuff about advertising

Bob Peck – fees site-wide, cat-specific, tell me more on ASPs/GMV/listings/CRs

  • JD – site-side in US/UK/DE next week, in some countries, cat-specific, others site-wide. Principles in all three will be similar, yet customised based on results from tests
  • BS – In aggregate, the tests showed us increases in listings, modest improvement in CRs, ASPs, because some lower-priced items came on site, ASPs came down.  Looking to have vibrance at all price levels (this is good, the last fee increase nuked the < $30 items from the site)
  • BestMatch – will help make sure high quality listings make it to top.

Sanford – eBay is turning from a growth play to more of a value play, are you doing anything to stimulate your 3P business?

  • BS – lots of financial-speak
  • JD – can you be more specific about 3P comment?
  • Sanford – we see sellers going to Amazon, what are you doing to stop that?
  • JD – stores is experiencing strong growth
  • Increasing exposure of stores items
  • Finding right search approach to give best core/store approach

Mary Meeker at MS, Meg – why now?  Bob – rev08 is below consensus, will we get to double digit listing growth?

  • Meg – thanks! It’s been an incredible journey.
  • BS – (long answer, I got distracted sorry) something about margins decreasing on eBay part, but offset by other stuff
  • JD – we agree that accelerating eBay is priority number 1.
  • Listings growth will be an indicator, but sold items will be the real metric (NEW METRIC ALERT!) due to multi-quantity fixed price.
  • MM – active users decelerated to 2%y/y – what the heck is up, how was marketing campaign?! What else?
    • JD – long answer, defended active users, continue to invest in marketing

Ben @UBS – Given all these changes, why such a tight range on guidance?

  • BS – we took into account our non-gmv biz momentum, and in gmv-based, we modeled off Q4 stuff (my words).

Justin Post @ML – PayPal, merchant services vs. ebay? how are margins? where they going?

  • BS – Great Q, merchant services grew faster than core biz.
  • Funding not that different in on/off eBay, more function of products (express/pro merchant, etc.), also tied to merchant+buyer lifecycle (interesting).
  • Margins – long-term are in the 20-25% range

Christa Quarles – TWP – ASPs and CRs in Q4 the lift was smaller than previous years. Wassup? (my words) Also how PayPal vs. BillMeLater doing?

  • BS – Q4 was hard due to comps from last year due to Wii/PS3 cycle
  • Room to improve conversion rates