Goldman live blogging II

May 21, 2008

Marketplaces ChannelAdvisor By ChannelAdvisor

Q: In the Q1 call you talked about things slowing, give us an update
A: (swan) recapped what they said in Q1.  Then mentioned that CBT is a big area of growth that has offset domestic softness.

Q: Did they play a stronger role than in other Q’s?
A: Yes, we were up 2% on CBT, expansion of PayPal playing a role.

Q: In terms of rising fuel cost have sellers complained about shipping costs?
A: Not really.  Rising fuel has more cost on demand, some shipping carriers, but that impacts all of e-commerce.  What we do see with eBay sellers is we are putting a much higher focus on their performance via DSRs – 2 of which are focused on shipping. Since we made this change there’s no doubt the entrepreneurial nature of eBay sellers has kicked in and they are making a huge improvement across the site.

(questions from the audience)
Q: When you look at some of the formats other than eBay does that dillute or cannabilize core eBay?
A: We don’t care – we connect buyers and sellers.  If that’s a classified, we have Kijiji, that’s great, if core eBay, great, if ad, great, etc.  What we’re seeing is buyers try everything.  They’ll go to eBay, check out a cell phone, then they go to, maybe click on a text ad and then come back to eBay – with more confidence knowing they checked out the entire web.

Q: It’s been a few years since the roll out of third party listers like isoldit (drop off stores) – what’s the growth rate of third party listers vs. individuals.
A: I don’t know. There are drop shops and there are trading assistants.  We don’t break that out.  Consumers selling on eBay continues to be strong – eBay is the only place you can turn assets to cash in 14 days.

Q: assuming you get to a stage where you have a great search engine, what’s the rational for having insertion fees at all?
A: Insertion fees have created quality at eBay – it motivates sellers to price well and put things on eBay they want to sell.  This gives eBay a fresh set of inventory every 7 days and that makes eBay unique.

We took a step recently to increase the FVF vs. listing fees, we’ll do more – you’ll see category pricing like media/technology.  Then if you look at Italy, insertion fees are quite low, very close to zero.

Auctions is still an important and unique part of eBay and insertion fees are a quality governor.

Q: What does fixed-price do to conversion ratios?
A: Good question and we talk about it internally.  We will continue a strong focus on high conversion inventory.  As we allow more and more larger sellers to bring more inventory on, then conversion rates will come down.  We’re seeing that now, listings up, conversions down (but holding up better than we thought it would). We will monitor in an intelligent way.

Q: Do you discuss amazon as a competitor? Why are they doing so well.
A: E-commerce is only 5-7% of offline retail and we both see lots of room for growth. Let me comment less on Amazon and more on eBay.  Our competitive differentiation/focus in value and selection.  We’re the place you find the lowest prices and largest selection and that’s our buyer base.  We tend to be the value oriented shoppers and collectors which account for roughly half of the ecommerce buyer market.

Over the next year as we improve the buying experience, our value proposition will increase.

With sellers, there’s nowhere else to get this volume.  What we haven’t been great at is as sellers scale, scaling with them.  Lots of examples of small sellers not scaling with large sellers.  We are going to fix that.  Amble growth available for both us and Amazon.

Q: Can you talk about Stubhub?
A: Stubhub is a fabulous business.  A secondary ticket market.  No way better in the world to know you want to go somewhere and get it reliably and conveniently.  Of all the eBay portfolio co’s, Stubhub has the best buyer experience.  Doing deal with Madonna and sports teams.

Q: You have no leverage on the balance sheet – any plans?
A: (Swan) Our philosophy has been to continue to do M+A as part of our growth story, acquisitions we did in last 3-4yrs is 40% of our revenue today.  We want flexibility to acquire our own shares when not valued correctly.  Few months ago we had $4b in cash on the balance sheet but it was all offshore.  We put a line of credit in place to give us flexibility without moving cash.

In last months we have bought $4.2b of stock – almost 10%.  If we take on debt it will be part of a consistent approach to do M+A and  buy stock.