Reminder – if any of the acronyms here are confusing, check the backgrounder here.
The Q+A session was fast paced so I tried to snag the stuff that was most interesting to marketplace participants with a little bit of extra thrown in.
Q: Is eBay working on merchandising?
A: ST – yes, we have more data than anyone and it’s something we’re working on. LT adds that it will be driven by search
Q: Can you say more about this secondary market opportunity?
A: LT – yes, the old eBay was about cleaning junk out of your house, this is about cleaning junk out of your warehouse. The stuff retailers don’t want
Q: Skype – will you split out all three businesses, or sell one?
A: JD got a little tough on this one and reiterated that Skype is something that doesn’t fit, but they love it. He wants to win in each business and that’s the goal. eBay helps PP win – brings new users, powers BML balance sheet, PP growth enabled Skype to grow without monetization. JD – tell them why they are undervaluing it. BS joked that he wouldn’t presume to do that, JD said – well give them some hints (funny).
Long blurb – highlight, BS thinks that marketplace business is valued at zero and thus people get free option on marketplace business is one way to look at it. We work on two things – PP and eBay and stay out of Skype’s way.
Q: How concentrated is your seller base? 25m sellers with $60b – Amazon has $10b with 1.5m sellers
A: LN answers – we favor those sellers regardless of size with superior experience and value. We have a very diffuse base. High trust sellers are winning. We believe that over time we will have fragment base for two reasons. 1. Used segment – continue to see diversity/fragmentation. eforcity – fairly small business. 2. you will see large massive inventories in liquidation come into the market. Search will look at all this and bring the best stuff up.
JD – we still embrace the large seller. Lots of small sellers bring great value and provide service. We are only marketplace that can embrace both.
Q: What’s the mix of new/used on the site.
A: JD – we won’t go out and try and be a retailer. 90% out of season, 10% in-season (LN chimed in). Everyone else has the in-season stuff, we’re the only place with the secondary stuff. Consumer can decide
Q: What are you going to do with all this cash that’s sitting internationally?
A: First priority is M+A, second is stock repurchase, third is see one/two. Went on long discusion about past M+A’s.
Q: What exactly is happening to the auction busines -where is it going? If you’re getting it on the fixed-price side, what are the competitive dynamics?
A: LN – FP has always grown faster than auction – all about showing the best results and seller quality.
Q: How do you win when you don’t have supply leverage of a big box retailer? On the demand side you are facing pressure on search spend, etc.
A: LN – On the demand side, we will delight buyers and they will use word of mouth. We want the 150m/m buyers to go tell their friends how great eBay is.
On seller side, in general, our sellers want velocity. We are dealing with different inventory of one item. Let’s take a jacket that is $150. Liquidators are moving it at $100-120. They won’t have as much, maybe 10 jackets. They will move it on eBay because no risk and flexible. That will bring inventory.
JD – the whole point of secondary market is that our sellers don’t compete with big guys in an inefficient supply chain.
Q: Of the 6-7b in cashflow you will generate, a lot is in marketplace. Everyone fearful that mp is in decline. Couponing didn’t work. The value buyer isn’t on the site driving GMV. Is there a risk that even with changes you don’t gain share of wallet. Also recommends doing a dividend.
A: LN – In the seller/risk equation that you point out. You made our case! We have to make foundational changes. There are great deals on eBay today. As we get into secondary market with inefficient supply chains, we can bring those deals on.
ST – If we fix the fundamentals, we will get organic growth. We are driving th product and experience. It is working as it’s working on inactive buyers.
LN – word of mouth is our best marketing possible.
JD concluded by saying there are three takeaways:
- Our company is about connecting buyer and sellers – we need to evolve as ecommerce evolves.
- Aiming our company to the future. We now have clarity on where ecommerce is going and we will sail the ship to that point on the horizon.
- We have a portfolio that is positioned to win in that environment and there’s a benefit to having a portfolio (except for skype – editorial):
- Paypal – THE online payments network
- eBay – objectivity and commitment to take the business and make it the leader
- Skype – A great business
Finally, we have a leadership team that is absolutely commited to delivering and driving hard. We look forward to this showing up in our results.
SeekingAlpha disclosure – I am long Google and Amazon