eBay earnings preview – Q1 2011

April 25, 2011

ChannelAdvisor ChannelAdvisor By ChannelAdvisor

This is a big week in the world of e-commerce:

  • Amazon announces Q1 results on Tuesday (April 26th) – a preview of that announcement can be found at sister blog Amazon strategies here.
  • eBay is set to announce Q1 results on Wednesday (April 27th)

Between the two companies we’ll get a feel for how e-commerce in 2011 is shaping up and how some global economic situations (UK austerity, Japan disaster) could adversely impact global e-commerce.

What Wall St is looking for from eBay in Q1 2011

Wall St primarily looks at two things with eBay:

  1. PayPal health – eBay has become largely a paypal story so Wall St. looks at PP metrics like TPV, take rate and margins first.  Expectations are for 27% y/y growth from PP.  Anything above that is positive and anything below is negative.
  2. Marketplace metrics – Expectations for eBay’s marketplace business are pretty low with Wall St. looking for 4% y/y revenue growth (which eBay should handily beat based on what we’re seeing) and they also look at metrics such as GMV growth, unit growth, take rate

Wall St. is very concerned about the impact of the UK economic slowdown and the Japan disaster.  eBay has a lot of exposure in the UK and little/zero in Japan so I suspect a lot of the Q+A will be around PayPal and the UK situation.

What sellers are looking at from eBay’s Q1

We have always encouraged sellers to look at eBay’s earnings for a couple of reasons:

  • It’s always good to know what is driving your partner’s business
  • You can generally pick up strong indications of where eBay is going via these releases and calls.

We encourage sellers to look at these metrics for benchmarking purposes and to help decide on the appropriate channel mix:

  • GMV growth – are you growing faster or slower than eBay?  We’ll peel the onion on this for you and publish domestic/non-domestic and also growth per category.
  • User growth – eBay’s buyer growth has been anemic for the last several years.  Any acceleration or deceleration is a signal of future trends
  • Unit growth – eBay units grow faster than GMV, then the ASP of the site has gone down. The inverse is true as well.
  • Take rates – I always find it interesting to see if these go up or down which indicates eBay is effectively charging more (or less) for their services.

What ChannelAdvisor is seeing

Comscore is reporting 11% y/y growth in 2011 vs. 2010 and we’re seeing similar numbers with the exception of March which seemed a little slow.

For eBay we saw ~5% growth y/y through Q1 from a same-store-sales perspective.   We saw some UK SSS slowdown in March, but nothing alarming.   Large brands continue to be attracted to eBay.  However, not all successful.  What works well is a strategy to leverage eBay as an outlet or liquidation centre as illustrated by this recent Jockey case study featured in Internet Retailer.

SeekingAlpha disclosure – I am long Google and Amazon. eBay is an investor at ChannelAdvisor where I am CEO.