So, (as we say on eBay) everything is wonderful on the bay! There was much repetition, the odd comedic moment, a few genuine clues, subtle contradictions and lots of filler.
“So our Lorrie Norrington and our U.S. team are very on top of executing between now and the remainder of the year.”
Stylistically I noted an increasing tendency towards nosism, but the undoubted word of the quarter is “our”. Things were so jolly I almost expected one of those vintage postcards saying “Wish you were here”.
There are few surprises in eBay’s second quarter 2010 (Q2-10) report. In the interests of economy and being green CEO John Donahoe recycled his Q1-10 opening remarks.
Q1-10 “First, we are becoming a more customer focused company. We are driving improvements to our user experience and we are measuring our success with three customer oriented metrics; net promoter score, velocity and market share. I have tied a portion of our leadership compensation to customer satisfaction… Second, we are becoming a more technology driven company and we are increasing our commitment to innovation.” SeekingAlpha
Q2-10 “First, we’re becoming a more customer-driven organization. We have three clear customer metrics, net promoter score, velocity and market share, and we’ve tied a portion of management’s compensation to customer satisfaction… Second, we’re becoming a more technology-driven company with an increasing commitment to innovation.” SeekingAlpha
- 60% of the eBay marketplace revenue was generated outside the U.S.
- marketplace revenue up 11% year-over-year
- Net promoter scores up for top and active buyers in the U.S., U.K. and Germany,
- Sold item growth continued to be strong at 11% globally.
- cross border trade is down except China and the UK
- the U.S. grew more slowly than the market
- active users increased to 92 million
- classifieds business was up 7% in Q2
- U.S. core GMV was 2% in the quarter, down 4 points from Q1 driven by lower ASPs due to broader selection of well priced inventory
Basis point or point: One hundredth of 1 percent (0.01%). Each percentage point of yield equals 100 basis points. Gross Merchandise Value - GMV
Presumably we would never have guessed scores are not up for low grade and inactive buyers?
Clues and contradictions
It is entirely possible I am being dim here, if so please enlighten in the comments.
Classifieds grew 20% in 2009, showed a 14% gain year over year in Q1-10 and slowed to 7% in Q2-10. Advertising revenue growth is slower at 9% for the quarter from 12% in Q1-10.
Whatever happened to Shopping.com? Has it turned into the red headed stepchild of eBay Inc?
G-Market acquired at a cost of $1.2 billion in 2009 is conspicuous by its absence from Q2-10. In Q1-2010 CFO Robert Swan said “our acquisition of G-Market increased growth by four points resulting in organic revenue growth of 11%. ” His Q2-10 statement
“Marketplaces segment margin was 40% in the quarter, down 220 basis points from a year ago. The main drivers of the change include increased investments to continue to build trust, value and selection, as well as, the inclusion of Gmarket” SeekingAlpha
In Q1 Swan excused decreases in Marketplaces segment margin with ‘investing in a lower take rate’ and ‘new Buyer Protection programs’. In Q2, surprise!
“The take rate increase was driven by higher velocity on lower priced items and lower power seller discounts versus last year … along with a shift of much of the cost of our Buyer Protection Program from PayPal to marketplaces”
Donahoe says velocity is down, sold item growth was 5% in the U.S. Swan says it is up, on lower priced items. Donahoe is going to fix it.
“we’re in the midst of making some adjustments in the format mix of auctions and fixed price … we’re now going to be increasing gently the fixed price exposure, as well as, ensuring that higher ASP items are getting appropriate visibility.”
Velocity is an expression of conversion measurement, stock into sales. Inventory turnover ratio (ITR) measures the velocity or speed of conversion of stock into sales. It is important to realize that a high inventory turnover ratio may not be accompanied by high profits. Margin at its simplest is another word for profit, more cultured.
Decoding the BaySpeak
Secondary markets are so last year, we prefer “off-price inventory”.
Delicate fine tuning of search with a pitchfork and shovel is taking place, expect the excavator later.
Once again decreases in eBay fees resulted in increased costs for eBay sellers, what a surprise, (not). “a shift of much of the cost of our Buyer Protection Program” is coming out of seller hides too. Think payment hold, rolling reserves, and coming soon, pre-authorized direct debit from your bank account and/or charges to your credit card. Bet you can’t wait.
Cheap stuff is selling, mainly from stagnant and previously invisible stores inventory, but I wonder if that inventory is being replenished.
The Emperor has spoken, it would be nice if you did too in the comments.
Y’all come back!