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EBay Inc.’s clear priority on attracting higher-quality sellers helped boost the value of merchandise sold on its marketplace 24% year over year in the fourth quarter, says analyst Colin Sebastian of Lazard Capital Markets.
EBay Inc.’s well-defined focus on attracting more reputable sellers helped the company boost the value of merchandise sold on its marketplace 24% year over year in the fourth quarter, says analyst Colin Sebastian of Lazard Capital Markets. “EBay knows who it wants to be-it’s focused on attracting higher-quality sellers,” he says. “Two years ago most people would be hard-pressed to say who eBay wanted to be.”
However, that doesn’t mean that the eBay marketplace doesn’t still have problems, he says. “It’s not a finely tuned machine,” says Sebastian. “It’s still losing market share to Amazon and Google and other entry points to the retail funnel. And there’s still some confusion among buyers about what eBay is useful for.”
EBay has made several moves to try to bolster its marketplace business in recent years, including upgrading its search technology and offering discounts to top-rated merchants and those that offer free shipping. So far those moves have worked better abroad-international sales made up 60% of total marketplace revenue-than in the U.S., says analyst Aaron Kessler of Kauffman Bros. He notes eBay nearly doubled the number of live listings in Europe by lowering both fixed price and auction listing fees. “In Europe it has led to a better user experience as it`s increased the selection on the site,” says Kessler. EBay plans to similarly lower its fixed price fees in the U.S. this year, John J. Donahoe, eBay’s CEO, said yesterday in a conference call with analysts.
EBay may be close to its natural market share, says Sebastian. “Before Amazon and others entered the third-party market, eBay was one of the only significant channels,” he says. Now it is a more clearly defined distribution channel for merchants specializing in excess inventory, hard-to-find items, and niche “long tail” merchandise.
In addition to changes in its marketplace, eBay’s strong fourth quarter numbers are due to easier year-over-year comparisons, says Kessler. “It is much easier to improve on numbers from the second half of 2008 than the first half,” he says.
Ebay’s mobile initiatives also helped spur eBay’s growth, said Donahoe. Nearly 7 million consumers have eBay apps on their mobile phones, says eBay.
For the year, eBay users completed more than $600 million in transactions on mobile phones, a 200% increase from 2008. EBay leads all retailers in selling to consumers through mobile phones, as mobile commerce experts estimate total mobile retail sales in 2009 were only between $800 million and $1 billion.
EBay launched its mobile web site in 2007, its first mobile phone app in 2008 and an app for finding the best deals in November.
“We will continue to find new and interesting and creative ways to bring our inventory to the mobile device in ways that are engaging for consumers,” said Donahoe. “How much of that will be incremental volume versus just a device shift, we don’t know and to some extent we don’t care. We view mobile as simply one more device as a way to connect buyers and sellers.”
EBay’s auction listings are particularly well-suited to a mobile app, says Sebastian of Lazard Capital. “The mobile app is a great way to track an expiring item,” he says. Despite the large share of mobile commerce, he notes that eBay’s mobile sales are a small portion of its $48.36 billion overall transaction volume.