eBay INC 2010 Fourth Quarter Earnings Numbers Of Interest To Small Business Sellers
20 January 2011
eBay INC posted mixed results for the fourth quarter of 2010 on the 19th. And once more we look at this quarter attempting to answer the question that many small businesses on eBay ponder, 'How did the Marketplaces section eBay.com do?'.
Numbers from eBay's 10/20/2010 SEC 8-K filing, show net total Marketplaces revenue growth up "8%" from the previous quarter. An improvement from two consecutive quarters of "1%" growth.
But Marketplaces revenue is only up "4%" from the fourth quarter of 2009. Versus "15%" from fourth quarter 2008 to fourth quarter 2009.
Marketplace revenues are principally generated through fees paid by users of eBay.com. Principally business who use eBay.com to sell products. The more a seller lists, and/or the more a seller sells, the more Marketplaces revenue eBay.com generates.
Now look at just the Marketplaces revenue. That is revenue derived from fees on sales.
During the busiest shopping quarter of the year, eBay shows a "6%" current quarter versus prior quarter increase. Up from the "0%" change of the third quarter.
There is a "3%" current quarter to prior year quarter increase. Compared to the "17%" of a year ago, that "3%" could use some improvement.
You can see eBay's "6%" in action by viewing the number of products that were available during the fourth quarter shopping season.
According to Medved.net eBay started the fourth quarter with a little over 140 million listings per day. Like the third quarter, the fourth quarter number of listings peaked at 142 million.
By the end of December the counts dived to 122 million.
In other words, millions of products were placed on eBay.com and millions were sold, resulting in eBay's revenue increase.
If you were selling on eBay.com, were you using PayPal?
The number of PayPal payments made and the amount of those PayPal payments, increased "18%" and "20%" respectively.
According the eBay.com numbers, the "Transaction revenue rate" has remained stable for the past year. The current quarter Marketplace loss rate, part of which includes fraud, stands at 3.45%. Compared to VISA, who reported a fraud rate of "$5 per $10,000" in 2005. Which is 0.05%.
According to eBay the Bill Me Later losses are decreasing. The Net charge-off rate has gone from 11.14% to 6.07%, and the 90-day delinquency rate has dropped to 2.37% from 4.20%.
Businesses in general pass costs on to their customers, and in the case of eBay to their sellers. Sellers will have to make their own determination on whether the declining loss rates indicates eBay is containing costs, or passing them on to the businesses that use eBay.
What about seller and buyer claims that there is less merchandise on eBay.com. That is, have products moved off eBay.com?
Businesses traditionally load inventory onto eBay during the fourth quarter shopping season. There was a quarter to quarter Gross Merchandising Volume (GMV) increase of 19%, and a current quarter versus prior year quarter increase of 6%. Excluding vehicles.
GMV represents "Total value of all successfully closed items between users on eBay Marketplaces trading platforms during the quarter, regardless of whether the buyer and seller actually consummated the transation."
Keep in the GMV represents the value of the items sold. As stated earlier the actual number of items available on a daily basis during the fourth quarter ranged from 142 million to 122 million. Comparable to counts during the third quarter.
The GMV for vehicles declined "-11%" quarter to quarter, and "-8%" quarter to prior year quarter. The second straight quarter of declines, with declines in three of the four 2010 quarters.
Auction seller inventory now represents 38% of eBay.com's GMV (Gross Merchandise Volume). A decrease from the 40% of the previous quarter.
Has there been progress for eBay under CEO John Donaohe?
The New York Times said about eBay's fourth quarter:
- "Revenue in the period rose 5 percent"
- "Revenue from eBay’s marketplace business, which is its largest unit and includes its namesake Web site, rose 4 percent"
Excluding vehicle related sales, the GMV (sales) current quarter versus prior year quarter increased 6%.
Then again the Wall Street Journal said of year to year online sales:
Perhaps businesses on eBay should ask why in aggregate they had to settle for John Donahoe's 6% increase in sales, when the rest of the internet was doing 13%.
"The minute our community stops talking is the minute I worry. Because their opinions, constructive criticism or praise, stem from passion."
John Donahoe, eBay CEO, 18 April 2008