Sunday, July 23, 2006
eBay Meets Targets, Plans Fee Increases
Online auction and fixed-sales giant eBay reported earnings that largely met expectations and set the outlook higher for the remainder of the year. The company also unveiled plans to raise fees in a bid to further boost revenues. eBay posted earnings of US$250 million, down from $291.6 million in the year-ago period, mainly due to the impact of stock options accounting. With the stock options costs stripped out, eBay said it would have brought in 24 cents per share, matching the estimates of analysts. Revenue for the quarter was $1.41 billion, a 30 percent increase over last year. eBay's online payment unit, PayPal, provided much of the boost, with revenue from that unit growing nearly 40 percent to $339 million. CEO Meg Whitman said the quarter was a "good" one for the company, "driven by solid growth across eBay, PayPal and Skype." eBay also announced plans to buy back up to $2 billion worth of its own shares over the next two years. That plan, Whitman said, "underscores our confidence in our ability to generate strong profitability and cash flows while investing in the future of the company."
In addition, eBay said it would raise new insertion fees for online stores from 2 cents to between 5 cents and 10 cents, and raise the final-value fees charged on store items that sell for less than $100. Those moves are aimed at moving more items for sale into its main listings area and out of sellers' eBay stores. The company said stores were becoming too crowded with items, diminishing the overall eBay experience for buyers and sellers alike. "The marketplace has been overwhelmed with identical, often poorly-priced items that have diluted the magic of the eBay experience," Whitman said. The changes have manifested themselves in the form of fewer return visits, higher exit rates and fewer bids per listing, she added, as well as lower conversion rates and fewer successful auction listings. eBay also said its Skype VoIP unit had grown by 20 percent in terms of registered users, with 113 million accounts at the end of the quarter, up from 95 million in first quarter of 2006. Revenue from Skype was $44 million, up 26 percent from the first quarter.
The company added that the quarter could have been better, but that it experienced a significant decrease in the amount of bidding taking place when World Cup soccer matches were being played. That tournament ran through most of the month of June. Investors were buoyed by eBay's stock buyback plans as well as its outlook, which was upbeat for the remainder of the year. eBay said revenues for all of 2006 would be between $5.7 billion and $5.9 billion with full-year per-share earnings between 69 cents and 72 cents. Both numbers represented reaffirmations or even slight increases from earlier forecasts. eBay shares were down about 1 percent in midday trading Thursday to $25.63. The attempt by eBay to convince sellers to use auction listings more often is somewhat ironic, given eBay's own aggressive move into the fixed-price, store-style sales space. That move is expected to make eBay more of a direct competitor with Amazon.com and other e-tailers. Now, eBay may be recognizing that making its site into too much of a traditional retail outlet actually detracts from what has always made it unique, said Forrester Research analyst Carrie Johnson. "eBay's strength is its community and loyal users, and if it gets away from that, it might hurt its own cause," Johnson said. "People like eBay because they can find whatever they're looking for, but if it's broken up into sellers' stores rather in the main listings, it changes the user experience." eBay appears to be seeing strong listings demand heading into the summer, according to Prudential Securities analyst Mark Rowen.
The strongest part of its year is still ahead in the third and fourth quarters, which include the back-to-school and holiday shopping season. eBay is also operating in enough international locations, Rowen added, that slowdowns are smoothed out by it geographical reach.
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In addition, eBay said it would raise new insertion fees for online stores from 2 cents to between 5 cents and 10 cents, and raise the final-value fees charged on store items that sell for less than $100. Those moves are aimed at moving more items for sale into its main listings area and out of sellers' eBay stores. The company said stores were becoming too crowded with items, diminishing the overall eBay experience for buyers and sellers alike. "The marketplace has been overwhelmed with identical, often poorly-priced items that have diluted the magic of the eBay experience," Whitman said. The changes have manifested themselves in the form of fewer return visits, higher exit rates and fewer bids per listing, she added, as well as lower conversion rates and fewer successful auction listings. eBay also said its Skype VoIP unit had grown by 20 percent in terms of registered users, with 113 million accounts at the end of the quarter, up from 95 million in first quarter of 2006. Revenue from Skype was $44 million, up 26 percent from the first quarter.
The company added that the quarter could have been better, but that it experienced a significant decrease in the amount of bidding taking place when World Cup soccer matches were being played. That tournament ran through most of the month of June. Investors were buoyed by eBay's stock buyback plans as well as its outlook, which was upbeat for the remainder of the year. eBay said revenues for all of 2006 would be between $5.7 billion and $5.9 billion with full-year per-share earnings between 69 cents and 72 cents. Both numbers represented reaffirmations or even slight increases from earlier forecasts. eBay shares were down about 1 percent in midday trading Thursday to $25.63. The attempt by eBay to convince sellers to use auction listings more often is somewhat ironic, given eBay's own aggressive move into the fixed-price, store-style sales space. That move is expected to make eBay more of a direct competitor with Amazon.com and other e-tailers. Now, eBay may be recognizing that making its site into too much of a traditional retail outlet actually detracts from what has always made it unique, said Forrester Research analyst Carrie Johnson. "eBay's strength is its community and loyal users, and if it gets away from that, it might hurt its own cause," Johnson said. "People like eBay because they can find whatever they're looking for, but if it's broken up into sellers' stores rather in the main listings, it changes the user experience." eBay appears to be seeing strong listings demand heading into the summer, according to Prudential Securities analyst Mark Rowen.
The strongest part of its year is still ahead in the third and fourth quarters, which include the back-to-school and holiday shopping season. eBay is also operating in enough international locations, Rowen added, that slowdowns are smoothed out by it geographical reach.
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Saturday, July 08, 2006
eBay Blocks Google Checkout as Payment Option
eBay has determined the Google Checkout system, which launched last week after months of speculation, is not an acceptable form of payment for eBay auctions or fixed-price sales.
Checkout, which launched amid swirling questions about how a Google payment system would impact eBay's own PayPal, does not appear on a list of acceptable payment methods that eBay updated this week based on a global payments policy developed last year. "We've updated the policy to identify those payment methods that we've determined are not appropriate for the eBay marketplace," Rob Chesnut, senior vice president for trust and safety at eBay wrote in a posting announcing the changes. "Please note that eBay's evaluation relates only to whether a particular service is appropriate for the eBay marketplace. These payment methods may, in fact, be useful services for consumers in other contexts." Google did not respond to a request for comment on eBay's move. Checkout launched last week with some analysts saying it represented more of a threat to merchants such as Amazon.com than to eBay, since it is not designed to handle peer-to-peer transactions -- at least, not yet -- that don't require a credit card to back them.
While eBay heavily promotes PayPal as the preferred payment option on its platform, it gives sellers some other options, including Allpay.net, Bidpay, Canadian Tire Money, Checkfree.com, hyperwallet,com, Moneybookers.com, Ozpay.biz and XOOM. The list of payment options not allowed is far longer and also includes AlertPay.com, anypay.com, FastCash.com, gcash, Moneygram.com, Netpay.com, Qchex.com and xcoin.com. "While many of the payment methods offered by eBay sellers offer a high degree of safety and convenience, a few simply are not appropriate for the eBay marketplace," Chesnut said. The move to halt Checkout comes against a backdrop of significant change both within eBay's marketplace and within eBay itself. On Thursday, the company announced a major restructuring and reshuffling of upper management, possibly a response to the Google threat. eBay said the executive now running PayPal will leave later this year and will be replaced by the executive overseeing another of the company's major acquisitions, Skype.
While Google may have some legal avenues to pursue if it feels eBay is unfairly locking it out, it may be content to wait for its payment solution to get traction. Then, eBay users may be the ones to push for a policy change. For now, though, eBay may be landing the first body shot by using the notion of "trust" to reject Checkout and other payment options. Google is counting on consumers to trust it with their financial information -- otherwise, Checkout will not succeed, noted Forrester analyst Charlene Li. "I think people will be comfortable with Google as the intermediary in some sales and with it keeping their transaction histories as well," she said. "The risk is that at some point, people start to worry that Google has too much insight into their behaviors, but that's more of a long-term risk." The long-term risk for eBay and PayPal will be if Checkout adds payment options that don't rely on credit cards, enabling peer-to-peer payments backed by checking accounts or other forms of stored money, Li added. The conflict may help raise awareness of the growing number of payment alternatives now available to compete with PayPal and direct credit-card payment. For instance, MODA Solutions, which uses e-mail and online banking billpay to enable payment, is gaining traction, said MODA CEO Marwan Forzley, but the firm doesn't have the marketing budget to match eBay or Google. "Right now, word of mouth and merchant adoption is what's driving our growth," Forzley said. "If you can provide a safer alternative that reduces the risks of buying online, people should be able to find you."
Search Engine Journal Editor Loren Baker said eBay's move is likely just the beginning of additional jockeying for position, with eBay's recently announced partnership with Yahoo adding to the intrigue. "You can chalk this up as one of the first striking blows in the Google vs. Yahoo-eBay payment war," he said.
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Checkout, which launched amid swirling questions about how a Google payment system would impact eBay's own PayPal, does not appear on a list of acceptable payment methods that eBay updated this week based on a global payments policy developed last year. "We've updated the policy to identify those payment methods that we've determined are not appropriate for the eBay marketplace," Rob Chesnut, senior vice president for trust and safety at eBay wrote in a posting announcing the changes. "Please note that eBay's evaluation relates only to whether a particular service is appropriate for the eBay marketplace. These payment methods may, in fact, be useful services for consumers in other contexts." Google did not respond to a request for comment on eBay's move. Checkout launched last week with some analysts saying it represented more of a threat to merchants such as Amazon.com than to eBay, since it is not designed to handle peer-to-peer transactions -- at least, not yet -- that don't require a credit card to back them.
While eBay heavily promotes PayPal as the preferred payment option on its platform, it gives sellers some other options, including Allpay.net, Bidpay, Canadian Tire Money, Checkfree.com, hyperwallet,com, Moneybookers.com, Ozpay.biz and XOOM. The list of payment options not allowed is far longer and also includes AlertPay.com, anypay.com, FastCash.com, gcash, Moneygram.com, Netpay.com, Qchex.com and xcoin.com. "While many of the payment methods offered by eBay sellers offer a high degree of safety and convenience, a few simply are not appropriate for the eBay marketplace," Chesnut said. The move to halt Checkout comes against a backdrop of significant change both within eBay's marketplace and within eBay itself. On Thursday, the company announced a major restructuring and reshuffling of upper management, possibly a response to the Google threat. eBay said the executive now running PayPal will leave later this year and will be replaced by the executive overseeing another of the company's major acquisitions, Skype.
While Google may have some legal avenues to pursue if it feels eBay is unfairly locking it out, it may be content to wait for its payment solution to get traction. Then, eBay users may be the ones to push for a policy change. For now, though, eBay may be landing the first body shot by using the notion of "trust" to reject Checkout and other payment options. Google is counting on consumers to trust it with their financial information -- otherwise, Checkout will not succeed, noted Forrester analyst Charlene Li. "I think people will be comfortable with Google as the intermediary in some sales and with it keeping their transaction histories as well," she said. "The risk is that at some point, people start to worry that Google has too much insight into their behaviors, but that's more of a long-term risk." The long-term risk for eBay and PayPal will be if Checkout adds payment options that don't rely on credit cards, enabling peer-to-peer payments backed by checking accounts or other forms of stored money, Li added. The conflict may help raise awareness of the growing number of payment alternatives now available to compete with PayPal and direct credit-card payment. For instance, MODA Solutions, which uses e-mail and online banking billpay to enable payment, is gaining traction, said MODA CEO Marwan Forzley, but the firm doesn't have the marketing budget to match eBay or Google. "Right now, word of mouth and merchant adoption is what's driving our growth," Forzley said. "If you can provide a safer alternative that reduces the risks of buying online, people should be able to find you."
Search Engine Journal Editor Loren Baker said eBay's move is likely just the beginning of additional jockeying for position, with eBay's recently announced partnership with Yahoo adding to the intrigue. "You can chalk this up as one of the first striking blows in the Google vs. Yahoo-eBay payment war," he said.
Brought to you by the Guardian eCommerce Privacy Seal Program.
Web Rage Turns Shoppers Back to the Street
Three quarters of people now shop online, but the growing threat of "Web rage" could drive consumers back to the street, according to a British e-commerce study. Some 78 percent of online shoppers surveyed complained that their frustration with Web site performance has led them to turn off their computer. Additionally, one in three refuse to give even their favorite Web site more than a second chance before turning back to the street. Online retailers were warned to move quickly to improve the shopping experience for their online customers or risk alienating them irrevocably. The most common factor cited as causing Web rage among more than half -- 54 percent -- of the 1,000 people surveyed is the inability to ask questions by telephone. Other irritations include Web sites crashing during a transaction, 47 percent; usability and complicated registration processes, 47 percent; inability to find information, 46 percent; and inability to amend orders, 45 percent. "Web rage is a burgeoning online phenomenon," said Deri Jones, chief executive of SciVisum, which commissioned the survey. "With less than half of online shoppers prepared to give their favorite Web site more than two chances to get it right, the message is that online shoppers are showing zero tolerance to poor performance." The survey also found the average spend of online shoppers was Pounds 89 (US$165) a month, though one in 10 splurged up to Pounds 5,000 ($9,264) or more on a single purchase. CDs and books were the most popular items bought online, though clothes, groceries and financial services were also popular.
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