eBay CEO Meg Whitman Addresses Concerns Over Declining Growth Rate and Store Inventory Format

Strategic Insights -

EBay reported second-quarter net income that was in-line with expectations, but with a 14 percent year-over-year decline, mostly due to the cost of stock options. Despite a $2 billion share buyback announcement, there is concern about the overall decline in some parts of the business. In a "First on CNBC" interview, eBay CEO Meg Whitman addressed concerns over declining revenue per listing, store inventory format, and acquisitions.

Key Takeaways:

  • EBay's revenue per listing declined by 10 percent in the second quarter compared to the same period last year, largely due to the shift from core auction-style listings to store inventory format listings.
  • Whitman acknowledged the imbalance in the market and the need to revitalize the buyer experience on eBay, citing the shift from store inventory format to core auction-style listings as a key step in achieving this goal.
  • Despite concerns over the impact of fee increases, Whitman stated that the company was "taking bolder steps" to address the issue and to advantage core listings on the site and its marketing efforts.
  • eBay hopes to start seeing the impact of these changes by the middle of the current quarter, with full impact expected in the fourth quarter.
  • The company's acquisition plans include buying eBay-like trading communities around the world, and it has already acquired Tradera in Sweden this quarter.
  • Whitman emphasized that eBay is a target, although the company may be acquisitive if it finds something that is strategically in-line with its objectives.
  • The Skype acquisition is starting to show some impact, with an increase in velocity of trade of high-average selling price items and improved conversion rates and average selling prices for listings that offer Skype.
  • The decision to announce a $2 billion buyback over the next two years was made as the company was generating more cash than it could conceivably use in the near term, and it decided to return that cash to shareholders.

Statistics:

  • EBay's revenue per listing declined by 10 percent in the second quarter compared to the same period last year.
  • Store inventory format listings account for 83 percent of eBay's listings but only 9 percent of the company's gross merchandise volume.
  • The company generates 345 million queries a day on eBay, all for products.
  • eBay has already integrated Skype-me buttons on 14 different markets and 14 categories, with promising early results.
  • The company plans to spend $2 billion over the next two years to buy back its shares.

Sources:

  • CNBC/Dow Jones Business Video, "David Faber" transcript.
  • Voxant, Inc., "David Faber transcript" transcript.