UPDATE: EBay CEO:Ecommerce Giant To Target 'Secondary Market'
11 Mars 2009 - 6:24PM
Dow Jones News
EBay Inc. (EBAY) Chief Executive John Donahoe said Wednesday
that the ecommerce company would focus on the global "secondary
market," selling low-volume and liquidation products as part of its
effort to transform its core marketplace business.
"We are not a retailer," he said during a presentation at the
company's analyst meeting in San Jose, Calif. "We will focus on the
secondary market."
Donahoe didn't immediately provide details of the company's
plans to capture the lead in the "global secondary marketplace,"
but indicated that the process of transforming eBay's core business
would "take time."
He predicted that eBay's marketplace revenue would grow more
slowly than the ecommerce market in 2009, track market growth in
2010 and surpass market growth in 2011.
Donahoe, appearing at his first analysts day meeting since
becoming CEO last year, also declared that the company viewed
online auctions and fixed-price sales as formats, not strategies,
adding that shoppers want to buy things in various formats.
Donahoe also declared that online payments unit PayPal was a
second core business for the company with "an enormous
potential."
Scott Thompson, PayPal president, later said the company's
payments unit expects to double the size of its business over the
next few years, processing $100 billion to $120 billion worth of
transactions by 2011.
"We expect to process 14% of global ecommerce transactions by
2011," he told analysts.
Thompson said PayPal would achieve that growth by expanding its
penetration on eBay, increasing its share of non-eBay transactions
and by expanding into adjacent markets.
The PayPal president said he was more convinced than ever that
eBay will be able to generate synergies from its purchase last year
of Bill Me Later, which lets online retailers offer shoppers
credit.
Bill Me Later's proprietary underwriting system tells shoppers
within seconds if they are approved for credit, without detailed
application forms.
Thompson predicted that PayPal could generate $4 billion to $5
billion in revenue by 2011, although margins were expected to be
squeezed over the next two years as the company works to integrate
Bill Me Later.
Ebay's payments business, which represents about 28% of the
company's total revenue, grew 25% in 2008 to $2.4 billion.
Growth at the Internet auction pioneer has waned in recent years
as online shoppers began shifting away from auctions to fixed-price
purchases on sites such as market leader Amazon.com Inc. (AMZN).
Investors have fled in droves, driving eBay shares down 66% in
recent trading from their 52-week high.
Ebay last year launched a series of initiatives to promote
fixed-price transactions aimed at attracting top-quality sellers
and creating a shopping experience that is more similar to
Amazon's. The company has so far failed to reverse the erosion in
its auction business, but Donahoe's comments suggest more dramatic
changes may be in store.
-By Scott Morrison, Dow Jones Newswires; 415-765-6118;
scott.morrison@dowjones.com