EBay forecast disappoints amid competition from Amazon, Walmart

[Artline1986]

EBay forecast disappoints amid competition from Amazon, Walmart

EBay Inc forecast first-quarter revenue below Wall Street targets on Tuesday, as the e-commerce company faces fierce competition from bigger rival Amazon.com Inc , sending its shares down about 3per cent after the bell.


REUTERS: EBay Inc forecast first-quarter revenue below analysts' estimates on Tuesday, as the e-commerce company faces fierce competition from Amazon.com Inc and Walmart Inc .

Shares of San Jose, California-based eBay were down about 5per cent after the bell.

"The relative growth rates of eBay's business versus Walmart's e-commerce efforts suggests eBay is losing market share to Walmart in the category," D.A. Davidson analyst Tom Forte said.

Facing stiff competition in its marketplace business, eBay has shifted focus to its advertising and payments businesses, as well as worked to make its platform simpler to use by adding features such as grouped listings and personal recommendations.

"I'd say Amazon is still the primary culprit", said Benchmark analyst Daniel Kurnos.

EBay slashed nearly US$116 million (88.3 million pounds) in marketing expense in the fourth quarter in line with its continued effort to cut costs.

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"They (eBay) also pulled back on marketing, basically giving up more share back to the marketplace in certain unprofitable channels," Kurnos added.

The company is also reeling under pressure from activist investors to hive off some of its businesses to improve profitability.

Following pressure from Elliott Management Corp and Starboard Value, eBay in November agreed to sell its ticketing unit, StubHub, for US$4.05 billion to ticket reseller Viagogo Ltd.

For the first quarter, eBay expects revenue of between US$2.55 billion and US$2.60 billion, while analysts were expecting US$2.64 billion, according to IBES data from Refinitiv.

However, the company's revenue of US$2.82 billion in the fourth quarter came in above analysts' expectation of US$2.81 billion.

Gross merchandise volume, which is the value of goods sold on its websites within a certain time frame, fell 5per cent to US$23.3 billion.

EBay said active buyers grew 2per cent to 183 million in the quarter from a year earlier, but they remained unchanged from the third quarter.

Growth in active buyers was impacted by the reduced marketing spend and a higher churn than what the company had expected, Chief Financial Officer Andrew Cring said on a post-earnings call.

Net income from continuing operations fell to US$558 million, or 69 cents per share, in the quarter ended Dec. 31, from US$763 million, or 80 cents per share, a year earlier.

On an adjusted basis, the company earned 81 cents per share, above the average analyst estimate 76 cents.

(Reporting by Ayanti Bera in Bengaluru; Editing by Shinjini Ganguli and Maju Samuel)

[phaz0rz]

Ah, so that's why they've backed off on pushing managed payments for now. Seems like they're trying to slow the mass exodus of sellers?

[prodigyace]

I wish they gave us the option to opt into managed payments upon choice, immediately after registration. I'm sick of paypal and the looking doom of them possibly suspending you and keeping your money

[yankee]

Originally Posted by phaz0rz

Ah, so that's why they've backed off on pushing managed payments for now. Seems like they're trying to slow the mass exodus of sellers?

MP still has lots of kinks to be worked out. I dont think ebay wants to have the support expenses so they are doing it on a managed scale.

The small delay on payments killed ebays phone support last fall and very few accounts are on MP now.

The people I know doing MP on a pure stealth level are not exactly having an easy go of it either so you may be correct. Until ayden/ebay work out a very fast system for processing docs and reinstating accounts, a bulk change over like Etsy did could be crippling to revenue. So far, it seems to be straight forward but imagine having 50 million users with with glitches or doc requests as the same time

[agent006140]

there is agreement when Ebay spunoff Paypal,that some day when it decides to set up MP or allow other payment processors to offer their services,it has to be a gradual process,not everyone ditches Paypal and go with MP.
Ebay has been described by Wall Street as a melting icecube,buyers/sellers are going elsewhere,bottomfeeders also dont want to pay sales tax on used items.

[Artline1986]

Sales on eBay in the US declined 9% in the fourth quarter, and the number of sold items globally shrunk 4%. While the company did provide reasons for the shrinking sales on the platform, those reasons merely distracted from the fact that the fundamentals are not working.



Scott Schenkel, the interim CEO at eBay, attributed this poor performance to two factors: reduced marking and internal sales tax in the US. Scott said that the company has reduced marketing that was not attracting buyers with high lifetime spending and that internet sales tax is increasing prices buyers see at checkout and are thus purchasing less, particularly large dollar items.

As a result, eBay ended the year with GMV shrinking from $89.8 billion in 2018 to $85.5 in 2019. To hold its revenue flat while seeing declining GMV trends, the company has increased its transaction take rate - the percent of GMV it captures as revenue - to 9.0% in the fourth quarter, an all-time high. More recently promoted listings and managed payments have contributed to that.

The company said that over 1.1 million sellers promoted more than 320 million listings in the quarter. Up from 600,000 sellers promoting 200 million listings in the fourth quarter of 2018. eBay has adjusted the mix of promoted and non-promoted listings at the top of search results, which now start with five sponsored product ads. Thus the third-party sellers are spending more on fees while the overall sales are not growing.

In the US, eBay’s market share of online shopping is second only to Amazon, but while the rest of the market is growing, eBay is shrinking. eBay is mostly excluded from the conversation about the future of the retail industry, despite its size. Unfortunately for the company, not only has traditional retail spending not shifted to eBay as it transitioned away from auctions, new upstarts have chipped away at its niche markets like fashion resale, sneaker collectors, and handmade goods.

Reduced marketing to increase margins is not going to help the company regain its relevance. eBay isn’t working, and by trying to stay afloat, it won’t be able to find what could make it work.

[animekings99]

There going down because we have to keep on making new stealth account lmfao

[agent006140]

I buy low price items on Ebay,like fragile labels,bubble wrap,tapes,things I dont care if it works or not.
everything else I go to WMT,Macy,AMZN.
Mixing old and new stuff,cheap and expensive stuff,bad and good pictures, just drive serious shoppers away

[glacier922]

I just hope they do away with it altogether

Originally Posted by phaz0rz

Ah, so that's why they've backed off on pushing managed payments for now. Seems like they're trying to slow the mass exodus of sellers?

[agent006140]

some sellers like MP,they said they like getting their money in their bank daily,weekly,monthly.
Can MP reach into your bank account if there are chargebacks?

[agent006140]

Ebay needs a guy who knows retail business,the last one is the technology officer,the one before Donahue is private fund partner ,before that Meg Whitman used to run a division for a toy company,none of them have been on the front line of retailing.
also mixing old and new,cheap and expensive items,bad spelling,bad pictures,poor description ,dirty finger nails turn serious buyers away.
Once I received a package with a cockroach inside.