eBay made $1.4 billion in Marketplaces transaction revenue in the 4th quarter of 2011 – $1.77 billion in total Marketplaces revenue including Marketing Services Other Revenue, which was up 17% year-over-year after factoring out the effects of foreign exchange.

But GMV (the value of goods sold) on eBay Marketplaces not including vehicles grew only 10% in the 4th quarter of 2011 from a year ago – both in the US and internationally. Wall Street analyst Mark Mahaney of Citi said the deceleration of US GMV to 10% from 14% in the previous quarter was solid but not too inspiring. eBays CFO blamed the US deceleration on slowing exports to Europe and declining ASPs (average selling prices) primarily driven by gold prices on the platform.

Mahaney also wrote in his report that Marketplace Transaction Take Rate was 8.75%, up 130 bps Y/Y – an impressive but surprising trend. (A higher take rate means eBay is wringing more money from the same amount of sales.)

Two revelations during a post-earnings conference call yesterday may make eBay sellers nervous about the year ahead. First, more changes are coming – eBay mentioned new products that will roll out in 2012 to eBay Marketplaces. And secondly, regular sellers will at some point have to deal with an influx of inventory from GSI Commerces large brands and retailers.

eBay Marketplaces New-User Growth Remains Flat
CEO John Donahoe and CFO Bob Swan sounded pleased with the fourth quarter results overasll, and called 2011 year-one of a three-year plan that they had outlined at last years Analyst Day. However, Donahoe got defensive at two points during the QA period. The first was when an analyst noted that eBays growth in the number of global active users on its Marketplaces remained flat at 6% despite a television advertising campaign in the US that promoted eBays buy it new, buy it now message.

Its not going to happen overnight, Donahoe said, adding, were just getting started. He also said eBay Marketplaces President Devin Wenig had made adding new users one of his key tenets both in eBays existing markets and in new markets.

eBay Execs on the Chopping Block
Another analyst asked eBays CEO what steps he was taking to counter the departure of some PayPal executives in light of the departures to Google last year and PayPal President Scott Thompsons departure 2 weeks ago.

Scotts departure was a surprise, but I wish Scott very, very well in his new role, Donahoe said, and stated that he disagreed with the analysts characterization.

He then made the surprising statement, Over the last 3 years, I have replaced 75 of the top 100 people in this company, making it particularly jarring later when he joked about using a hammer as a new people management tool. (An analyst from UBS jokingly asked if it the hammer was something Bain had taught him about management.)

Donahoe said, We have rebuilt the leadership team across all of our businesses, including PayPal and said the PayPal leadership team had never been stronger. He mentioned eBays ability to attract an excellent team at PayPal, specifically mentioning Don Kingsborough (heading up PayPals offline point-of-sale initiative) and David Marcus (head of PayPal Mobile).

The PayPal leadership team felt enormous ownership over the PayPal vision that they developed, enormous commitment over the plans, and they will not miss a beat.

Fees on Shipping Added Less than 1% to US Revenue Growth
eBay now charges fees on shipping costs in the US as of last year, but eBay CEO John Donahoe said that change was take-rate neutral. He said he knew there were questions about the impact of the fee change on eBays financials. Let me say it was immaterial globally and accounted for roughly less than 1 percent of the growth in the US

Explaining that the fee change encouraged sellers to offer free shipping, Donahoe said, It is the right thing to do, and sellers are responding, and we think consumers are responding to that.

Expect Rapid Influx of Inventory from Large Merchants from GSI

Regarding GSI Commerce, which eBay acquired last March, CFO Bob Swan said they still had some work to do on the technology and features to enable GSIs 500 large retailers and brands (which include the likes of Adidas, Timberland, American Eagle Outfitters) to easily serve up their inventory on the eBay platform.

Were making sure we get it right before we rapidly expand additional large merchants on the platform, Swan said, adding that the GSI Commerce clients were excited about getting access to 100 million users around the globe – 13 of its 500 large merchants are already on eBay Marketplaces.

Were working together to ensure its simple and easy to put their inventory on eBay Marketplace, and were making sure we get it right before we rapidly expand additional large merchants on the platform, Swan said.

Donahoe added, Over the next 60 – 90 days, were going to have some nice examples of trying new things with well known brands and retailers.

New Products Coming to eBay Marketplaces

As eBays chief executive and financial officers discussed fourth-quarter earnings with analysts during the conference call, they revealed that eBay expected to see solid performance in core markets in its Marketplaces business in 2012, with continued investment in platform and new products.

But sellers will have to wait to see what those new products are that lie in store. eBay spokesperson Amanda Coffee told EcommerceBytes after the conference call that eBay hadnt announced any new products yet, but will throughout the year.

PayPal Mobile and Point of Sale

Donahoe said PayPals pilot with The Home Depot stores for its point-of-sale checkout system was taking place in the Bay area. He described how he had visited a store and made a purchase simply by typing his phone number and Pin number into the stores checkout terminal.

He also noted that PayPal mobile payments increases conversion rates for retailers – Donahoe said shoppers are more confident about making a purchase when they see the PayPal button on their phone.

Ineresting Data Points from eBay Q4-2011

For eBays full 4th quarter and full-year 2011 financial results, see the eBay Investor Relations section of its website. Here are some key highlights of interest to eBay sellers.

• Marketplace revenue: 17% fx-neutral year over year growth (including adjacent services).
• US GMV non-vehicle: was up 10% in Q4 2011, with strong category sales in Fashion and Parts Accessories.
• US GMV non-vehicle growth decelerated in Q4 from Q3s 14% growth thanks to slowing exports to Europe and gold prices on the platform.
• International GMV non-vehicle: was up 10% in Q4 2011 – Germany remains sluggish while UK is strong and stable.
• Flat growth rate in number of global active users – up 6% to 100.4 million active users on eBay Marketplaces.
• eBay has $6.5 billion in cash sitting overseas. The CFO said eBay ended the year with $7.5 billion in cash, cash equivalents and non-equity investments, including $1 billion in the US
• In terms of corporate capital allocation, eBay closed on the sale of its remaining minority interest in Skype for $2.3 billion, completed 3 acquisitions, and repurchased 8 million shares in the fourth quarter 2011.
• Corporate Product Development operating expenses increased as a percentage of revenue due to investments in mobile apps, PayPal platform and POS, search, X.commerce and acquisitions.
• eBay revised its outlook for 2013 revenue (see graphic above).

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