Listing Numbers Cast Doubt on eBay's Growth Plans
By Peter Eavis with Tim Arango
Staff Reporters
8/21/01 8:40 AM ET
URL: thestreet.com
Millions of people spend hours searching eBay (EBAY:Nasdaq) for treasure. Some others are scrutinizing eBay itself -- and finding anything but treasure.
In fact, recent studies of prices, listings and users cast a cloud over the uniformly bullish case that investors and Wall Street analysts make for this company. The danger? Key statistics derived from these studies suggest that stellar growth rates in use, sales and profit will be tough to maintain. eBay's pricey stock isn't factoring in a slowdown.
Here's what eBay monitors have found out.
Perhaps most important, new goods sold on eBay, particularly electronics products, are frequently more expensive than identical goods sold on retail sites, data from an ongoing study suggest. The risk for eBay? That it will lose out as it tries to compete with e-commerce sites that offersimpler payment systems and faster delivery. What's more, the company could lose its reputation as a place to find bargains, something that has been a large part of the appeal for its buying community. At the same time, the company has resisted efforts by other sites to include eBay in search engines that compare prices across a broad range of retail and auction sites.
Meanwhile, collectibles -- the catchall term for anything from cute Beanie Babies to grim Nazi memorabilia -- are falling in price, according to two surveys. This could eat into eBay's listing fee revenue if auction numbers stall. And there are signs that a slowdown may be coming: An analysis of eBay's main U.S. site shows that the growth rate of auction listings is a third of what it was at the beginning of the year.
How many active users actually exist on eBay is another key number, but one that is hard to gauge. The real figure, however, is likely a lot smaller than the user figure eBay provides along with its quarterly earnings. One study suggests the user number could be half of eBay's advertised figure of 34 million. And, after excluding users picked up by acquiring other auction sites around the world, it appears that growth in eBay's user total is also decelerating.
Make no mistake: These findings don't show that earnings growth is imminently set to tumble from its rip-roaring pace. But they could be early indicators that sales and profits won't meet market expectations at some point in the next 18 months.
The Goods
So what are eBay watchers coming up with?
According to an as-yet-to-be-published study conducted by AuctionBytes.com, an online newsletter for auction users, practical goods being auctioned on eBay often end up selling at a higher price than other retailers are offering. |
