eBay Inc (EBAY)’s Q4 2014 Earnings Call Transcript

Bob Swan
Sure. On the PayPal take rate, there’s really been one dynamic that has been driving take rate for quite a bit of time now. And it primarily focuses on opportunities we see to expand our served market and enter new areas. And they’ve come in 3 forms. One, credit. As we expand our credit portfolio, all else equal, our monetization on credit-related transactions is higher. Secondly, as we expand with larger merchants over time, all else equal, our take rate has a tendency to be lower. And then third, as we expand into new markets, the shared economy through Braintree, our take rate has a tendency to be lower. So in all 3 cases, we’ve expanded our served market. The implications are a lower take rate, and yet we’re still able to generate 60% transaction margins. As we project going forward, there will continue to be take rate on — sorry, pressure on PayPal’s take rate, and it’s going to be primarily because of our success with the growth of Brain tree and the growth of PayPal ubiquity in large merchants. And we expect that trend of a compressed take rate to continue to come down going forward.

John Donahoe
And Eric, regarding the things at Market Places, de-prioritizing or stopping it, let me just step back. And what this is grounded in is an increasingly competitive environment that requires us to sharpen and focus the Market Place strategy. And as I mentioned earlier, we talked a lot over the last several years about the lines between e-commerce and mobile and offline blurring, the taking of $1 trillion market and making it a $10 trillion market, and that’s still the case. But Market Place in this competitive world is going to focus on the $4 trillion where our core consumers align with our competitive strengths. This is where we think we can win. And in particular in simplest terms, it’s not the convenience consumer. It’s the average and — I’m sorry, the avid shopper, the person who loves great value, loves selection, loves shopping. That’s the majority of our current customer base, and that actually is 40% of the market, $4 trillion. And so Kevin and team are more focused on what specifically that consumer wants than ever before. So an example, that consumer wants great deals, so we’re growing our Deals business.

We’re growing the $2 billion Deals business and putting less emphasis on adding more full-priced inventory on the site. On delivery, our core consumer wants free delivery or they want to buy online and pick it up in store so they don’t pay for delivery and they get to shop. And we’re spending less on same-day delivery, which is really something that’s geared toward the convenience user. Similarly, on trust, our core consumer likes eBay buyer guarantee. That’s what they like, and there’s some other trust initiatives that have less value. So it’s really a re-prioritization on the more specific focused things that our core consumer represent, and we want to grow our $80 billion marketplace into the $4 trillion opportunity.

Operator
Our next question comes from Paul Vogel of Barclays.

Paul Vogel – Barclays
Two quick questions. One, of the 7% reduction in force, just any breakdown by division where those cuts are coming from? And then just the second question, on the SEO issues that keep — that have respected Market Places for a while now, just any additional color on sort of what’s taking so long to fix that and sort of how you’re going about fixing that problem so it gets better going forward?