Market Overview

CEO John Donahoe Defends eBay's Fee Increases (EBAY)

In March, eBay (NASDAQ: EBAY) announced that it would overhaul its fees to become more competitive with Amazon (NASDAQ: AMZN).

At the time, eBay promised that the fee overhaul would lower the expenses for many sellers.

Shortly after the announcement, Piper Jaffray analyst Gene Munster said that the platform changes should improve the seller experience "by simplifying the fee structure."

Some eBay sellers disagreed with this assessment. On the company's own community board, investors will find a whole host of complaints about the fee changes, which eBay sellers refer to as "fee increases."

"When we polled readers, the majority of respondents said it would be an increase (74 percent), while a quarter (26 percent) said it was a decrease," EcommerceBytes' Ina Steiner wrote in a report last April.

CNBC took note of this criticism when it interviewed eBay CEO John Donahoe, who quickly dismissed the issue.

When asked if he had heard about the rumors that some business owners left eBay after the fee increases were implemented, Donahoe replied, "No, not at all."

"What we have done is that we have dramatically simplified seller fees, and if you look at the take rates, if anything, they are coming down," he told CNBC this morning. "Sellers only pay when they actually sell something on eBay, and that's something that's unique."

On the topic of earnings, Donahoe said that eBay had a "strong second quarter" with volume growth above 20 percent.

"We were 14 percent revenue growth and at the high end of the earnings," he told the network. "…As we guided for the second half of the year, what we simply said is that macro economic conditions in Europe and Korea were such that while people were expecting us to be at the high end of the guidance, we simply said we will be within the full-year guidance, but we will use the full range of it."

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Donahoe added that eBay is "very bullish" about the business' future and that the company has forecasted mid-teens growth for the second half of the year.

With regard to Korea, Donahoe said that eBay has a "leadership position" in this "interesting market." Ecommerce growth has plummeted there, dropping from roughly 10 percent to four percent.

"But Korea is a notoriously dynamic market where the growth rates go up and down relatively quickly, so we are continuing to drive," Donahoe told CNBC. "It is a high smartphone penetration market. Our mobile strength [and] our mobile leadership are real strengths there, and while it will impact us in the second half, we will continue the leverage our leadership position in Korea and think it is important market in the future."

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ

Posted-In: CNBC EBAY John DonahoeNews Management Tech Best of Benzinga

 

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