PESA State of E-commerce Scot Wingo CEO – ChannelAdvisor twitter.com/scotwingo ebaystrategies.blogs.com, csestrategies.com, amazonstrategies, searchmarketing.com

Agenda Economic backdrop Overall E-commerce Trends E-commerce Channel Trends Paid-search Comparison Shopping Engines Marketplaces

Economic backdrop

Overall E-commerce Trends

E-commerce Channel Trends

Paid-search

Comparison Shopping Engines

Marketplaces

US Consumer Confidence

US Consumer Confidence Improving

2008 E-Commerce Results Growth rate has come down from the 20%+ y/y to flat/down Personally, I think this will mirror consumer confidence

Growth rate has come down from the 20%+ y/y to flat/down

Personally, I think this will mirror consumer confidence

Q408 Category Breakdown

E-Commerce Forecast 2009-2011 Source: JP Morgan, Forrester, US Dept of commerce.

Source: JP Morgan, Forrester, US Dept of commerce.

E-Commerce Category 08/09 Growth * All amounts are $US Billions 2008 2009 Y/Y Growth Pets 1.5 1.8 20.0% Personal Care/Health + Beauty 5 5.9 18.0% Food and Beverage 7.3 8.6 17.8% Apparel 23.6 27 14.4% Music/Video 5.5 6.2 12.7% Consumer Electronics 11.1 12.5 12.6% Furniture 1.6 1.8 12.5% Auto Parts 3.2 3.6 12.5% Appliances/Home Improvement 17.2 19.2 11.6% Movie Tickets 1 1.1 10.0% Jewelry 3.1 3.4 9.7% Flowers 2.2 2.4 9.1% Toys and Video Games 6.7 7.2 7.5% Sporting Goods 2.7 2.9 7.4% Computer 25.5 27.2 6.7% Books 5.1 5.4 5.9% Collectibles 1.7 1.8 5.9% Office Products 5.2 5.5 5.8% Event Tickets 5 5.2 4.0% Other 7.2 7.4 2.8%

Consumer Behavior Has Changed Fewer consumers go ‘direct’ – over 80% of GMV driven by e-commerce channels If you aren’t on all of these channels, you are missing a material opportunity. FBR Research based on publicly available GMV Information.

Fewer consumers go ‘direct’ – over 80% of GMV driven by e-commerce channels

If you aren’t on all of these channels, you are missing a material opportunity.

2008 – Coupons Go Mainstream 35m visitors equates to 18% of the audience

35m visitors equates to 18% of the audience

Challenges Recessionary head-winds Diversification takes time, resources and attention If you are eBay only, you are missing 75% of the pie Opportunities Multi-channel e-commerce gives you an advantage over competitors Plenty of growth left in e-commerce, think of 08/09 as a minor speed bump Coupons are hitting the mainstream Everyone’s instinct is to ‘hunker down’, but this is probably the best time in our lifetimes to take share. But do so cautiously and with a measured approach E-Commerce Trends - Summary

Challenges

Recessionary head-winds

Diversification takes time, resources and attention

If you are eBay only, you are missing 75% of the pie

Opportunities

Multi-channel e-commerce gives you an advantage over competitors

Plenty of growth left in e-commerce, think of 08/09 as a minor speed bump

Coupons are hitting the mainstream

Everyone’s instinct is to ‘hunker down’, but this is probably the best time in our lifetimes to take share. But do so cautiously and with a measured approach

E-Commerce Channel Trends

Paid Search

Huge Growing Market Paid-search market size Paid-search growth rates 2006 2007 2008 2009 2010 2011 US $8,602 $11,764 $14,518 $15,951 $20,102 $23,576 International $6,233 $10,235 $14,993 $17,208 $21,315 $25,701 Total $14,835 $21,999 $29,511 $33,159 $41,417 $49,277 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 US Y/Y Growth 37% 23% 10% 26% 17% Intl Y/Y Growth 64% 46% 15% 24% 21% Total Y/Y Growth 48% 34% 12% 25% 19%

Paid-search market size

Paid-search growth rates

Search Share Trends Source: ComScore data US Search Market Share Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Google Sites 63.1% 63.5% 63.5% 63% 63.3% Yahoo! Sites 20.5% 20.4% 20.5% 21% 20.6% Microsoft Sites 8.5% 8.3% 8.3% 8.5% 8.2% Ask Network 4.2% 4.0% 3.9% 3.7% 4.1% AOL 3.7% 3.8% 3.8% 3.9% 3.9%

Search – Summary Opportunities Many e-commerce players like CSEs and eBay have decreased their paid-search spend due to changes Google has made with quality score Don’t believe the naysayers, search still works Will Yahoo! and Microsoft merge or partner to create a ‘balance’ to Google? Google Product Search is a great ‘on-ramp’ to paid-search Challenges Search is very different than a marketplace or CSE You have to generate keywords A great e-commerce site with advanced merchandising and high conversion rates is a requirement to be able to compete successfully in the world of paid-search

Opportunities

Many e-commerce players like CSEs and eBay have decreased their paid-search spend due to changes Google has made with quality score

Don’t believe the naysayers, search still works

Will Yahoo! and Microsoft merge or partner to create a ‘balance’ to Google?

Google Product Search is a great ‘on-ramp’ to paid-search

Challenges

Search is very different than a marketplace or CSE

You have to generate keywords

A great e-commerce site with advanced merchandising and high conversion rates is a requirement to be able to compete successfully in the world of paid-search

Comparison Shopping

ChannelAdvisor – some customers see CSE as large as 40% of GMV 10-20% on average Forrester – 55% of online shoppers influenced by CSE ChannelAdvisor ‘assist’ technology shows this is the case. % of Internet audience directly using CSEs by geography CSE Trends

ChannelAdvisor – some customers see CSE as large as 40% of GMV

10-20% on average

Forrester – 55% of online shoppers influenced by CSE

ChannelAdvisor ‘assist’ technology shows this is the case.

% of Internet audience directly using CSEs by geography

CSE Y/Y growth 5%

CSE 1.0 Vintage <2000 Product catalog driven Usually heavily electronics oriented CPC Stagnant, little to no innovation since 2006 timeframe Primarily acquire traffic from paid-search CSE 2.0 Vintage >2006 Variety of models to enhance experience/business Reviews (Ciao) Social (Pronto) Traffic/fun (Jellyfish) BizModel (CPA ) CSE 1.0 vs. 2.0

CSE 1.0

Vintage <2000

Product catalog driven

Usually heavily electronics oriented

CPC

Stagnant, little to no innovation since 2006 timeframe

Primarily acquire traffic from paid-search

CSE 2.0

Vintage >2006

Variety of models to enhance experience/business

Reviews (Ciao)

Social (Pronto)

Traffic/fun (Jellyfish)

BizModel (CPA )

CSE Trends I Rank Oct-2008 Nov-2008 Dec-2008 Jan-2009 Feb-2009 Mar-2009 March Share Total Internet : Total Audience 190,616 190,775 190,650 191,863 192,187 192,173 Comparison Shopping 71,175 76,321 80,323 71,599 66,384 66,265 34% 1 Yahoo! Shopping 25,321 27,646 29,722 25,387 23,414 22,957 12% 2 Shopzilla.com Sites 24,350 24,618 29,410 24,097 20,154 20,511 11% 3 Shopping.com Sites 15,122 14,704 16,362 14,700 13,012 13,624 7% 4 PRONTO.COM (w/ history) 11,675 11,025 13,759 12,141 10,635 11,085 6% 5 ValueClick Sites 11,319 11,608 12,390 11,653 10,697 10,286 5% 6 Google Product Search 11,753 11,841 13,864 12,466 11,382 9,993 5% 7 Nextag.com Sites 6,985 8,200 9,657 8,396 7,117 7,531 4% 8 MSN Shopping 8,229 10,760 10,429 7,400 6,079 5,499 3% 9 SHOPLOCAL.COM 5,520 12,231 10,419 5,446 5,350 5,172 3% 10 AOL Shopping (w/ history) 5,381 7,433 10,163 5,251 5,362 4,609 2% 11 PriceGrabber 3,560 5,101 6,653 4,574 3,794 3,927 2% 12 Become, Inc. N/A N/A N/A N/A N/A 3,888 2%

CSE Trends II

Amazon ProductAds

Amazon ProductAds II

Amazon ProductAds III

ProductAds Categories and Pricing Open categories Baby, Computer, Consumer Electronics, Health and Personal Care, Home and Garden, Office, Sports and Outdoors, Tools and Home Improvement and Toys Restricted categories Apparel and Accessories, Beauty, Jewelry and Watches and Shoes

Open categories

Baby, Computer, Consumer Electronics, Health and Personal Care, Home and Garden, Office, Sports and Outdoors, Tools and Home Improvement and Toys

Restricted categories

Apparel and Accessories, Beauty, Jewelry and Watches and Shoes

CSE - Summary Opportunities Forrester – 55% of online shoppers influenced by CSE. Economics still ‘work’, niche sites highly effective. Next wave of innovation coming with CSE 2.0 – are you ready? Google Product Search! Did I mention that it’s FREE? In the US 34.5%+ consumers use a CSE Amazon ProductAds are an interesting new entrant in this space Challenges Datafeeds are complicated. CSEs require a pretty sophisticated e-commerce site with .merchandising to hit ROI targets. ROI management is complex and requires datafeed manipulation.

Opportunities

Forrester – 55% of online shoppers influenced by CSE.

Economics still ‘work’, niche sites highly effective.

Next wave of innovation coming with CSE 2.0 – are you ready?

Google Product Search! Did I mention that it’s FREE?

In the US 34.5%+ consumers use a CSE

Amazon ProductAds are an interesting new entrant in this space

Challenges

Datafeeds are complicated.

CSEs require a pretty sophisticated e-commerce site with .merchandising to hit ROI targets.

ROI management is complex and requires datafeed manipulation.

Marketplaces

eBay is losing share in e-commerce Q408 GMV was down 12% y/y (ex-vehicles) Q109 GMV was down 20% y/y (ex-vehicles) eBay Faces Substantial Challenges

eBay is losing share in e-commerce

Q408 GMV was down 12% y/y (ex-vehicles)

Q109 GMV was down 20% y/y (ex-vehicles)

eBay – Major Challenges Both auction and fixed-price GMV accelerating their decline

Both auction and fixed-price GMV accelerating their decline

Top eBay Seller Areas of Concern Demand DSRs Number of ‘unintended consequences’ is large Are Auctions in death spiral? Is the consumer abandoning them or is eBay effectively killing the format with decreased BestMatch Exposure Off-eBay advertising Fees/costs Search/BestMatch Did I mention demand?

Demand

DSRs

Number of ‘unintended consequences’ is large

Are Auctions in death spiral?

Is the consumer abandoning them or is eBay effectively killing the format with decreased BestMatch Exposure

Off-eBay advertising

Fees/costs

Search/BestMatch

Did I mention demand?

What are they doing to fix eBay?

Amazon – Taking Share Q109: Amazon: 21% (21% greater than e-commerce, 41% greater than eBay) E-Commerce: 0% eBay: -20%

Q109:

Amazon: 21% (21% greater than e-commerce, 41% greater than eBay)

E-Commerce: 0%

eBay: -20%

Amazon – Why? Prime Shipping Seller Business

Prime Shipping

Seller Business

Amazon’s Seller Business

eBay vs. Amazon What if the eBay/Amazon share change continues?

What if the eBay/Amazon share change continues?

eBay Changes – June 15 Smart FAQ Package Tracking Multi-sku – Biggest seller change since Fixed-Price introduced – link But not without complexity and some complex thinking…

Smart FAQ

Package Tracking

Multi-sku – Biggest seller change since Fixed-Price introduced – link

But not without complexity and some complex thinking…

Marketplaces - Summary Opportunities In face of eBay’s decline, you can take share on eBay if you are aggressive and early to the game with FP30, DSRs, RS. Catch the Amazon wave and hang on. New entrants like Buy.com give you an opportunity to establish a leadership role moving forward in your category. Challenges Marketplaces are only 25% of e-commerce, don’t over-focus here. eBay is 13% of global e-commerce, but losing share. Diversification can be complex if you’ve built your processes around a single-marketplace world. Concerns over partnering with Amazon who is a retailer.

Opportunities

In face of eBay’s decline, you can take share on eBay if you are aggressive and early to the game with FP30, DSRs, RS.

Catch the Amazon wave and hang on.

New entrants like Buy.com give you an opportunity to establish a leadership role moving forward in your category.

Challenges

Marketplaces are only 25% of e-commerce, don’t over-focus here.

eBay is 13% of global e-commerce, but losing share.

Diversification can be complex if you’ve built your processes around a single-marketplace world.

Concerns over partnering with Amazon who is a retailer.