) management has indicated that the eBay Bucks rewards program
introduced in August 2010 is gaining traction and enabling higher
consumer spending on eBay.
eBay Bucks is a rewards program for shopping on eBay.
Shoppers earn 2% of the purchase value of qualified items and are
issued an eBay Bucks certificate at the end of each quarter which
can be redeemed within the next 30 days. For example,
spending $2,500 per quarter on eBay would earn you $50 in eBay
Bucks which can be used on future purchases.
eBay Bucks can stimulate more purchases on eBay which can lead
to an increase in the company's listings-to-sales conversion
rate. eBay's program may also siphon off purchases from
competing platforms like
) and Overstock (
Listing-to-sales conversion rate declining
Listings-to-sales conversion rate represents the percentage of
items for sale listed on eBay that are actually sold.
We estimate that the conversion rate has declined slowly from
42% in 2006 to 39% in 2009
. We believe that this ratio declined in the past due to the
recessionary environment forcing customers to cut down on spending.
With improving macro conditions, we expect this ratio to stabilize
at around 39% in the future.
Can eBay Bucks program boost sales on its
According to eBay management
, over three million shoppers have enrolled in the eBay Bucks
program and spent five times more than those not enrolled. If eBay
continues to come up with such innovative programs, this conversion
rate could actually increase in the future. There could be an
upside of more than 10% to the $31 Trefis price estimate for eBay's
stock if eBay's conversion rate were to increase to 50% (half of
all listed items sold) by the end of the Trefis forecast
You can see the complete $31 Trefis Price
estimate for eBay's stock here