eBay announced Q2 earnings last week—a continuation of slow growth and growing advertising revenues. eBay revenues grew 5% year-on-year to $2.5 billion, while its gross-merchandise value dropped 2% to $18.2 billion. Listening to the earnings call was hard.
eBay CEO Jamie Iannone has been a caretaker - fairly little innovation, no risks, keep the business running and keep the lights on. Real tortoise movement,
On Monday, Mr. Iannone spoke to Insider on eBay’s evolution - the next phase of the marketplace.
A few take-aways:
"Artificial intelligence will drive growth? - we are still in the early stages of AI adoption so - seeing any topline or bottomline growth is close to impossible currently.
Continue to focus on revenue driving categories such as sneakers, handbags, watches, trading cards, and motor parts and accessories. eBay should be the market leader in circular economy - the Wenig and Donahoe years sadly was without focus and gave startups such as The RealReal, StockX, and others the opportunity to grow. I believe eBay will start to take marketshare back from them.
Double down on initiatives that drive trust through verification of high value goods, certified by brand,
Use livestreaming in the focus categories to drive engagement and sales. Initlal feedback of “more than 100 sellers had tried eBay’s version and sold more than $1 million in goods in total.” Its early stages but likely will be a focus in 2024.
Also discussions in the presentation about focussing more on bigger spending loyal customers.
But eBay isn’t uniform on this around the world
North America - discontinued eBay bucks rebate scheme
UK - “earn” and “burn” with multi-retailer NECTAR loyalty scheme–lead retailer is Sainsbury’s supermarket (I think this is quite good). (NECTAR is a bit like a frequent flyer/stayer scheme, in fact you can transfer out to Avios/British Airways and some hotel groups).
Germany - ebay Plus (subscription which reduces shipping charges for deliveries and returns)
Nothing like consistent–UK or German schemes could play well in the rest of the world, and would be copy-paste to implement. So why not?
Further thought: would Nectar be a good investment for eBay as a “retail media/advertsing” purchase? Nectar started as independent but was eventually bought by Sainsbury’s in 2018, but maybe could be sold or licensed.
(Tesco operates a similar scheme but with fewer earn and burn opportunities, and would never sell it, although the DunnHumby agency, who has been instrumental in operating Tesco’s scheme for decades, could create something turnkey for eBay).
I really look forward to seeing this. This has been a headscratcher for over a decade. Why abandon the thing that made eBay great, only to see hundred million dollar, billion dollar businesses built on taking eBay’s lunch money?
Also discussions in the presentation about focusing more on bigger spending loyal customers.
The real danger there is getting too much of a dependence on a small segment of the population, which then drives your future efforts to be much more targeted to them and potentially alienating the rest of the population. Similar issues happening in California, where the income tax was designed so that it was something like 40% of all of the taxes were paid by just 0.5% of the population because of a dependency on capital gains and Silicon Valley/startups, so that as that has turned on them recently the budget completely falls apart. Same thing can happen here, when eBay keeps failing to innovate in many areas and also gets rid of the perfect thing to keep drawing a wide array of more casual customers back to the platform (eBay Bucks). I’m sure the breakage/expiration on eBay Bucks was pretty high so they never had to pay out, and for those where they did pay out they got another purchase on the platform and made a new commission. I can tell you I was disappointed when they stopped accruing into my account, without any warning or notice (though there are still references to the program throughout the app, checkout, and website).
