Cheat Sheet: eBay works to modernize its platform to attract younger buyers
In July of 2020, eBay CEO Jamie Iannone acknowledged the company was due for some updates — a “tech-led reimagination” — as he called it. With so many online marketplace options, eBay knew it needed to modernize, so it added direct deposit payments to sellers, updated the eBay app and connected with younger consumers.
Last year, eBay also started investing in sectors that were doing surprisingly well in the pandemic: sneakers and watches — categories that attract hobbyists and resonate with younger buyers.
eBay’s 2020 momentum is holding on into its first-quarter earnings, but the company is already advising that revenue will probably remain the same or fall slightly in Q2.
The key details:
- eBay announced first-quarter revenues of $3 billion, up 42% from the same quarter last year.
- Marketplace Gross Merchandise Volume came in at $27.5 billion, up 29% from the first quarter of last year.
- The company also reported 187 million annual active buyers, an increase of 7% year over year, and 20 million annual global active sellers, up 8% year over year.
- In the U.S., sneakers selling above $100 grew at a triple-digit rate year-over-year, and growth in luxury watches grew 38%.
In an effort to modernize, eBay rolled out managed payments last fall, which deposit payments directly into sellers’ bank accounts. Before, sellers would have to pay eBay fees and PayPal fees. For the first quarter, over half of global on-platform volume was processed through managed payments.
eBay’s Promoted Listing ad product generated $224 million in revenue for the first quarter. Last year, the company’s total ad revenue passed $1 billion for the year, just a mere 1% of GMV. In Wednesday’s call, Iannone said the company is experimenting with ad placements for auctions, CPC capabilities, and off-site ads.
eBay has also focused on app updates, including streamlined layout and SEO tweaks, as well as a dark mode. For 2020, almost half of global gross merchandise volume was transacted in the app.
Timely Investments in Shoes
In the fourth quarter 2020 earnings call, Iannone said investing in eBay’s core marketplace with a focus on enthusiasts was a priority this year. In the U.S., sneakers selling above $100 grew at a triple-digit rate year-over-year this quarter, and luxury watches grew 38%.
In the fall of 2020, eBay launched its “Authenticity Guarantee” for watches sold over $2,000 and for sneakers sold for $100. Under that program, eBay dropped seller fees on big sneaker purchases but increased seller fees in early April on watches to fund advertising for the luxury items.
Last year, eBay sold more than 200,000 luxury watches, as well as 7.69 million sneakers in North America, up from 6 million in 2019, according to company data.
Of course, eBay faces stiff competition from StockX and GOAT, which are both more focused platforms, as well as shoe providers like Nike, which launched a resale program. On the other hand, Amazon, Walmart and others are looking to attract mass-market consumers who are hunting for value and deals.
But eBay is betting big on its authentication services to entice buyers.
In 2020 the average customer who purchased a pair of sneakers over $100 spent a total of $2,500 on eBay. Approximately 80% of that spend was in categories outside of sneakers.
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