eBay

guardian6c · ‎11-04-2022

On Wednesday 11/02/22, eBay reported financial results for its third quarter ending September 30, 2022, topping earnings and revenue estimates.

But while the company beat Wall Street estimates, a glaring problem persists. eBay keeps losing active buyers; this quarter alone, the company shed 2 million buyers, down to 133 million globally.

Year-over-Year (YoY), eBay lost 10% of active buyers as the company reported 148 million active buyers at the end of September 2021.

These active buyers statistics exclude GittiGidiyor, the Turkish marketplace the company is shutting down and is costing the company an additional 4 million buyers (based on September 2021 reported numbers).

The bottom line is that eBay’s core marketplace continues to shrink, resulting in a loss of 15 million active buyers over a twelve-month period.

During last night’s earnings call discussing the company’s results, eBay CFO Steve Priest said, “[e]nthusiast buyers accounted for approximately 17 million of our active buyers in Q3.”

In simple terms, this means out of 133 million active buyers, only 12.7% are enthusiast buyers (high-value buyers), the type of buyer eBay claims it is focusing on as they represent the majority of Gross Merchandise Volume (GMV).

In 2021, eBay executive management started to promote this high-value or enthusiast buyer strategy as the key to growing the marketplace.

eBay CEO Jamie Iannone explained in 2021 that an enthusiast buyer typically buys at least six times a year, spends more than $800, or sells on eBay as well.

Furthermore, Iannone claimed that 20% of all buyers fall into this category and were responsible for 75% of GMV on eBay.

So, how does this compare now with this year? Well, eBay keeps moving the goalpost to make comparisons very difficult.

During last night’s earnings call, eBay said that an enthusiast buyer now spends on average $3,000 per year, while last year, the company said the annual spent was at least $800.

But this quarter, eBay didn’t quantify how much of GMV the 17 million enthusiast active buyers are responsible for.

We could do a bit of simple math here to get a rough idea:

Estimated Enthusiast Buyer GMV: 17 million X $3,000 = $51 billion GMV
Total GMV (Q4 2021, Q1 2022, Q2 2022, and Q3 2022): $76.4 billion
Estimated Enthusiast Buyer GMV Share: 66.8%

So how does this compare to last year’s definition?

Unfortunately, this is very difficult to do as eBay moves the definition of the active buyer and doesn’t provide enough data to make a good comparison.

In theory, in 2021, about 31 million buyers were considered enthusiast buyers representing 75% of GMV, while now the company says 17 million buyers are responsible for about 67%.

Considering how the definition of an enthusiast buyer has changed from one that spends at least $800 in 2021 to an average of $3,000 in 2022; it’s very plausible there has been growth in this buyers segment as the company claims.

But why change the definition if it looks like there is actual positive progress?

eBay President and CEO, Jamie Iannone acknowledged stagnation and possible downturn to come during yesterday’s earnings call.

He said, “on enthusiast buyers, in Q3, we had 17 million enthusiast buyers, which was relatively flat to Q2.”

Furthermore, Iannone explained, “we do expect some pressure on that count in the coming quarters as a result of the current macro-environment. But when we look at it, the vast majority of enthusiasts remain active buyers.”

In other words, enthusiast buyers are currently not growing in actual numbers. While these buyers may continue to buy on eBay, they may also be reducing their spending over the next year due to economic realities.

I continue to feel baffled by eBay’s shell game with active buyer numbers.

It seems the company keeps explaining away overall declining numbers by highlighting sweet spots in specific focus categories where there has been growth.

But eBay is more than just focus categories.

It’s a general marketplace with millions of listings from new to pre-owned products. Recommerce, the sale of used products, is expanding globally, especially among younger generations.

Yet, it seems during financial presentations, there is very little discussion about recommerce on what should be a natural growth opportunity for eBay and one that should bring new buyers.

As long as buyers keep leaving, that seems to suggest shoppers are not finding the items they are looking for or are not happy with eBay’s platform.

Maybe it’s time for eBay to invest in understanding why buyers are leaving and what changes need to be made to the platform to bring shoppers back.

With the self-acknowledged stagnation of enthusiast buyers, it’s time to refocus on fixing the fundamentals to bring general shoppers back.

newdealpawn · ‎11-06-2022

Seems simple to me, all that enthusiast buyer, big ticket item buyer stuff is crap. The deal is this its small SELLERS who have left. These folks sold their stuff to buy more stuff. The bonehead managed payments fiasco sending MONEY OFF THE SITE, SELLER PROCEEDS COULD NOT BE USED TO MAKE PURCHASES IMMEDIATLEY.. THAT ONE MOVE COST SELLERS AND THE VENUE OPERATORS BILLIONS.. they are just now a year plus in fixing that HUGE MISTAKE , and the poor rollout of the new regulations regarding 1099 forms, and the general apathy toward small scale sellers that the current management team appears to have. (intentional or not that is the perception) are the reason those sellers left.. This once great selling venue is being poorly ran, until a complete leadership overhaul is done growth will continue to be flat. Lets just hope it will not be to late.

farmalljr · ‎11-06-2022

eBay has ignored major issues for too long, and allowed them to be a cancer to the platform. Sellers and buyers are leaving. While the whale categories they want to pursue could be nice, you can't change what eBay is and has grown from. You can't "rebrand" on OG platform. eBay is mostly thought of as a place to buy used and some collectables, but it's not know for what they WANT to be known for. That's never going to happen.

You can try to reinvent yourself all you want, to your eventual detriment, or you can get really good at what people know you for. eBay is never going to be the "go to" place for sneakers and high end collectables. And with all of the problems sellers are having with "authenticators", eventually no one will trust eBay to list anything high end. They make a mess of everything they try to jump into.

allthingssurplus · ‎11-08-2023

In addition to what you have stated reading down the entire earnings report eBay failed to state, as they have in the past, the number of Sellers that left the platform. If you add up the revenue eBay posted for advertising and promoted listing you would see that without that revenue eBay would have posted like $100 mil loss for the quarter. You are very correct in saying that management needs to focus on adding Buyers and Sellers and stop worshiping the Wall Street throne of paying stockholders. With accounting magic eBay finally stated a quarter showing a 2% gain in GMV. This only happens when Buyers and Sellers are leaving the platform if the existing Sellers have more of their sales reduced by eBay Fees. In a three year period in my category I have gone from 8.9% fees to 25% fees. Please don't anyone respond that there is no category with 25% fee. That is true. Real accounting is this, the cost of an item what you sold it for and subtract what it cost you to sell it (all eBay fees, Promoted Listings, shipping, sales tax, etc) the reality is 25% or higher on items that ship at a higher rate and have a lower value. There will be a tipping point and only when that is reached will management do something. How motivated is the CEO, Jamie, to grow this platform the only sustainable way, acquiring more Buyers and Sellers, if he gets fired for cause he will receive a $17.4 million package or if he is fired because his performance is poor he will receive $47 million in severance package. There is no down side for running the company poorly. When your profits are generated from taking a extreme percentage of the Sellers sale and flood advertising in with a Sellers listings, reducing that Sellers chance to sell their items, you have lost site of your core business. Sad

slippinjimmy · ‎11-08-2023

The last thing eBay needs is more sellers with the same stuff that is already plentiful here.

farmalljr · ‎11-08-2023

@slippinjimmy wrote:
The last thing eBay needs is more sellers with the same stuff that is already plentiful here.

I think eBay could stand more sellers, ONLY IF they could get more buyers here. The lack of buyers IS the problem, not that there are too many sellers.

dwise3671 · ‎11-08-2023

@farmalljr wrote:
@slippinjimmy wrote:
The last thing eBay needs is more sellers with the same stuff that is already plentiful here.

I think eBay could stand more sellers, ONLY IF they could get more buyers here. The lack of buyers IS the problem, not that there are too many sellers.

Buyers leave due to bad sellers, period.

dwise3671 · ‎11-08-2023

@slippinjimmy wrote:
The last thing eBay needs is more sellers with the same stuff that is already plentiful here.

Agree. Buyers are not stupid either. They are not going to pay $100 for items sellers paid $30 at retail for. The gig is up for many sellers. Buyers know where these items (new especially) are coming from. Far too many sellers use Ross, TJ Maxx and Homegoods as sourcing solutions. The problem is when a buyer figures that out, they think they are wasting their time on this site.

dbfolks166mt · ‎11-08-2023

In addition to what you have stated reading down the entire earnings report eBay failed to state, as they have in the past, the number of Sellers that left the platform. If you add up the revenue eBay posted for advertising and promoted listing you would see that without that revenue eBay would have posted like $100 mil loss for the quarter. You are very correct in saying that management needs to focus on adding Buyers and Sellers and stop worshiping the Wall Street throne of paying stockholders. With accounting magic eBay finally stated a quarter showing a 2% gain in GMV. This only happens when Buyers and Sellers are leaving the platform if the existing Sellers have more of their sales reduced by eBay Fees. In a three year period in my category I have gone from 8.9% fees to 25% fees. Please don't anyone respond that there is no category with 25% fee. That is true. Real accounting is this, the cost of an item what you sold it for and subtract what it cost you to sell it (all eBay fees, Promoted Listings, shipping, sales tax, etc) the reality is 25% or higher on items that ship at a higher rate and have a lower value. There will be a tipping point and only when that is reached will management do something. How motivated is the CEO, Jamie, to grow this platform the only sustainable way, acquiring more Buyers and Sellers, if he gets fired for cause he will receive a $17.4 million package or if he is fired because his performance is poor he will receive $47 million in severance package. There is no down side for running the company poorly. When your profits are generated from taking a extreme percentage of the Sellers sale and flood advertising in with a Sellers listings, reducing that Sellers chance to sell their items, you have lost site of your core business. Sad

The one thing that has always bothered me about GMV is the G part of this. What I would like to see eBay actually report, although it would be a little tough to do and would probably shock their shareholders, is the NMV. Focusing on the GMV is like focusing on the Gross amount on your W-2 or 1099 it's a false perception. As a seller what I am interested in is the net, what I am interested in as a worker on my W-2 is the net. The only money I actually have and can spend is the net.

As for the fee calculations about 1/2 of your listings have free shipping so the FVF's are based on that amount + sales tax + $.30. For those that have calculated or flat shipping your FVF's are based on cost of the item + sales tax + $.30. While it is true the eBay effective FVF rate is higher than what is posted in the FVF policy it will usually be a percentage point higher than the published FVF's mostly because of the sales tax. Your selling cost percentage may, and probably does exceed 25% which would be normal.

chrispass918 · ‎11-08-2023

Don’t care, eBay for life!

farmalljr · ‎11-08-2023

@dwise3671 wrote:
@farmalljr wrote:
@slippinjimmy wrote:
The last thing eBay needs is more sellers with the same stuff that is already plentiful here.

I think eBay could stand more sellers, ONLY IF they could get more buyers here. The lack of buyers IS the problem, not that there are too many sellers.
Buyers leave due to bad sellers, period.

That's just not true. Some MAY leave because of a bad experience, but we all know how the MBG works. No buyer has really ANY worries of getting screwed over.

SEARCH is a big issue why they leave. If you can't easily find what you are looking for, you go elsewhere. Pricing can also be a factor. People are not going to pay $100 for something they can get at the mall for $30. Far too many seller inflate prices to unreasonable levels in the name of making money.

Personally, I think if eBay would delete listings 90 days old and charge a seller a $3 listing fee to relist, on items that are not selling in those 90 days, there would be WAY less clutter on the site/search. Not many sellers are not guilty of having very stale inventory filling up listing space in their store. I know, I used to do it too. You just forget about stuff. This would be a quick reminder to keep stuff fresh and target listing things that actually sell, not just junk to fill free listings. Makes a seller price aggressively too. Get it sold and move on.

dwise3671 · ‎11-08-2023

@farmalljr wrote:
@dwise3671 wrote:
@farmalljr wrote:
@slippinjimmy wrote:
The last thing eBay needs is more sellers with the same stuff that is already plentiful here.

I think eBay could stand more sellers, ONLY IF they could get more buyers here. The lack of buyers IS the problem, not that there are too many sellers.
Buyers leave due to bad sellers, period.
That's just not true. Some MAY leave because of a bad experience, but we all know how the MBG works. No buyer has really ANY worries of getting screwed over.

SEARCH is a big issue why they leave. If you can't easily find what you are looking for, you go elsewhere. Pricing can also be a factor. People are not going to pay $100 for something they can get at the mall for $30. Far too many seller inflate prices to unreasonable levels in the name of making money.

Personally, I think if eBay would delete listings 90 days old and charge a seller a $3 listing fee to relist, on items that are not selling in those 90 days, there would be WAY less clutter on the site/search. Not many sellers are not guilty of having very stale inventory filling up listing space in their store. I know, I used to do it too. You just forget about stuff. This would be a quick reminder to keep stuff fresh and target listing things that actually sell, not just junk to fill free listings. Makes a seller price aggressively too. Get it sold and move on.

Those are issues with sellers. Not eBay. From a buyer’s perspective nothing has changed with eBay in decades. There is nothing wrong with the search. Every time someone complains about this, they get proven wrong. I am a buyer on this site. I rarely shop here anymore because of bad sellers. Even though eBay will fix the problem, it’s a hassle. No buyers want to regularly deal with that. They will pick a place they trust, and know has easy returns and won’t have to invest days into trying to get their money back on a bad item. Sellers are the face of eBay. You can make any claims you like, but sellers are the problem.

simba6 · ‎11-08-2023

People lose interest in things over time. Even Brony Con could not survive.

dbfolks166mt · ‎11-08-2023

@farmalljr wrote:
@slippinjimmy wrote:
The last thing eBay needs is more sellers with the same stuff that is already plentiful here.

I think eBay could stand more sellers, ONLY IF they could get more buyers here. The lack of buyers IS the problem, not that there are too many sellers.

Buyers leave due to bad sellers, period.

Buyers leave for a number of reasons. I buy little on eBay these days simply because I can almost always find it cheaper elsewhere to include B&M stores. The pandemic drove an explosion in ecommerce sites and buyers are exploring alternatives and options, eBay is not the only game in town these days. Some buyers die, move have lifestyle changes.......... One of the issues eBay faces is attracting new buyers to replace those that have left and that is becoming more and more difficult with all of the competition.

dwise3671 · ‎11-08-2023

@dbfolks166mt wrote:
In addition to what you have stated reading down the entire earnings report eBay failed to state, as they have in the past, the number of Sellers that left the platform. If you add up the revenue eBay posted for advertising and promoted listing you would see that without that revenue eBay would have posted like $100 mil loss for the quarter. You are very correct in saying that management needs to focus on adding Buyers and Sellers and stop worshiping the Wall Street throne of paying stockholders. With accounting magic eBay finally stated a quarter showing a 2% gain in GMV. This only happens when Buyers and Sellers are leaving the platform if the existing Sellers have more of their sales reduced by eBay Fees. In a three year period in my category I have gone from 8.9% fees to 25% fees. Please don't anyone respond that there is no category with 25% fee. That is true. Real accounting is this, the cost of an item what you sold it for and subtract what it cost you to sell it (all eBay fees, Promoted Listings, shipping, sales tax, etc) the reality is 25% or higher on items that ship at a higher rate and have a lower value. There will be a tipping point and only when that is reached will management do something. How motivated is the CEO, Jamie, to grow this platform the only sustainable way, acquiring more Buyers and Sellers, if he gets fired for cause he will receive a $17.4 million package or if he is fired because his performance is poor he will receive $47 million in severance package. There is no down side for running the company poorly. When your profits are generated from taking a extreme percentage of the Sellers sale and flood advertising in with a Sellers listings, reducing that Sellers chance to sell their items, you have lost site of your core business. Sad

The one thing that has always bothered me about GMV is the G part of this. What I would like to see eBay actually report, although it would be a little tough to do and would probably shock their shareholders, is the NMV. Focusing on the GMV is like focusing on the Gross amount on your W-2 or 1099 it's a false perception. As a seller what I am interested in is the net, what I am interested in as a worker on my W-2 is the net. The only money I actually have and can spend is the net.
As for the fee calculations about 1/2 of your listings have free shipping so the FVF's are based on that amount + sales tax + $.30. For those that have calculated or flat shipping your FVF's are based on cost of the item + sales tax + $.30. While it is true the eBay effective FVF rate is higher than what is posted in the FVF policy it will usually be a percentage point higher than the published FVF's mostly because of the sales tax. Your selling cost percentage may, and probably does exceed 25% which would be normal.

They’re have been a lot of sellers leaving, because they don’t want to pay taxes. Far too many sellers ran a business for decades without paying a dime in taxes. The rest of us have been subsidizing these people for years. They have been nothing but a drain on society, and shouldn’t have been selling to begin with.