Does Ebay Inflate It's Sales Numbers To Make The Company Look Better?

[american-photography]

Ebay reports "total sales" for sellers in their Seller Hubs to include more than just the item price paid.  This is artificially inflating the sales numbers to look better than they actually are and the question becomes from an accounting perspective is this the number that Ebay reports to its investors?

They include:

Taxes (which are not sales)

Shipping and Handling Fees (which are not sales)

Government Fees (which are also not sales)

This is misleading and distorts the actual true sales being generated by sellers and the company.

Please separate "actual sales" from all these other non-sales fees.

[dhbookds]

You can get a breakdown from the reports in seller hub.......on each thing.  They supply all the numbers to seller who need them for THEIR tax returns. 

I'm positive that Ebay follows standard accounting rules in providing numbers to their stockholders........otherwise, they could be in deep ****.    

[crazystuff4sale]

I am sure anything Ebay Corporation reports to SEC or stockholders includes a detailed description of the accounting and what the gross sales numbers include. 

[yuzuha]

That is the standard practice for measuring sales. My B&M job does exactly the same thing when we print the sales readout at the end of the day-- it registers the total dollar amount of all of the transactions that have been processed on the registers for the day, sales tax included.

[eleanor*rigby]

That is the industry standard for calculating the GMV of any C2C company. If eBay's investors don't understand that, they have no business investing in the stock market.

[dentalrprtek2012]

I wonder if they report a break down of fees they charge sellers due to false and fraudulent claims made but their dishonest buyers.

[eleanor*rigby]

Why, yes, I believe they do. I'll have to double-check that, though, and get back to you.

[div_style]

In 22 years on eBay I have not once wondered, nor cared, how eBay reports its sale volume to investors.  There's just too much other stuff to deal with.

[luckythewinner]

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@american-photography wrote:

Ebay reports "total sales" for sellers in their Seller Hubs to include more than just the item price paid.  This is artificially inflating the sales numbers to look better than they actually are

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If I sell an item for $100 and net $80, it "looks" like I paid 20% in selling costs. 

If eBay reports this as a $120 sale instead of $100, it "looks" like I paid 40% in selling costs. 

How does that make the company look good to the seller? 

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@american-photography wrote:

the question becomes from an accounting perspective is this the number that Ebay reports to its investors?

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IMHO anyone who is familiar with accounting or the reporting requirements that Sarbanes–Oxley imposes on corporation knows that eBay is not intentionally misreporting sales figures. 

[mr_lincoln]

@american-photography   One challenge would be items sold with Free Shipping, meaning the Seller built in the shipping cost to the List price.  Sales tax is levied on the item plus shipping so again, hard to separate that out on sales that have both item and shipping paid ... .  If anyone has a copy of the annual Share Holders meeting notes I suspect they break it down from the Gross total they take in, but again, trying to split out every item price as a stand alone number might be a challenge, they may just handle the break down as percentages from the Gross amount taken in.

[dbfolks166mt]

The figures you see in your seller hub for your sales reflect your Gross sales and while they may be artificially inflated they mean little on their own. The same applies to the SEC reports eBay is required to file on a quarterly and annual basis. Those reports have to follow GAAP standards and the financial impact to companies found to be in non-compliance can be severe. 

     There are a number of indicators that stock holders as well as Wall Street watch to determine, for lack of a better word, the success of a company. EBay always tosses out the Gross Merchandise Value (GMV) which is the total dollar value of everything sold during a given period of time and for eBay is in the billions. However you can have a GMV of billions and still not be making any money. Investors are interested in the balance sheet, income statement and cash flow statement to determine how well the company is doing. These required financial statements, to put it simply, clean up the gross numbers and peel back the layers of the onion. Do they fudge where they can to make the numbers look better to the shareholders? Sure they do, but so does every company simply because like tax laws there are some loopholes in the reporting requirements. 

     EBay has little concern over your individual numbers you see in seller hub that is for you to digest and analyze on your own as you should be doing, or you will do at tax time. EBay has no insight into your business costs so has no way to project your net income, ROI or other important factors. Example if your gross sales are 10K for a year but the net income boils down to 2K after all expenses and taxes are paid is that good or bad? Lets say you work on average 10 hours a week or 520 hours for the year on your eBay selling business that means you earned about $3.84 per hour. Is that good or bad? It probably depends on your perspective and will vary from person to person.