ebay reports Q4 2023 results today Feb 27th

[my-cottage-books-and-antiques]

For those who are interested in this stuff.

I'm expecting to hear GMV was basically flat, revenue, if up, was due primarily to first party ads , little or no mention of buyer and seller numbers (with the possible exception of some numbers for "enthusiast" buyers), and "our strategy is working" but we face "headwinds"....

But, those are just guesses. We'll know soon enough.

If you don't have the time to delve into this on your own, you can always check the summary that will be posted to the Value added resource blog later ....

[farmalljr]

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@slippinjimmy wrote:

The Temu app was the number one download from Google and Apple in 2023, over 250 MILLION downloads.

Temu, based in China is a marketplace pretty much restricted to manufacturers in China with Temu handling all the logistics. For North America fulfillment is based in California. There has been some chatter that they may open up for American brands/sellers.

Temu is owned by Pinduoduo Inc, they are well on their way to become the largest ecommerce company in the world. Current market cap is about US170 Billion, more than 4 times the market cap of eBay. They have been active in China since 2015 and had a GMV of US$383B in 2021.

Originally they were a China only operation dealing almost entirely in direct to consumer sales of agricultural products, the Temu subsidiary started in 2019.

It's possible they will exceed Amazon's GMV this year or next. It has been reported that they spent about 3 Billion US Dollars in marketing in the past year and may have been the single largest advertiser during this years Super Bowl.

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I don't know why that keeps getting repeated. It's not true at all. I have ordered several times now from them. My wife has as well. It's shipped directly from China, and lands in New York and goes through customs. If you live on the west coast, maybe it lands there and is run through customs there. There is NO warehouse that "orders" are run through. All of the orders from my household have been fulfilled in China and shipped to the US. Not saying Temu doesn't have some warehouse or whatever here to receive returns, but all products ship from China.

Other than that, yes I agree Temu is a giant. I do not shop a whole lot from China direct sites, since Fast Tech went kaput. I don't care all that much for Aliexpress, as they are more expensive and slower to get your stuff to you. Lots of site out there, but none seem to be as large as Temu. 

[chapeau-noir]

I've never heard of a North American fulfillment center, either, so I'm curious as to where this is. In fact, a great deal of Temu's success lies in NOT having a particular fulfillment center, but decentralized logistics between seller/manufacturer who ships direct to the individual buyer, coordinated by Temu. This small-packet, decentralized model helps them ship under de minimis trade exception where all packages are beneath the $800 customs threshold (for the US) and not dutiable. They don't stock in the US because shipping in bulk to a warehouse for fulfillment would defeat the purpose, and they deal with something like 100,000 different manufacturers.

They do have a US headquarters in Boston.

[tobaccocardyahoo]

@slippinjimmy 

In spite of the oft touted numbers for Temu consider this WSJ article

https://www.wsj.com/business/retail/temus-u-s-entry-is-an-orange-flag-for-etsy-957adb29?st=io4ssttzf...

Particular interesting is

"Temu’s success isn’t inevitable. If the platform’s main appeal is that its goods are dirt cheap, then U.S. sellers may find it difficult to compete on the platform to begin with. And while Temu has been effective at capturing U.S. customers, it hasn’t been as successful at luring them back for a second purchase. While over 30% of customers who shopped on Temu in September returned a month later, only 14% of them came back four months later, according to KeyBanc Capital Markets, which also found that churn rates have been increasing over time"

[dbfolks166mt]

Would you please describe what Temu is?  I remember seeing all their commercials during the Super Bowl, but I'm not sure I understand what the app is all about.

     Temu is a new Chinese e-commerce company that started in 2023. It is operated by the Chinese e-commerce company PDD Holdings. It offers heavily discounted consumer goods which are mostly shipped to consumers directly from China. 

[frugality_inc]

Raises dividend, lays off employees.

This company is garbage.

[chapeau-noir]

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@tobaccocardyahoo wrote:

@slippinjimmy 

In spite of the oft touted numbers for Temu consider this WSJ article

https://www.wsj.com/business/retail/temus-u-s-entry-is-an-orange-flag-for-etsy-957adb29?st=io4ssttzf...

Particular interesting is

"Temu’s success isn’t inevitable. If the platform’s main appeal is that its goods are dirt cheap, then U.S. sellers may find it difficult to compete on the platform to begin with. And while Temu has been effective at capturing U.S. customers, it hasn’t been as successful at luring them back for a second purchase. While over 30% of customers who shopped on Temu in September returned a month later, only 14% of them came back four months later, according to KeyBanc Capital Markets, which also found that churn rates have been increasing over time"

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I think those they do capture and keep may be those 'enthusiast buyers' that CEO Jamie wants - it's really addicting shopping there.

[reallynicestamps]

but decentralized logistics between seller/manufacturer who ships direct to the individual buyer, coordinated by Temu. This small-packet, decentralized model helps them ship under de minimis trade exception where all packages are beneath the $800 customs threshold (for the US) and not dutiable.

Reminds me of a startup circa 1995 called AuctionWeb.

[chapeau-noir]

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@reallynicestamps wrote:

but decentralized logistics between seller/manufacturer who ships direct to the individual buyer, coordinated by Temu. This small-packet, decentralized model helps them ship under de minimis trade exception where all packages are beneath the $800 customs threshold (for the US) and not dutiable.

Reminds me of a startup circa 1995 called AuctionWeb.

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It's curious because it's a ton of little small manufacturers (of which China has TONS - they've been manufacturing for millennia and there is nothing they don't know about it) selling to individual people through Temu, so it is really like eBay.

ETA: And I can tell you, they have stuff that you'd never find around here. I purchase mostly clothing - they have streetwear that makes Supreme, etc., look stupid.

[valueaddedresource]

Anyone else notice how heavily Jamie was "leaning in" on consumer to consumer (C2C) initiatives in Germany? 👀

I've been seeing signs that eBay may be pivoting back to a broader consumer-seller focus (and away from the more narrow "high value vertical focus" over the last month, including some interesting new job openings and reports that Chief Business and Strategy Officer Stefanie Jay may have resigned following last month's layoffs.

The fact that eBay is doing a "promotional" trial of fee free listing and selling for private (C2C) sellers in the UK through April is interesting as well - if it goes well, we may see it become permanent like the changes eBay made in Germany last year.

When Jamie took the helm in 2020, his initial "tech-led reimagination" strategy specifically called out the need to capitalize on eBay's robust C2C platform, seeing consumer to consumer selling as the foundation of the company's success.

https://investors.ebayinc.com/investor-news/press-release-details/2020/eBay-Inc-Names-Jamie-Iannone-...

He took those sentiments even further in an interview with CNBC in July 2020, saying getting back to individual consumer selling and becoming the "seller platform of choice" were among his top priorities for the company, along with focusing on key core vertical categories for growth.

https://www.youtube.com/watch?v=duSNA802I-8&t=40s

But shortly thereafter, consumer selling and being the seller platform of choice faded to the background as eBay pursued the more narrowly focused vertical, "high value, enthusiast buyer" strategy that has left a lot of sellers feeling excluded and abandoned.

This earnings call marked the most I've heard Jamie talk about C2C since mid-2020. While he is carefully trying to position it as just the next logical step to apply things they've learned from the "focus verticals" and an extension of their existing strategy that he claims is and has been working, I think it's likely a much bigger pivot than he is letting on and eBay may finally be being forced to reckon with the idea that the strategy they have pursued the last few years really isn't working as well as they want everyone to believe.

Too early to tell if/when any of that might filter to the US market and what it will look like if it does, but one of the open job positions is explicitly for a Director, US C2C Selling, so I think it's fair to say at the very least we can expect some changes "coming soon."

https://jobs.ebayinc.com/us/en/job/R0061999/Director-US-C2C-Selling 

This role is responsible for providing a single point of leadership and direction for the C2C strategy and execution plan within the US market. It will also be accountable for the value proposition and healthy growth of the business within the designated competitive landscape. Finally, this will be a key interface connecting Global product, Marketing, Pricing, Finance and Local teams to ensure the contribution of C2C to the overall US eBay business performance.

[keziak]

What are some other things people get on Temu? Just curious. I guess the next time I want something online I could see what they have.  On ebay I mostly just buy used DVDs and business supplies, other stuff on Amazon Prime.

[my-cottage-books-and-antiques]

If you look at the changes ebay has been making on the dot com site, there has been no new focus category since street wear, which is really just an offshoot of the existing sneakers category....the appeal is largely to the same buyer base. Most of the changes ebay has been working on are what Jamie calls "horizontal changes"....changes that are designed to benefit sellers ---- and buyers----in all categories. (Things like immediate payments on offers). So I think to a degree this can be considered recognition that perhaps there has been an overemphasis on focus categories, at the expense of the site as a whole. So far, however, this hasn't translated to a change in marketing strategy---that remains focused on the Verticals, at the expense of the rest of us. And the focus on first party ads as a revenue generator....rather than GMV growth....continues to weigh heavily on the seller base, particularly many of the c to c sellers. 

Jamie also noted that ebay's best defense against sites like Temu is a combination of organic traffic (rather than a heavy reliance on , say, Google, whose ad prices have been driven much higher by Temu) and its Enthusiast Buyer/Focus Category strategy, which does not (in Jamie's view) directly compete with Temu. 

So, just a guess, but ebay won't abandon the current Enthusiast/ Focus Buyer strategy , nor its dependence on Ads....but I think we will continue to see more effort allotted to the "horizontal", which should benefit c to c sellers. If ebay begins to finally market the site as a whole, or some of the non focus categories , in an effort to improve c to c selling, that will definitely get my attention. 

I suspect ebay is aware that it has been losing some of its c to c seller base to other venues, perhaps rapidly, and Jamie has maybe realized he can no longer take the base for granted, which ebay could do even just a few years ago. There are just too many competing venues for c to c sellers today, and ebay can really not afford to treat them as an afterthought these days. Becoming the "platform of choice" for those sellers (and buyers) is going to be a real challenge, and IF they can succeed, they could do very well indeed.

[my-cottage-books-and-antiques]

@keziak  Temu has a HUGE assortment of stuff. (new, not used). Much of it is priced quite low. The best advice I can give you is go and look for yourself. I suspect MANY of their sales are not things people are searching for, they are just things people decide to buy on the spur of the moment, because they are unusual and low priced. 

[theteamsetguy]

I really don't understand how share repurchases work. Is the idea that the company gets to keep that much more profit to expand and /or upgrade rather than pay out profit as dividends?

@reallynicestamps ,

As a investor when you purchase shares in a publicly traded company like eBay you are buying a share of the company profits. For simplicity sake lets say a company makes 5 million dollars after taxes a year and there are 1 million shares of stock for the company outstanding. In this case each share would stock would be entitled to $5.00 of the profits. Depending on the industry the company is in,  the average stock trades at around 20 times the company's profits or $100.00 per share in this example.

Now let say the same company spends 3 million dollars on a share buy back at $100.00 each. After the buy back, instead of having 1 million shares of stock outstanding to divide up the profits there is 970,000. (30,000 x $100.00 equal 3 million)  Assuming the company made the same 5.25 million dollars the next year instead of being entitled to $5.00 per share in profits each of the remaining 970,000 shares would be entitled to $5.42. (5.25 million divided by 970,000 equals $5.42) If the company stock still trades at 20 times profits per share they would going for $108.40. 

As the number of shares of the company's stock shrinks each share's piece of the profits goes up causing the stock's value to go up. This is why shareholders including myself look to invest in companies that are buying back a lot of their company stock on consistent basis. (example Home Depot, Meta (Facebook), Apple, Pepsi, and McDonalds, are examples of companies that I own that buy back a lot of stock each year.)

Hope this helps. There is nothing evil about stock buy backs if executed properly. Properly meaning they still invest in the company and there employees. Example Home Depot raises the dividends every year and buys back a bunch of stock. They also gave employees sizable wage increases last year.

[broto_64]

Yeh, I recently purchased a few things on Temu, they do have a knack for displaying things I had not seen... Not that they are so unusual, it's that other sites don't focus on these particular things and the price appears attractive enough... However, put in a little more time and I see that ebay holds a lot of these items too, just have to do a search and then lo and behold I found ebay was even cheaper on several items.

I don't doubt that Temu will create some competition, however a lot is left to be seen yet, specifically how their product returns and refund department holds up... If they fail in the returns department (as I experienced with certain other chinese wholesalers in the past) then they're not likely to get many return buyers after a few get burned on their refunds, only time will tell.

[keziak]

Interesting. I'll check it out. It will be "fun" if they have the same kind of books I sell.