At first glance, eBay’s final quarter numbers look relatively subdued – with growth across every line sequentially worse than the prior quarter.
However, digging beneath the headlines reveals a slightly better picture, if only because the strength of the dollar has deflated sales. On a currency neutral basis, gross merchandise volume increased by 5 per cent, and net revenue jumped by 6 per cent. While these numbers are not ultimately reflected in the accounts, they show that eBay’s underlying performance is not quite as bad as it first seems.
All that noted, when put into a wider context the gains remain fairly unspectacular. Indeed, eBay’s growth remains well below that of total eCommerce sales growth across the markets it serves. As well as losing market share, its performance is also anemic when contrasted to that of online peers such as Amazon – which had a stellar holiday season. This is especially so in the sale of physical products from the marketplace (which excludes the more buoyant StubHub part of the business) where revenue rose by just 1.1 per cent over the prior year.
As much as eBay did enough to meet market expectations, the results are disappointing in that they show the various improvements the company is making are not, as of yet, generating significant traction with consumers. This includes the use of more structured data to make listings easier to find and view, and an increase in the number of full-priced products available from the site.
As sensible as these steps are, they are really about correcting deficiencies rather than putting eBay on an innovative footing.
eBay needs to go much further in revamping the whole online experience in order to allow it to compete more effectively with rivals. This includes trying to create some stickiness around the brand and proposition, in the way that Amazon has done by creating a whole ecosystem of products and services. Admittedly, this is a very tough ask, but it is the direction in which eBay needs to travel if it is to win back market share.
In looking at ways to improve, eBay needs to focus its attention on younger shoppers, among whom brand perception and site usage have weakened. From Conlumino’s data, younger demographics – while active digital consumers – do not have the affinity with eBay that the generation before them did, or that older consumers do. In this regard, eBay has lost out to players like Etsy which these consumers believe to be more authentic, and more likely to offer innovative and interesting products.
Looking ahead, there is no overly negative forecast for eBay: the company is addressing its issues and is making steady progress that will continue to aid results. However, it is one of the slower players in the fast-paced digital arena and to date there are very few visible signs it will move into the fast lane in its new fiscal year.
- Neil Saunders is CEO of Conlumino.