EBay reported strong Q4 and full-year financial results on Wednesday, with sales on its core marketplaces growing the most they have in three years.
The value of goods sold on eBay’s U.S. marketplace grew 4.9% to $36.28 billion in 2017, up from $34.58 billion in 2016. For the fourth quarter ended Dec. 31, eBay’s U.S. gross merchandise volume was $9.86 billion, up 7.9% from $9.14 billion in the same period a year ago.
GMV of eBay’s global marketplaces, including the United States, grew 5.5% to $88.40 billion in 2017 compared with $83.76 billion in 2016. In Q4, global sales grew 9.4% to $24.43 billion from $22.34 billion in the same period a year ago.
In its earnings call, eBay announced it will eventually replace PayPal Inc. as its back-end payments processor with Dutch technology company Adyen. What this means is that eBay will handle all payments on eBay’s marketplaces—collecting funds from customers and instructing Adyen to disburse funds to sellers—which should result in lower payment processing costs for its marketplace sellers, eBay says. With the new payment processing model, eBay says it will charge sellers a single fee for the marketplace and payment services. EBay expects the shift to be completed by 2021.
“What I want sellers to hear is that, No. 1, we have their experience in mind, we want to give them flexibility, increased payout options and we want to lower their costs,” CEO Devin Wenig said on a call with investors discussing Q4 results, according to a SeekingAlpha transcript. “That was very much front and center in our mind when we made this very consequential decision.”
From a customer view, there won’t be Adyen logos on eBay when the change occurs, and customers will not leave the website or app to complete their purchases. EBay says the PayPal button will still be a payment option for customers.
Additionally, eBay expects this change to generate $2 billion in annual revenue because it will increase the percentage it takes from each purchase.
The strong Q4 results followed sales growth of 8.1% in Q3, one of the strongest quarters in a few years. Comparatively, sales in the 10 quarters prior to Q3 2017 grew at a rate of 3% or slower. In some of those quarters, lower growth rates can be attributed to the impact of a strong dollar at the time, and thus excluding currency exchange rates, growth was a bit higher. Still, eBay has made progress on some of its long-term initiatives, namely structured data which standardizes its product descriptions, and it seems those initiatives gave the online marketplace a lift in 2017.
Even with the progress eBay has made, some analysts remain skeptical about the marketplace’s potential to be a dominant player in the e-commerce industry again.
“EBay hasn’t had the same trajectory as Amazon, and that is why it is unfortunately viewed as less successful, even though they are highly profitable and they have improved the marketplace,” says Sucharita Kodali, an e-commerce analyst at Forrester Research Inc. “But so much of what they have been investing in is just catching up to Amazon; they can’t even leapfrog it at this point.”
Here’s a roundup of new products and features eBay rolled out in 2017:
For the last two-and-a-half years, eBay has been redefining all the products listed on its site with what it calls structured data. This involves standardizing the information the online marketplace collects from sellers, and ensuring that every seller inputs the same type and amount of information on the products they’re selling. The goal is to help eBay deliver more relevant search results, making it easier for shoppers to find what they’re looking for, and for eBay to better understand the items on its marketplace.
The share of organic traffic landing on structured data-enabled pages is increasing, Wenig said on the call. At the end of Q4, the share of traffic was 14%, compared with 12% in Q3. A year go in January 2017, Wenig said live structured data listing pages represented about 4% of eBay’s traffic.
Some eBay sellers have noticed the impact of structured data. Matt Becker, CEO of pre-owned luxury watch retailer Beckertime, has been selling on eBay since 1999. “Over the last year, things have gotten better. Impressions and clicks have gone up compared with a year ago, and we think artificial intelligence and structured data are having an effect on that,” he says.
New Site Features
With structured data, eBay has been able to roll out several new features on its site in 2017, with the goal to refine search results on desktop and on its app. Launched in October, image search allows shoppers to take a picture, or select one saved on their smartphone, and enter it in eBay’s mobile search bar. The search results populate the most visually similar products of the 1.1 billion items listed on eBay.com.
Also in October, eBay launched Grouped Listings, which streamlines the search results for customers. Now, when searching for an item, shoppers won’t be flooded with listings of the same product. Further, there are more filtering options, such as comparing prices and reviews.
Executives didn’t provide details on the progress of these features on the earnings call, but they did say Grouped Listings, “performed well and set the foundation for the next set of changes we’ll make this year.”
EBay in March 2017 announced Guaranteed Delivery, a program that offers eBay customers delivery in three days or less. Consumers will have the option to filter eBay’s listings by delivery date for items in the eBay Guaranteed Delivery service beginning this fall, the marketplace says. It is similar to how Amazon.com Inc. allows its Prime customers to filter search results for items that are Prime-eligible—meaning those products qualify for free two-day delivery. More than 150,000 customers a day used guaranteed delivery while searching on eBay in the United States during the holiday season, the company says.
Price Match Guarantee and eBay Authenticate
In June, the online marketplace for the first time began offering price matching on more than 50,000 products in the United States. Through its new Price Match Guarantee, eBay pledges to offer the best price on qualifying products, and if it fails to, it will match select competitors’ prices. EBay will cover the cost when lowering prices on items, not marketplace sellers, the company says. EBay will only match prices of products sold by a select group of retailers, which include Amazon.com Inc. (No. 1 in the Internet Retailer 2017 Top 500), Best Buy Co. Inc. (No. 10), Wayfair Inc. (No. 16), Jet.com, The Home Depot Inc. (No. 8), Sears Holdings Corp (No. 19) and Target Corp. (No. 20). For example, on Amazon, Jet, Sears and Walmart—all retailers that also operate online marketplaces—products in which the retailers are the seller of record are the only items that qualify for eBay’s price-match guarantee. Third-party marketplace products are not be eligible.
EBay Authenticate, also launched last year, allows sellers and buyers to opt into a service (for a fee) to have a professional authenticator review a product before it is shipped.
eBay Seller Hub and Promoted Listings
EBay began providing more data to its marketplace sellers last year, including price guidance, restocking guidance and more insight into inventory, such as demand signals for the right products, price and timing.
Additionally, the marketplace has ramped up options for sellers to pay for promoted listings—and sellers are taking advantage. Nearly 160,000 sellers used promoted listings to advertise more than 100 million items in Q4, eBay said. That accounted for 50% of sequential revenue growth in the quarter, the marketplace said.
For the fourth quarter ended Dec. 31, eBay also reports:
- Net revenue grew 9.1% to $2.613 billion from $2.395 billion a year ago.
- Net loss of $2.22 billion compared with net income of $5.95 billion a year ago. These results include a $3.1 billion tax charge attributable to the enactment of the Tax Cuts and Jobs Act. 2016 figures include a $4.6 billion income tax benefit related to a legal structure alignment.
- The value of goods sold on eBay’s global marketplaces, not including sales on online ticketing marketplace StubHub, grew 9.1% to $22.99 billion from $21.10 billion.
- StubHub’s gross merchandise volume was $1.43 billion, up 15.3% from $1.24 billion.
- The number of active buyers—those who have made a purchase on eBay in the past year—increased to 170 million from 162 million at the end of 2016.
For 2017, eBay also reports:
- Net revenue of $9.567 billion, up 6.5% from $8.979 billion a year ago.
- Net loss of $1.012 billion compared with net income of $7.29 billion in 2016. These results include a $3.1 billion tax charge attributable to the enactment of the Tax Cuts and Jobs Act. 2016 figures include a $4.6 billion income tax benefit related to a legal structure alignment.