EBay reported gross merchandise volume (GMV), the value of all goods sold on its platforms, of $90.21 billion for all of 2019, down 4.6% from $94.58 billion in 2018. In the U.S., that contraction was much larger, with GMV down 6.3% to $35.16 billion from $37.52 billion the prior year. EBay is No. 5 in the ranking of Digital Commerce 360 Online Marketplaces.
EBay blames online sales tax for decrease
EBay’s interim CEO Scott Schenkel partially blamed its results on some states now charging sales tax to internet orders after the ruling in South Dakota vs. Wayfair.
“This rollout happened faster than anticipated and affected small businesses and consumer sellers requiring marketplaces to collect and remit on their behalf,” Schenkel said in a call with analysts transcribed by Seeking Alpha.
During the fourth quarter, ended Dec. 31, sales tax laws in two of the nation’s most populous states, Texas and California, took effect, along with nine others. EBay is advocating for a national sales tax framework, Schenkel said, to simplify tax collection for its sellers.
The marketplace estimates that GMV in the U.S. would have only dropped 3% for the fourth quarter compared with the 8.3% fall to $8.95 billion from last year’s Q4 of $9.76 billion GMV. International GMV dropped 3.6% this quarter to $14.35 billion from $14.88 billion during the fourth quarter last year.
Largest manufacturer of consumer packaged goods
|Year||EBay’s US GMV||EBay’s Global GMV|
EBay reduced marketing spending to focus on loyal customers
Schenkel also said eBay reduced its marketing spend, which also led to decreased GMV.
“We reduced marketing that was not activating buyers with high lifetime values,” he said. “While reducing near-term GMV and buyer growth, this also drove better profitability.”
The number of active buyers during the quarter hit 183 million, up 2.2% from 179 million in the fourth quarter last year. However, the number of active buyers each quarter had been growing around 4% year over year for the previous five quarters.
Instead of spending to bring in new active buyers, eBay plans to spend its marketing dollars on getting active buyers to spend more, Schenkel said. The average GMV of an individual active buyer has remained steady, he said, and the shift in marketing spending should help the spend increase in 2020.
Net income for the quarter shrank 1.3% still, to $661 million from $670 million last year. However, profits rose for the year, up 4.8% to $2.42 billion from $2.31 billion in 2018.
Revenue, which comes from sponsored listings and seller fees, was nearly flat at $10.80 billion for the year compared with $10.75 billion in 2018. For the quarter, revenue was down 2.1% to $2.82 billion from $2.88 during Q4 last year.
Stubhub generated 13.4% of eBay’s revenue
EBay said the sale of ticket reselling service Stubhub is expected to close during the first quarter, but didn’t account for the sale in its projection of up to $10.92 billion in revenue next year. Stubhub generated 13.4% of revenue and 5.7% of GMV at eBay during the fourth quarter. Former CEO Devin Wenig stepped down in September amid activist investor pressure to sell off Stubhub and the classified business.