Marketplace platform eBay is continuing to shed active buyers and report lower sales volumes as consumers increasingly return to in-person shopping, though the company says losing some customers was always an inevitable part of the company’s long-term plan.
Executives told investors and analysts on Wednesday (Oct. 27) that eBay had 154 million active buyers as of Sept. 30, down 5% year over year and the second quarter in a row of annual decline in buyers after months of pandemic-induced increases. Global active sellers remained unchanged at 19 million.
Chief Financial Officer Steve Priest attributed the loss of active buyers to a natural shedding of “low-value” buyers as eBay focuses more on “high-value” buyers, or those making at least six purchases per year at over $800. The latter represents 20% of eBay buyers, but delivers 75% of the company’s gross merchandise value (GMV).
“We are confident in this approach,” Priest said on a conference call. “But we recognize that the reduction of low-value buyers could pressure our rolling 12-month active buyer count in the coming quarters.”
Compared to the third quarter of 2019, CEO Jamie Iannone said that high-value buyers are up 6%, while low-value buyers are down 7%. He added that eBay has not seen a decrease in auction bidding volume with the loss of low-value buyers.
“Frankly, that format has actually been really strong because of the strength we’re seeing in collectibles, where it tends to be a more used format,” Iannone said.
However, the eCommerce company also reported that GMV is down 12%, to $19.5 billion, and is down 8% in the U.S., with sold items globally declining 21% year over year. Compared to 2019, global GMV grew by 9%, and U.S. GMV was up 22%.
In an effort to weed out the low-value buyers and attract more high-value shoppers, Iannone noted that eBay is focusing on certain key categories in order to build trust with consumers and create a better experience that will retain them.
“It really is about both leaning into the high-value buyers who are on the platform, as well as attracting new buyers,” he said.
The categories of focus currently include sneakers, luxury watches, authenticated handbags and trading cards, with motor parts and accessories to be added soon. Iannone said eBay plans to take its entire inventory of parts and add it to the eBay Motors app, “creating a one-stop-shop for vehicles and parts enthusiasts.” Other changes may be considered as the company looks to capture untapped growth, the CEO added.
A big part of the strategy in focusing on these categories, Iannone said, is to drive enthusiasts to these new experiences, “and then leverage those buyers across our vast supply in other categories.”
“One of the great benefits of eBay is the cross-category nature of shopping,” he said, noting that the average buyer who purchased sneakers spends approximately $2,000 in other categories; the average purchaser of luxury watches spends $8,000 in other categories.
“The changes we are making to the marketplace are improving results today, and are also putting us in a better position to deliver sustainable growth,” Iannone said.
eBay is facing increasing competition from Etsy, which has made a series of acquisitions this year in order to bolster its peer-to-peer marketplace ecosystem, as well as several other strong eCommerce rivals.
Bringing Commerce and Payments Together
Last month, eBay also completed the rollout of end-to-end payments processing around the world, allowing the company to manage payments in all markets. In the third quarter, eBay processed 90% of the GMV on its platform, and it expects to capture the remaining 10% by the end of the year.
“Owning the entire seller and buyer journey unlocks opportunities to remove friction, improve trust and provide new capabilities to sellers and buyers,” such as different forms of payment, including buy now, pay later (BNPL), Iannone said.
Iannone also noted that eBay’s issue with unpaid items has been virtually eliminated for fixed-price items, and the company is currently working to solve the problem across other types of transactions.
“The migration is complete, but we’re just getting started in terms of what we can do with commerce and payments together in a single flow and single experience,” Iannone said.