In a phone interview with TheStreet, CEO Jamie Iannone explains how eBay aims to be the platform for young consumers.
In the online commerce war, we tend to forget about eBay (EBAY) – Get eBay Inc. Report.
Admittedly, the Californian platform is no longer the setting it was a long time ago, but the firm is not completely out of touch.
Amazon (AMZN) – Get Amazon.com, Inc. Report, Walmart (WMT) – Get Walmart Inc. Report, and even Target (TGT) – Get Target Corporation Report no doubt offer services, such as Amazon’s Prime, that delight consumers, but eBay has not yet said its last word.
EBay has taken advantage of the big boost given by the pandemic to reposition itself. The company now wants to be seen as the anti-Amazon and the anti-Walmart. Basically, a niche and selective platform with a clear identity.
The platform wants to be the marketplace of sneakers, luxury watches, handbags, accessories, collectibles and motor parts. In a word, a place where consumers come because they know they will be able to find something special there.
“We’ve expanded what we’re doing, for example, and watches to our international businesses in UK and Germany this quarter. Our next focus category is motors parts and accessories,” CEO Jamie Iannone told TheStreet. “It’s a very large category for us and a strong category in UK and Germany. We’re the market leader in parts and accessories and so it’s our our next big focus category.”
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Focus on High Value Customers
EBay does not own the goods and products that the group sells on its site. In fact, the firm created and manages the platform that connects sellers and buyers. To make money eBay charges a fee — the amount of which varies — on each transaction.
EBay therefore needs sellers as well as buyers. Sellers would stop offering their products on the platform if there were no buyers and conversely buyers would not flock if there were not enough interesting products.
Iannone, who became CEO in April 2020, has launched a new strategy to reduce discounts and promotions aimed at attracting as many buyers as possible. As a result, gross merchandise volume, which accounts for all trading across the eBay platform, fell 10.4% from last year to $20.7 billion, with global active buyers down 9% to 147 million, according to the company’s fourth-quarter earnings report.
EBay did not suffer from this strategy, however, as its revenues increased by 5% to $2.6 billion in the fourth quarter. Iannone even sees in it a way that would allow eBay to continue to exist even if its market share has considerably diminished.
EBay now accounts for less than 5% of U.S. e-commerce. It had a more than 10% share less than a decade ago, and faces competition from niche platforms such as Etsy (ETSY) – Get Etsy, Inc. Report, StockX and GOAT, Vinted and Depop, OfferUp and even from Meta Platforms’ (FB) – Get Meta Platforms Inc. Class A Report Facebook Marketplace.
“We’re not focused on selling consumables and paper towels and dishwashing stuff. We’re really focused on that non-new and seizing. I’ll give you an example,” Iannone explained.
Second-Hand Market
“Every category that we’ve invested in, we’re seeing very strong double-digit growth rates ahead of the rest of the business,” Iannone added.
“We’re going to continue to roll out more categories. Across the site, we only have touched 20% of the business. So we still have a lot of room to grow with what we’re doing from that perspective,” the CEO continued.
In order not to antagonize sellers, Iannone and his team have expanded the range of services offered to them, in particular to increase the volume of transactions. They have invested a lot to change the traditional mistrust between sellers and buyers on eBay.
EBay introduced a product authentication service in the fall of 2020. This service is for sneakers, handbags and watches to weed out counterfeit products from its platform. Recently, at the end of January, eBay extended this service to trading cards worth more than $750.
As with other products, products offered for sale are sent to a cell of experts who identify them. The product will only be sent to the buyer if it meets all the criteria of authenticity. The products are provided with an authenticity card providing detailed information about the product. Basically, consumers can now shop with peace of mind.
These efforts allow eBay to attract the second-hand market, which is lucrative because it combines the fashionable values of sustainable development prized by Gen Z and millennials.
This market, which concerns both mass and luxury brands and is valued at between $30 and $40 billion by BCG Vestiaire Collective.
EBay has been carrying the burden of counterfeiting on its shoulders since its founding, which has always earned it the wrath of large luxury groups.
According to Iannone, users of the platform seem to appreciate it.
“They’re shopping not only in their primary category, but one of the unique benefits of eBay is the multiplier effect because they shop across categories on the platform. That customer will not only go on to buy $9,000 of watches from us. They’ll go spend $7,000 in other categories across the bay.”
