Note from Liz: Opinions expressed are mine alone and should not be taken as financial advice.
As usual, I'll leave the financial analysis to experts in those fields and instead focus on highlights, insight and commentary from an experienced seller perspective.
To absolutely no one's surprise, in the Q3 2021 earnings call CEO Jamie Iannone leaned heavily on the "vertical playbook" for "focus categories."
Our strategic playbook continues to improve customer satisfaction and build trust and is leading to faster GMV growth in our focus categories.
It was a nice attempt to focus (pun intended) on a small slice of positive GMV news, but the bigger picture is far less rosy.
"Gross Merchandise Volume of $19.5 billion, down 10% on an as-reported basis and down 12% on an FX-Neutral basis"
Iannone also glossed over the slowdown in sneakers - once again seeing only double digit growth this quarter when prior to Q2 2021 they had seen consistent triple digit growth in that vertical.
eBay Motors Parts & Accessories is the next category to be tackled in the vertical focus playbook but that's not exactly news - they've been saying this since mid-Q2 and just started to take the first steps by adding these products to the eBay Motors app in September. The tech led reimagination is certainly not moving at NASCAR speed here.
In another attempt to focus on the positive, Iannone talked about eBay's commitment to be 100% carbon neutral. It's a worthy goal, but considering eBay doesn't have warehouses, production facilities, retail locations, cargo planes, or ground delivery fleets (like some competitors) it's not exactly a particularly challenging benchmark to hit.
Active seller numbers remained flat while active buyer numbers are down, again. Iannone explained away last quarters fall in buyers by saying it was all part of an intentional effort to focus on high value buyers - a story he's sticking with this quarter as well.
I noted after the Q2 earnings call it was odd Iannone didn't mention eBay's Top Star buyer loyalty program initiative as an example of this high value buyer strategy.
This invite only program first started bubbling up across social media in June, so my suspicion was it was still in a test phase and too early to give results at that time. However, the program was active throughout all of Q3 and was even expanded to include watches as well as sneakers. It's clearly an important part of the high value buyer strategy - why wouldn't Iannone want to crow about it to investors?
To justify the dropping off of "low value buyers", Iannone said there has been less focus on couponing and discounting that had driven "one and done" sales in the past.
The reality is, eBay is using the same playbook, they've just shifted the players around a bit. There are still many discounts and coupons offered by eBay directly - they just target the "focus verticals" almost exclusively instead of being sitewide. Check out the eBay Canada twitter feed and you'll see coupon offers on an almost weekly basis.
The other way eBay has shuffled the deck on couponing and discounts is with seller initiated offers and coded coupons.
They still seem to be trying to pull the same levers, primarily using discounts and promotions to attempt to drive buyer engagement and retention, only now they are increasingly putting pressure on sellers to fund the discounts themselves.
Iannone said that sellers funding coupons is a "huge benefit for eBay" and I'm sure it is, at least short term. The benefits for sellers are a little less clear and the longer term effect may be detrimental to the overall marketplace as prices race to the bottom and seller's margins are squeezed while eBay's take rate continues to climb.
The Managed Payments migration is almost complete with 90% of transactions on the platform being processed through MP. Iannone says this will unlock opportunities to remove friction and increase trust - again, a story he's been telling us all year with very little to actually show for it.
He's been talking about "fixing" unpaid items on offers for months now, but has given no concrete ideas about how exactly that will work and when we can expect to see it in action.
Update 10/29 - eBay has started a very limited test of immediate pay for best offers.
One of the biggest issues eBay needs to address to increase trust in Managed Payments from the seller side is the increasing problem of chargebacks and so called "friendly fraud."
Dishonest buyers are finding it very easy to use payment disputes to exploit the system and eBay is doing very little to protect sellers or offering any meaningful ways for sellers to proactively manage risks, especially on high value items.
Also on the topic of trust, Iannone said:
Based on community feedback, we've reduced another pain point for trusted sellers by increasing protection against fraudulent returns by requiring photos and providing returns shipping credits.
It's not entirely clear to me what he is referring to here. Since the Fall 2019 Seller Update, Top Rated Sellers have had the additional protection of being able to receive a $6 return label credit for false not as described claims - if that's the return shipping credit he's talking about, that is not a new protection and was in place before he returned to eBay.
There is nothing in the additional protections for Top Rated Sellers that requires the buyer to submit photos and I'm not aware of any such policy in place on a widescale across the platform.
Maybe they require pictures for authenticated items or select focus verticals? I'm going to reach out to eBay on this one to see if I can get some clarification and will update when I have more information.
eBay community staff have confirmed a current pilot test requiring some buyers to upload pictures for not as described returns, however it still remains to be seen how exactly this is supposed to provide additional seller protection.
Sellers are skeptical that this requirement will do much to stem the tide of fraudulent returns - buyers can upload a picture of anything they want (one seller received a disturbing picture of dead ducks) and as one seller noted, this may just push buyers to file chargebacks with their credit card companies instead of using the eBay return process.
Without more detail about eligibility criteria, updated policies and enforcement procedures outlining what exactly this pilot hopes to achieve, I believe Iannone's remarks about reducing pain points and increasing protection are a bit premature.
The latest updates to the stores experience rolled out literally 2 days before this call, so it's a bit early to tell how they will be received by sellers and buyers and what impact it will have on increasing conversion and buyer stickiness.
Video in stores and listings has been one of the most eagerly awaited updates this year - and most of us are still waiting.
After initial rollout in early Q2 to sellers using the API and select 3rd party partners, this initiative seems stalled in production with no updates on when it will expand to more sellers and be supported on desktop in Seller Hub.
Iannone mentioned using the eBay Partner Network (EPN) to drive traffic to promoted listings sellers. It's interesting that eBay seems to be leaning into their affiliate program while quietly backing away from the discounted fees for social sharing initiative that was introduced at eBay Open Online in August.
Sellers were excited about the social sharing program and have been eager to hear any updates on expected launch timeframes but so far eBay has been very tight lipped on the subject.
Iannone talked about the Certified Refurbished program and exciting new brand partnerships that it has brought to the platform, calling out Samsung specifically.
That was a bold choice, considering the ethical and possible legal implications of this recent eBay/Samsung promotion that violated the terms of the Certified Refurbished program and falsely advertised 30 day returns to buyers when in fact they only offered a 14 day return time.
The tech led reimagination continues but many sellers feel that once again it is all about the focus verticals and not bringing enough real benefit to the entire platform.
Sellers outside the focus verticals are losing patience and feel that eBay's priorities are skewed and "exclusionary."
Those priorities were on full display in this call with Iannone stating:
Product development increased 21% year-over-year as we continue to accelerate product innovation and support our longer-term strategic initiatives within payments, advertising and focus categories.
He also said:
At eBay one of our core values is Be For Everyone. As part of this focus, supporting our seller community is critically important.
Sellers who feel left behind by the focused vertical strategy and those who had their businesses turned upside down with Q4 category and item specifics changes might take issue with the "be for everyone" motto.
As for supporting the seller community - regular readers of this site already know how I feel about that.
One big announcement in this call was the introduction of 3D image capability being piloted with select sellers for sneaker listings. While this would be a welcome addition in the seller toolkit, 3D image technology in general isn't exactly a new or innovative concept. This is still early stages, so I'll reserve full judgement until I actually see it in action.
It's interesting Iannone chose to highlight Collections and Price Guide for trading cards as an example of tech led reimagination. As I've detailed before, this beta release still needs a lot of work.
The UI is clunky, Price Guide lacks any ability to filter by important variables like grade which causes the prices to vary wildly and not be a true apples to apples comparison, and they haven't even integrated it with the existing computer vision assisted Scan to List technology to make adding cards to your Collection as easy as taking a picture.
For updates on other seller tools, features, and experiences, check out the eBay Release Tracker
A few notes from the Q&A segment of the call.
When asked to elaborate on Promoted Listings offerings, Iannone once again mixed up Promoted Listings Express (flat fee for auctions) and Promoted Listings Advanced (CPC model).
So on the new Promoted Listings offerings, let me just kind of explain this in detail. So the first one, which is Express is really to give us a Promoted Listings product against auctions so since we launched this product five years ago, it's really only applied to fixed price. And so this opens up, while a smaller format of the site, a format that has not been open to advertising before.
Promoted Listings Express [should be Advanced] is a CPC-based product, gives sellers the opportunity to drive more velocity, goes after a different type of marketing budget for that perspective and gives us the opportunity to work with a secondary and supplementary advertising format.
Iannone made the same slip up on the Q2 earnings call - again stating the CPC offering was PL Express when he should have said Advanced.
That business is doing well, so we grew at 8% in the quarter, despite volume being down 11%, and we actually are starting to scale up a couple of palettes that we launched in Q2 specifically, ads for auctions what we're calling Promoted Listings Express which is a CPC business and then -- and off eBay advertising business so we continue to see lots of potential in that business, and these three areas are just getting started.
If the CEO of the company can't even keep this stuff straight, how do they expect sellers to figure it out?
Someone needs to slip Jamie a copy of this helpful slide from GM Global Advertising Alex Kazim's eBay Connect 2021 presentation sometime before the Q4 earnings calls.
Brian Fitzgerald from Wells Fargo asked, in part:
...you recently during the summer started showing buyers, all shipping services offered by sellers, allows them to select carriers and shipping costs and estimated deliveries. It's still early days, but can you talk about what impacts that's happening, if any, on conversion rates?
In terms of the shipping services, this has been a constant march for us. Last year, we expanded in the U.S. to have USPS, UPS and FedEx in there and did the same thing with Royal Mail and Australia Post to greatly exceed the amount of tracking.
On the specific shipping test that's going on now, it's kind of too early to tell. What I would say in general is how to think about this, Brian, is I'm trying to get the whole company focused on how do we make things as simple and as easy to do on the platform.
So what we're doing with our new seller flows, with computer vision and trading cards is how do we take all the work out of the listing process. We're trying to do the same type of thing with our sellers and the stores product and making it really easy to get that set up on the platform. And shipping is one of those areas where there's an opportunity to take a lot of the friction out.
This answer was a bit confusing for several reasons - one of course is that the question had nothing to do with tracking, computer vision, trading cards, listing flows, or stores.
But the more interesting thing to me is that the idea of presenting all of a seller's chosen shipping methods to the buyer is somehow something new that eBay is in early days of testing out.
Does Iannone not know that this was in fact how listings were displayed for many, many years on eBay (including during his previous time there) and that it was a change made in 2019 by previous leadership that hid those options in the first place?
06-03-2019 01:41 PM
We are improving the buying experience on eBay as of May 28 on listing pages and in checkout.
Until recently, shipping options outlined for the buyer did not always promote the best value. eBay will now only show the most cost effective shipping services for a given delivery speed, hiding higher priced options.
Why is eBay doing this?
To enable buyers to quickly choose the shipping service that best meets their needs. You do not need to take any action to apply these changes.
04-06-2021 02:34 PM
In 2019, we announced available shipping options in a listing that were not the most cost effective for a given delivery speed would be hidden from buyers. We heard that the hidden shipping options created challenges for some sellers, including buyers not seeing the shipping service they wanted and concerns buyers were not purchasing their items because all options were not shown.
We listened to your feedback and we're again showing all shipping services you offer in your listings. Now buyers can select their preferred carriers, shipping costs, and estimated delivery dates from the options in your listings. We expect the expanded shipping options will create greater efficiencies for sellers and improve the buyer experience.
This is not some brilliant innovative new idea eBay is testing out, it is simply a very belated undoing of a poorly executed and almost universally panned decision implemented during disgraced ex-CEO Devin Wenig's tenure.
I'm glad Jamie reversed course on this blunder, but the fact that it took him a year into being CEO to do it doesn't earn him too many accolades in my book.
From this seller's perspective, the tech led reimagination is quickly running out of what little steam it had, eBay's relationship with sellers outside of the focus verticals is tenuous at best and getting worse by the day, and regardless of how they spin it, falling buyer levels for the second quarter in a row is not the mark of a robust, healthy, growing marketplace.
eBay is long overdue for a Mark Tritton/Bed, Bath, and Beyond style shake up. If Iannone can't get the job done - it's time to find someone who will.