While eBay makes good points about the strength of its positioning (especially during periods of economic stress), its pool of buyers and gross merchandise volume has been steadily trending down, providing an important clue to consumer spending patterns.
Buyer Drop-Off Offset by Increased Ad Sales
- eBay’s core business has been stressed by a drop-off in buyers & a resultant decline in gross merchandise volume. This reflects the impact of inflation & rising interest rates on discretionary consumer spending and possibly increased competition (FB Marketplace).
- Despite this, eBay drove +5% y/y net revenue growth during 2Q23 because of a +47% y/y increase in promoted listing sales (management reported a live inventory of 800MM promoted listings).
- With a shrinking buyer pool, sellers are more eager to compete by paying eBay to promote their products.
Management Believes its Core Business is Poised for Rebound
- Management suggested that inflation can be good for business as consumers search for great deals while difficult financial conditions drive an increase in sellers.
- Also, eBay plans to use AI to further enhance the buyer experience sufficient to prompt increased spending.
- Finally, the company plans to drive additional revenues with the launch of financial services.
