eBay is improving seller resources to scale new business
To compete with Amazon and the influx of other online marketplaces, eBay is focusing on simplifying the selling process on its platform.
Over the past several months, the marketplace has made it easier for sellers to borrow money from eBay to scale their businesses, which then adds more inventory to its site, as well as added more capabilities to seller tools, including search functions and faster product listings. eBay CEO Devin Weng trumpeted the new measures in an earnings call Tuesday, saying the moves would help eBay stay ahead of its growing competition.
The goal is to both retain long-time sellers and acquire new ones, by supplying them with the resources to scale.
In July, the company partnered with Square Capital, which allows a seller to borrow up to $100,000 in a single day. The move is intended to allow credit-worthy businesses to scale their operations more quickly, including by stockpiling more inventory. New seller tools have also been rolled out in the past quarter to improve businesses as they grow, like image search and integrating marketplace feeds across the eBay platform and sellers’ own sites. The company has also worked to streamline its ad placement business.
As Amazon has been criticized for an opaque ad policy that doesn’t give sellers access to much of its data, eBay is positioning itself as the transparent one. Though Amazon dominates eBay in the online advertising business, eBay is emphasizing the straightforward and fast nature of its ad business, including providing instant analytics through the company’s seller hub.
It’s a complement to the pitch eBay is making to larger companies to use its services to build online stores. The combined aggressive growth strategy to both win over small and large businesses contributed to an uptick in revenue. For the third quarter, the e-commerce giant reported revenue of $2.6 billion, a year-over-year increase of 6 percent.
But there are other indications that eBay’s growth is slowing, such as a gross merchandise volume, or total products sold, quarterly growth of just 2.6 percent, down from 6 percent.
The moves are meant to stem concerns that eBay’s retail business is plateauing.
“eBay continues to see slowing growth in its core business given difficulty revamping the platform without disrupting existing users, competition, and challenges acquiring new users,” wrote Brian Nowak, a Morgan Stanley analyst who covers the company, in a report released ahead of the company’s third-quarter earnings.
Scaling new services is a defense strategy that has its drawbacks. The influx of new options has been jarring to some long-time sellers. In the company’s earnings call, Weng said that fear has “limited our ability to scale some new experiences.”
“New eBay users are responding well to the evolution of our platform,” said Weng. “As we mentioned last quarter, our existing buyer base has been slower to adapt to these changes.”
But evolution isn’t optional.
“eBay finds itself in a position of adapting to an evolving digital commerce landscape as well as changing seller/buyer behaviors,” wrote R.J. Hottovy, a Morningstar analyst who covers eBay, in a report. He added, “we believe eBay’s consumer-to-consumer platforms have developed a network effect within the broader digital commerce landscape.”
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