There are still millions of shoppers who love eBay, and as it approaches three decades in business, the online retailer has has been bending over backwards to keep them around.
However, it’s not clear that it’s working. The retailer said on a Tuesday earnings call that it has 16 million so-called enthusiast buyers, which is the term it uses to describe the shoppers who spend the most time and money on the site. That is flat from the last three quarters, but down from 17 million in 2022 and 18 million in 2021. They represent the most lucrative customers out of the 132 million people who bought something on eBay in the last twelve months.
The retailer’s inability to grow, or at least hang onto, the very shoppers who love eBay the most and who it has been so busy courting casts doubt on its turnaround strategy under CEO Jaimie Iannone. Recruited from Walmart in 2020, Iannone’s hiring helped fend off pressure from activist investors, who were calling for the company to sell off assets as it lost ground to larger rivals.
Under Iannone, the company has stopped trying to go head-to-head with Amazon, and instead made its number one priority to retain its most loyal shoppers who spend thousands of dollars a year on baseball cards, vintage clothing, car parts and other hard-to-find things people have always gone to eBay for.
“They have really gone back to their roots,” said Colin Sebastian, an analyst at Baird. “The prior management team attempted to compete more directly with Amazon, but that strategy really did not work out.”
No longer is it trying to persuade people to buy new, in-season items on the site. This is not “a long-term place where we can win,” said Iannone last year, saying shoppers prefer Amazon and Walmart for those purchases. He also said the company would no longer place so much emphasis on the total number of active buyers, which include plenty of “low value buyers” and “one-and-done buyers.”
The number of eBay super-buyers has fallen by more than 10%, to 16 million, over the past two years.
Instead, its efforts have been placed squarely on keeping its best shoppers around. In a presentation to investors last year, the company said that enthusiast buyers spend nine times more than the average shopper and account for 71% of gross merchandise value. These shoppers buy something 30 days a year, spending a total of about $3,000.
“I’ve met a lot of these enthusiast buyers,” said Iannone in an earnings call last year. “They wake up, they grab a cup of coffee and they open up the eBay app.”
A lot of the company’s efforts have been around authentication. In 2020, it launched its authentication program, offering to inspect watches above a certain price to make sure they were genuine. It has since expanded authentication to sneakers, handbags, trading cards, jewelry and streetwear. It says it has 200 employees who review 5,000 products a day, plus it recently acquired a company called Certilogo, which does AI-powered authentication for apparel.
EBay has also been rolling out other user-friendly features. There is now a way for buyers to check if a car part will fit their vehicle — and if it doesn’t, eBay will give them their money back. Last year, it launched a 31,000 square foot secure facility it calls “The Vault,” where collectors can keep their valuable cards and other items. It has been doing more live selling, where shoppers can discover and purchase products during a livestream. And it is giving its site a makeover, like updating product pages with larger images that have important information up top and less clutter.
“These are all trust-building efforts,” said Nikhil Devnani, an analyst at Bernstein.
It doesn’t change the fact that eBay was late to the game. Newer competitors like StockX and TheRealReal, which have long made authentication core, have aggressively taken market share from eBay in category after category.
EBay is still moving too slow, said analysts, who would like to see it roll out authentication features across more categories at a faster pace. The company has introduced these features to about 25% to 30% of their gross merchandise value, Devnani said. That makes it unlikely they’ll meet their 50% target by the end of 2024, he said, adding that he expects this will be pushed back to at least the end of 2025.
In the meantime, the site continues to lose shoppers, and with them, sales. Its total number of customers has fallen sharply to 132 million, down from 163 million in 2020. Sales slid to $9.8 billion last year, down from $10.3 billion in 2020. It also swung to a loss last year, posting $1.3 billion in net losses, as it invests in authentication and other initiatives.
The company pointed to some early indications that its efforts are paying off on Tuesday, like momentum in its car parts and accessories business, where sales grew in the mid single digits for the third quarter in a row following the rollout of its ‘guaranteed fit’ program that helps shoppers figure out if a part will fit in their vehicle. It is now rolling out that program in the U.K. and Germany, its second and third largest markets behind the U.S.
“I think there have been some signs of success, but there is still more work to do,” said Sebastian.