eBay Marketplaces experienced single-digit growth in the second quarter of this year thanks to a rough quarter, the company revealed on Wednesday, and executives outlined some of the actions they have been taking to aid in the recovery.
eBay CEO John Donahoe said growth of eBay’s Marketplaces business was hampered by the password reset it required for all users in the second quarter following a security breach made public in May.
The company as a whole grew revenue 13% in Q2 (April, May, and June), but eBay Marketplaces revenue was up only 6% FX-neutral (taking into account foreign currency exchange).
eBay sellers were clearly impacted by the password reset. An EcommerceBytes survey taken in late June revealed 93% of eBay sellers experienced a negative impact from news of the breach. And eBay’s earnings report backed up that statistic. eBay GMV was up only 10% year-over-year in the U.S., and it was up only 8% internationally (the article originally said GMV was up 8% in Europe). (GMV is the value of goods sold on the eBay Marketplace.)
An issue eBay didn’t address – and Wall Street analysts didn’t ask about – was the fact that sellers who listed the same amount on the marketplace would have received less bang for their buck. Given the slower activity on the site, sellers who paid eBay insertion fees would have received fewer sales. And given that eBay said the first half of the quarter had gotten off to a good start, the impact after the May 21st announcement was likely greater than the number for the entire quarter would indicate.
The recovery of eBay’s business in Europe from the cyber attack has been slower. Donahoe explained that the media in Europe is “definitely more privacy sensitive and the EU – there was all sorts of talk from legislators and regulators and so the whole thing got a lot more media,” he said.
eBay ended the first quarter with 145 million active buyers, up 14%. eBay ended the second quarter with 149 million active buyers, up 14%. We asked eBay if that meant all of the 145 million active buyers eBay had at the end of the first quarter had reset their passwords, or if eBay was simply sticking with its definition of users who had had some activity in the 12 preceding months. eBay did not respond by press time.
We subsequently found on eBay’s site how it defines Active Buyers: “All buyers (including buyers of Half.com, StubHub, GittiGidiyor and our Korean subsidiary) who successfully closed a transaction within the previous 12-month period. Buyers may register more than once, and as a result, may have more than one account.”
In his call with analysts, Donahoe did not reveal what percentage of users had reset their passwords, but he did say: “Buyers representing approximately 85% of affected volume have reset their passwords.” And, he said, “But some of these buyers have not returned to their previous activity levels.”
“Our focus is now on recovery,” Donahoe said.
eBay CFO Bob Swan provided more details on how eBay was trying to reengage those users and try to get those users who haven’t yet reset their passwords to do so, and cope with the Google SEO changes.
eBay’s strategy: “couponing, seller incentives, and increased marketing spend,” Swan said.
“We’ve begun to see some recovery in the first part of July, and we’re confident we’ll get the challenges behind us. But, it will take a bit longer, and we’ll invest more as we work to get back to double-digit growth.”
While Overstock disclosed on SEC filings when it was impacted by reduced exposure in Google search a few years ago, eBay felt no need to do so. Although eBay executives referenced the issue during a post-earnings conference call with analysts on Wednesday, surprisingly none of the analysts was curious enough to ask for more information. eBay’s CEO simply referred to it as “Google SEO changes.” In slide 14 of its presentation deck, eBay stated, “Cyberattack and SEO impacted conversion and new buyer growth,” but there was no mention of the reduced exposure in Google search results in eBay’s earnings press release.
eBay also broke out results for PayPal and eBay Enterprise, available on the eBay Investor Relations website.
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