eBay is looking at getting back to its roots and is willing to experiment more in vertical markets, according to eBay interim CEO Scott Schenkel. The strategy comes as eBay faces growing competition in various niches, such as the sneaker category where a marketplace now headed by the former head of eBay Marketplaces Scott Cutler is engaging buyers.
The chief executive gave a presentation at the Goldman Sachs Technology and Internet Conference on Tuesday, February 11, 2020, where he also discussed two dynamics that negatively impacted the company's sales growth in 2019: state sales tax collection requirements and reduced marketing spend.
Schenkel said he hadn't expected 30-plus states to roll out sales tax laws so rapidly and expects it will have an impact in 2020 as well. That was a reference to laws that put the burden of collecting and remitting sales tax on marketplaces rather than third-party sellers.
When it comes to marketing, he said eBay proactively reduced the marketing spend last year, and he referenced the recent reorganization of the marketing team. As eBay reached the end of the frontier of bringing in new buyers, it pivoted back to spending more on those buyers to get them to activate more. "It will negatively impact a little bit of the active-buyer growth and will impact GMV a little bit," he said.
He doesn't want to leave growth on the table, but he doesn’t want to go overboard in "pushing the efficient frontier," he said.
The ethos of eBay is the "enthusiast buyer" and the "value seeker." They tend to index towards collectibles, vintage, last year's model - it's the "spectrum of value" eBay provides, Schenkel said. "They're not the "efficiency buyers,"" he said.
"I think that's what we have to lean into," he said. "I think there's a market there." It may grow less than ecommerce, but it probably grows in-line or better than retail - for eBay, it's a great business, he said.
When asked about growth, Schenkel said, "Regardless of who's running the company, it's about what categories or verticals make sense for us."
He referenced eBay's experiment with different revenue models and participating less as a horizontal marketplace - "which we're good at," he noted parenthetically - "but how can we operate as a vertical marketplace?"
In eBay's sneaker category, there's now zero take rate over $100. While he said, "Free is not a strategy for us," he said the plan was to iterate on, "what do we see the behavior of those sellers?"
So far, he said, sellers are buying more promoted listing ads - "so we are getting a take rate." The number of listings is going up, and the buyer base is starting to get more interested "because now the inventory is here." And eBay is working on the product behind the scenes to make it more engaging.
Schenkel said this year eBay will be expanding a number of categories and experimenting with different revenue models, with different seller engagements, different capabilities for sellers within those categories, and different visualization for buyers.
When asked where eBay was seeing incremental competition, Schenkel said ecommerce is seeing a lot more funding into vertical niche players. The hardest part for those startups is becoming profitable given the marketing spend required to scale. eBay already has that, he said.
"But they are bringing an engaged user base to an ecosystem that we haven't in recent years. They're bringing in a user experience that's more fresh, that's differentiated, that's mobile only, etc.
"You can expect us to lean into that side of the equation more," he said.
"They are helping to expand the market, and we've got to compete to win in these categories, and think about ourselves a little bit less from a user experience standpoint as a horizontal."
eBay CEO Takes a Vertical Approach to Compete with Rivals
by: Number 6