Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Tue Feb 11 2020 14:43:35

eBay CEO Takes a Vertical Approach to Compete with Rivals

By: Ina Steiner

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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."

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Perminate Link for eBay CEO Takes a Vertical Approach to Compete with Rivals   eBay CEO Takes a Vertical Approach to Compete with Rivals

This user has validated their user name. by: NoMoreEbay

Wed Feb 12 10:55:25 2020

They want to 'connect' with buyers and steer them away from competitors then start talking in plain English instead of this never ending stream of disingenuous buzz words.

It's condescending and does nothing but alienate and anger both buyers and sellers. It brings no value and talks 'at' customers rather than talking 'with' them.

If ebay can't even adopt this simple and basic human precept, how on earth are they going to escape their own dysfunction and make any meaningful changes.

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This user has validated their user name. by: Number 6

Wed Feb 12 11:49:41 2020

NoMoreEbay.

My name is Not Really.

How can I help you today?  Your concern has been forward to the outsourced eBay Plain English Department.  I am pretending to be a real human but this is really a donotreply Bot with a canned response.

I believe that due to your lack of an exclusive Harvard or Yale education, your problem is that you are frustrated at not being able to comprehend our MBA Business Management 'Today's Wall Street Special' word salad jargon.

I have therefore condensed them into one long paragraph for easy reading, and below that provide you with a clear and concise translation in Latin for additional elucidation.

I hope that makes things clearer for you.

If you require further assistance, please do not hesitate to call us on our never-ending-wait Customer Non-Service Line, where you will be placed on hold for a few hours and subjected to the same music enjoyed by waterboarded 'residents' in obscure Black Ops offshore prisons.

Have a Nice Day.

eBay is looking at getting back to its roots...vertical markets...two dynamics...growth burden...proactively reduced...end of the frontier...pivoted back...activate more... pushing the efficient frontier...value seeker...index towards...spectrum of value...efficiency buyers...in-line... categories or verticals make sense for us...different revenue models...horizontal marketplace...vertical marketplace...zero take rate... behavior of those sellers...promoted listing ads...take rate...buyer base...behind the scenes...more engaging...expanding categories...experimenting...revenue models...seller engagements...capabilities...visualization...vertical niche players...engaged user base...ecosystem...differentiated...mobile only...lean into the equation...expand the market...user experience standpoint...horizontal.

Latin clarification translation:

eBay ... est vultus ad radices ejus, ut recepto duos dynamics vertical fora ... ... ... incrementum onus proactively redactae ... a fine ad finem excitant more ... ... ... retro orae propellentibus peteret versus valorem index ... ... ... agentibus in termino efficientiam buyers placerat valorem ... ... ... genera vel in-linea verticali posili inter sensum facere diversum vectigal nobis exempla monstrabit, ... ... amet nulla ne ... marketplace vertical marketplace rate ... ... ... promoted quicquid sexus est exigo mores eorum ads ... ne ... reddet emptori basis rate plus amatur ... ... ... post scaenae expanding Donec commodo elit ... ... ... expertos aduersus ... praedicamenta ... auctor nisl angulus verticalis visualisation ... ... ... circa diversa mobilia turpis tincidunt nisi ... ... .. ecosystem expand user experientia foro ... ... .lean in aequationem consideratione ... Seu Rigidorum VOL.

Please remember to take our short survey about how well we serviced you today

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by: ddigler This user has validated their user name.

Wed Feb 12 11:59:11 2020

"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"

It is as if he never even used eBay before. If I was a professor and a student wrote this, I would assume he didn't do his homework and was copying lines from the book in a feeble effort to sound intelligent but it is clear that he has no idea whatsoever of what he is talking about.

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This user has validated their user name. by: Number 6

Wed Feb 12 12:17:26 2020

ddigler says 'feeble effort'

That about sums up eBay entirely these days.

Feeble search
Feeble customer base
Feeble seller protection
Feeble management
Feeble stock price (only kept alive by endless company buy-backs)
Feeble non-growth
Feeble 'new' ideas
Feeble execution of said feeble 'new' ideas

Feeble...actually, feeble would be ok in this particular case: Utterly Useless Cellphone AP that TWO YEARS on still can't create an invoice for international customers with the correct discounted per extra item shipping, or let them simply request an invoice from sellers after creating a shopping cart.  Feeble doesn't remotely explain losing sales because, in 2020, you have the lousiest mobile APP of any I have ever encountered.

Now managed temporarily by a Feeble Wal Mart reject CEO that came back to eBay as they clearly can't find a decent CEO to replace the Feeble one they 'fired' in all but name.

And above all else, after being on ebay since almost the beginning, thus far in 2020, utterly Feeble sales.

I now think the only way to save eBay from its almost inevitable fate, is if someone  like the pet food website Chewy were to buy it...where you can get amazing 24/7 customer service, speak to real people when you have a problem, get orders delivered in a day or two, where the site works all the time, where shopping carts and order systems work fast and properly every time...where they actually seem to like and respect their paying customers...

But then again, the 'eBay touch' might actually drag down any proper online venue like a virus.




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This user has validated their user name. by: toolguy

Wed Feb 12 12:52:46 2020

@plcombs

"when the stock goes back into the mid to upper 20's"

eBay still makes way too much in profits for the stock to drop that low.

It would have a P/E under 10

Wall Street won't let that happen and yes it would be a buyout by almost any company with cash.

eBay is a CASH machine, it has been since day 1

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This user has validated their user name. by: toolguy

Wed Feb 12 12:57:11 2020

@Number 6

Been a buyer and seller on eBay for 22 years, never once bought something with my mobile device, not once!

There's nothing on this Earth I need that can't wait until I sit down in front of my desktop.

Don't get me wrong, I use my cell for directions and information all the time, I just don't buy anything on it. . .

Perminate Link for eBay CEO Takes a Vertical Approach to Compete with Rivals   eBay CEO Takes a Vertical Approach to Compete with Rivals

by: Geetar This user has validated their user name.

Wed Feb 12 13:00:47 2020

I recently started free returns on my listings. Was ok at first. But now at a month and a half into it it has become a disaster. I cant afford this...paying shipping back and forth, with nothing in return.

Point is their policies have done more harm than good. You loose buyers because prices have to go up. Then with prices up, you cant compete with amazon. You did away with calculated shipping (or have done your very best to discourage). So thats one less competitive advantage. You kicked to the curb and discouraged used, collectible and vintage, giving rise to the sites that you will now have to compete against. You severely discouraged auctions over the past several years by increasing all of the costs to list, that coupled with the fvf stopped sellers from offering auctions, and the non professional seller who sell what they dont need any more is long gone. The buyer looking for the auctions are gone, and gone are the sales from the buyers that lost the auction, and decided to buy anyway at fixed price. Gone are the buyers that get a thrill out of going thru the auction process.

Now they have to reverse all those things. But they cant dont wont because in the short term they will not make money on it / and or loose money.

We have been telling you all these things for 10+ years, but you didnt listen. Wanna listen now?

Perminate Link for eBay CEO Takes a Vertical Approach to Compete with Rivals   eBay CEO Takes a Vertical Approach to Compete with Rivals

This user has validated their user name. by: CanBrit

Wed Feb 12 14:00:22 2020

"When asked about growth, Schenkel said, "Regardless of who's running the company, it's about what categories or verticals make sense for us.""

A new announcement coming soon or is he just warning potential candidates as well as the BOD?.

Makes sense for us? Nothing you've done in the last decade has made any sense.  

Perminate Link for eBay CEO Takes a Vertical Approach to Compete with Rivals   eBay CEO Takes a Vertical Approach to Compete with Rivals

by: pace306 This user has validated their user name.

Wed Feb 12 14:03:31 2020

Snapped - your follow up of ShortSeller's analyses was equally as masterful - ty !

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by: pace306 This user has validated their user name.

Wed Feb 12 14:17:57 2020

eBay going forward will be ....

Marshaling mission-critical communities, leveraging with killer convergence, Coordinating revolutionary functionalities, launching end-to-end methodologies, implementing magnetic trusts, and more!

(just joining in the fun!)

Perminate Link for eBay CEO Takes a Vertical Approach to Compete with Rivals   eBay CEO Takes a Vertical Approach to Compete with Rivals

by: HappyOne This user has validated their user name.

Wed Feb 12 14:38:37 2020

Thank you Ina for explaining what vertical marketplace is. Recently while one of my grandchildren was taking music lessons I got to talk to a brick and mortar music store owner. Store has been open 20+ years and never struck me as a busy place -renting instruments to local schools, fixing and repairing, lessons and sales of a lower priced accessories and instruments. While waiting I heard several cellphone cash register rings. I got into a conversation with owner. He told me he had been on Ebay since 1998 and Reverb when it started in 2014. At first Ebay was good but he had many problems starting around 2016 or so with high priced items - charge backs, damaged/used returns and non paying bidders. Now he only uses Ebay for fixed price lesser value items and some accessory items he buys in bulk. His quality high priced new and vintage items are sold strictly on Reverb with very good results. Now I understand that Reverb is a “vertical marketplace” - makes sense for a profitable specialized category. I guess smaller Esty understood this and recently bought the company. Owner is still happy with resulting sales.  

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This user has validated their user name. by: Number 6

Wed Feb 12 15:30:40 2020

toolguy

'Been a buyer and seller on eBay for 22 years, never once bought something with my mobile device, not once!'

Me neither - but that's not the point - perhaps 50%, maybe even more than that, are sales to customers on cellphones using Apps to purchase from, and eBay's is a disaster, they seem either unable to fix it or disinclined to do so.

I would imagine most younger, under 40 folks, are exclusively using cellphones these days and not computers to do virtually everything, from banking to buying items online.

So, why is eBay's App so bad?  Why wouldn't they want the best, fastest, easiest to use App that accomodates all the things its website has to offer when it comes to the point of sale?

Our store is set up for a lower shipping price per extra item on everything we ship international, plus a 5% discount on multiple purchases.

Every single international customer (and many USA customers as well) in the last few years trying to buy on eBay's App have not been able to either facilitate the 5% discount, and/or the discounted additional shipping.  

Customer service has told them/me so many different lies its tragic - the saddest of  which, if true and not a lie, is 'eBay's system can't accomodate two discounts in one sale, namely a % discount as part of the managed store offers we can make and reduced postage for additional items'.  

The App always requires the same shipping amount (higher of course) for each item in their cart (if they are able to create a cart in the first place), requires immediate payment at those higher amounts and doesn't let the customer create the cart and contact seller for a corrected invoice - the list of problems they have reported to me (that's the lucky ones I've been able to help out, who knows how many sales I've lost and not known about) are endless, and over time a clear pattern has emerged...namely that eBay's app doesn't facilitate multiple item sales properly, doesn't facilitate customer-seller contact for invoices and doesn't even chase-up abandoned carts at point of sale.

It is inconceivable that the self professed 'technology' company can have such a clunker of a sales app and do nothing to improve it.

All the other sites we list on, Amazon, Discogs, Reverb, etc etc - no problems at all - whatever the customer uses works, computer, cellphones, tin cans with bits of string between even, never an issue with correct shipping/discounts for multiple purchases if you have your sales funnel set up properly on the website in question.

And now, of course, Paypal won't refund its fees if we sellers refund customers for overpaid shipping, there's no workaround that doesn't line eBay/Paypals pockets further.

Perhaps, come to think of it, that's the reason for eBay not making it work for multi-item sales in the first place -  

Oh well, we reduced our store from $60 pcm to $25 pcm this year and as soon as mangled payments is forced on us, we're off and gone.

If eBay was providing the sales it'd be worth putting up with all this malarky, but there's too many other options these days to put all the time and energy we used to in eBay.

I can't even begin to count the number of others sellers in my genres that have said and or done the same thing in recent years.  Many are gone for good and don't even think of eBay as a venue to consider now.







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This user has validated their user name. by: Beanie

Wed Feb 12 17:21:21 2020

After 20+ years, if Ebay has not figured out who they are, they NEVER will. They cooked the Golden Goose years ago. That is Ebay in a nutshell.

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This user has validated their user name. by: RKTOYS

Wed Feb 12 17:24:48 2020

eBay will be a horizontal marketplace soon enough if these clowns keep up the "disruptive innovation."

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by: Geetar This user has validated their user name.

Wed Feb 12 17:25:31 2020

It really is sad. Ebay was a great place. But they just got way too carried away with greed, and making shareholders happy. At the same time destroying their future prospects and growth for short term gain. I bet those bozo's could come up with an algorithm for that. (breakneck take rate x stupid sellers - future growth = more money now = we are screwed in the future) Sounds like a winning calculation.

I hate Amazon with a passion. Hate hate hate. Why ebay do you make me go sell there? Why?

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by: JWsax This user has validated their user name.

Thu Feb 13 00:44:06 2020

Increasingly , I use ebay as a place to notify customers of goods I have available and list them at high prices. This drives traffic to my website even if not mentioned in the listing , where they can enjoy good prices and I can enjoy seller protection. A win win for the buyer and I and happily, a lose for ebay. Its what they deserve for the contempt they now show what was once their loyal seller base.  

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This user has validated their user name. by: DeathFromAbove

Thu Feb 13 01:57:51 2020

Why we would look to align with the landing pad for another failed ebay executive, Scoot Culter, and believe that overpriced shoes are the answer?  There's no future there.  All I see is a "vertical" jump off a cliff when everyone goes bankrupt.

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by: scissors This user has validated their user name.

Thu Feb 13 02:23:52 2020

I have to comment on the Invoice and Shopping Cart issue.

I have customers every day who cannot get an invoice - the Classic App works, but its the oldest version out there and no one has that on their phones.  Customers simply cannot get an invoice using the App. It actually is not acceptable on any level that Ebay does not fix this. I complain every single time I call in to customer service and ask them to pass it up the line. I put it on the surveys as well.

I have customers who over pay sometimes by over 100 dollars in shipping - and that means those percentages come out both in ebay and paypal.

While I also use a computer the fact is customers do not, and have a right to get an invoice. Every other site has a shopping cart that works. Why is this not a priority? I would say I lose 1-2 customers a day because they cannot get an invoice.

Get the little stuff fixed and move up the list. My category is strong still. but Etsy and Amazon will take it over if they do not fix this issue and do some solid customer advertising.

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by: purpleiris This user has validated their user name.

Thu Feb 13 02:46:09 2020

"third-party sellers"?

Why are small business owners being referred to as third-party sellers? eBay isn't even selling anything other than virtual real estate and seller services. We sell directly to customers through virtual mediums. It's that virtual medium that's the third party.

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This user has validated their user name. by: Philo

Thu Feb 13 02:51:42 2020

@ShortSeller right on, well said.

I think everyone who has posted comments knows problems and fixes.  The issue is that they aren't listening or have turned into such a dysfunctional organization they cannot adapt.  It will need to get worse until someone can buy them out.

my 2 cents, I have said it many times before.  All management, as a condition of employment, must have items for sale with sales to the tune of about 25 items at all times.  Once they do this, they can start to see the effects of free shipping, crappy returns, bad search logarithms and non existent invoices.

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