eBay blamed fidget spinners for a disappointing metric in its second quarter earnings report
released yesterday after a Wall Street analyst asked why eBay promotions and the Best Price Guarantee program were not translating into an increase in active buyers during the quarter.
The "stress-relieving" fidget spinners had attracted new buyers in the second quarter of 2017 - but not all of those new buyers who had been eager to get their hands on the latest fad returned to make subsequent purchases, according to eBay Chief Financial Officer Scott Schenkel.
Growth in active buyers in the recent quarter was 3% (excluding eBay's Japanese acquisition), down 1 point versus the prior quarter due primarily to the lapping of new buyers from fidget spinners in the prior year, he said.
Here's how he responded to the analyst's question about active buyers:
"I would highlight that there is actually a couple underlying dynamics that we've called out in the past and that continue and will continue to pressure a rolling 12-month metric for the time being.
"First off, as we kind of talked about, there is a fidget spinner dynamic that in Q2 of last year brought a lot of low ASP (Average Selling Price) items that were a lot of new buyers as well, and we have not retained those new buyers to the extent that we have in the past. They're a kind of "one and done," if you will, buying those fidget spinners - and they were very low ASP items.
"So, as we lap that, that certainly makes it feel like the underlying growth rate is decelerating when in fact it's more a one-off aspect of that.
"And that same thing is pressuring active buyers, but now, the other thing we talked about was we had been favoring higher ASP branded items in our search, and as that has kind of offset some of the pressure that we got from the fidget spinners in the sold item number pushing ASP up a bit, but really sold items down. So hopefully that's clear. But that's the dynamic between those two both active buyers and sold items."
What he seems to be saying is that in Q2 2017, there were a high number of sold items with low selling prices due to fidget spinners, without anything similar in Q2 of 2018, so that when comparing this year to last year, the growth in the number of sold items is lower than what might be expected.
Schenkel explained how eBay would improve growth in active buyers going forward: "Scaling of new user experiences and our broader marketing programs will continue to be a key area of focus to drive more active buyer growth."
Yet,...it appears eBay is baiting new users with cheap gimmicks. In March, it launched an "Under $10
" shop full of the kinds of products found in dollar stores and offering free shipping. Plenty of the items come via SpeedPAK from sellers in China - a delivery service with long shipping times that has led to disappointing buyer experiences, as we noted here
Either eBay hasn't learned its lesson about the value of new users attracted to cheap goods, or it's trying to attract more of them simply to raise its active buyer metric.
Is eBay placing too much emphasis on attracting new users versus retaining existing users?
We're also perplexed by this statement from above: "we had been favoring higher ASP branded items in our search" - any thoughts about what eBay's chief financial officer meant by that?