eBay CEO Devin Wenig told shareholders today that 2018 was a transition year for the company, and he said in his annual letter that eBay's purpose and policies are what help retain loyal sellers. Millions of small businesses and consumers sell only on eBay, he said.
The CEO reaffirmed his commitment to "transform" eBay despite the fact that the marketplace saw some "challenges with the pace of adoption of some of our transformational changes" in the second half of 2018, accompanied by a slowing pace of growth. "It would be an enormous strategic mistake to not transform the business," he said.
A big part of that transformation is moving to a managed marketplace. What does that mean for sellers?
"Managing our marketplace means building a foundational product catalog, increasingly playing a role in package delivery and returns, and managing the end-to-end payment process," he told shareholders.
The CEO has previously discussed his efforts to build a catalog and launch managed payments, but less clear is what he means by his plans for eBay to take a bigger role in package delivery and returns, though eBay has quietly launched a fulfillment service
And while Wenig didn't mention Amazon by name, he expanded on his Twitter response to Jeff Bezos
who had compared Amazon favorably to eBay in his letter to Amazon shareholders.
Wenig wrote in today's letter:
"Unlike other digital commerce businesses, we don't compete with our sellers and we refuse to compromise the shopping experience to push "house brands" and irrelevant posts.
"Millions of small businesses and consumers sell only on eBay. I believe it's because of our purpose and policies - this matters to customers.
"We fundamentally object to unnaturally bundling services to overcome barriers to competition. At eBay, we empower third party sellers to thrive, which actually serves consumers seeking value and selection. We are a benchmark on this. We always have been."
Wenig talked about the level playing field that eBay provides sellers. "We are innovating, investing and transforming the business not only to win in the marketplace, but also to level the playing field for tens of millions of people who operate on our platform and depend on it for their livelihood."
But he went on to highlight programs that do the opposite: eBay Deals; eBay Authenticate; and eBay Retail Revival; all of which are open to only a tiny percentage of eBay sellers. Some have also pointed to eBay's specialized services that help Chinese companies compete against domestic sellers in the US and elsewhere.
Among his accomplishments since taking over the company in 2015, he described the following:
"In the three years after completing the spin-off of PayPal, we have added 20 million new buyers to a total of 179 million and grew our inventory to 1.2 billion listings from 850 million. In those three years, the volume of transactions on our platform - gross merchandise volume (GMV) - increased to $95 billion, up 16% from $82 billion. Over the same period, we have returned $11.3 billion to shareholders, which is 140 percent of our free cash flow."
He also detailed some of the initiatives of 2018, putting them in the following buckets: Platform Innovation; Payments Debut; Geographic Expansion; StubHub & Classifieds; Capital Allocation; and Employee Experience, Diversity and Inclusion.
And Wenig talked about what's ahead for this year, including what's in it for shareholders: advertising revenue (a $1 billion opportunity) and payments revenue (a $2 billion opportunity), both of which, of course, come in the form of seller fees.
Among the gains for sellers in 2019: "Sellers will gain access to more data and tools, with enhanced protections," he said. The latter may be protections that eBay could offer to sellers who opt in to managed payments, which will eventually become mandatory for all sellers.
Some parts of Wenig's letter left us wondering what he had intended to convey, such as when he told shareholders that last year "was a year of reckoning for many consumer tech companies, with a breakout of societal issues around privacy, trust, trade and immigration." And when he said, "Our marketplace is growing, resilient and steadily profitable in a hypercompetitive industry, and not many can claim this. It would be easy to rest on those accomplishments,..."
It would actually be impossible for Wenig to rest given the interference by activist investors who have already forced eBay's board of directors to make changes - including giving them some seats on its board and forcing eBay to review its portfolio.