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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

by: toastedmutt This user has validated their user name.

Tue Feb 11 16:22:38 2020

Thanks Ina.  Interesting read.  

Now to figure out what was really said or not said and how badly it will affect seller bottom lines when it all shakes out.

Experimenting with different revenue models?  Different seller engagements?  Different seller capabilities within those categories?

Hang on to your wallet folks.

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

by: FeelingFroggy This user has validated their user name.

Tue Feb 11 16:30:33 2020

OK call me stupid BUT what the hell is a vertical approach.

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: Ina

Tue Feb 11 17:07:05 2020

A vertical market would be automotive, or clothing. eBay is "horizontal" in that it has many categories. Thusfar, eBay has taken a "once size fits all" approach, it appears it's willing to try deviating from that strategy.

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

Tue Feb 11 18:08:39 2020

Vertical Market "Companies in a vertical market are attuned to that market’s specialized needs and generally do not serve a broader market."

Buzz words aside. What a group of dopes. What the heck does ebay think they were in before they decided to go all out AMAZON and flood the site with Chinese junk, Walmart merchandise and a huge population of scammers and thieves. Now they are a sullied brand that will never change  and never be trusted.

Forgetting all that. Considering ebay is a parasite depending on sellers and buyers for their life blood. Just how is ebay going to control what and what can't be sold. How is ebay going to steer the market vertical or horizontal. They don't own a thing. The only thing ebay controls is the level of abuse imposed on sellers, looking the other way while they make millions on counterfeits and allowing buyers to run amok destroying good seller's livelihoods.

I do take away a sense of satisfaction knowing that in the end, JD's and Wenig's plans proved to be a failure.

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by: ShortSeller This user has validated their user name.

Tue Feb 11 18:29:02 2020

Translation  from executive speak to the cold hard reality:

Ebay is getting hammered in mainsteam categories by rival marketplaces that are succeeding in attracting sellers with friendlier policies. Newer marketplaces lack the encumbrance of a creaky infrastructure like ebay so they find favor with a younger audience who in turn solve the inventory and buyer equation. Ebay is fighting a losing battle in many categories to attract prime inventory hence all the games they have been playing over multiple categories manipulating listings and selevtive marketing of product categories to project the image they desire but will always fail to achieve.

Sales tax collection remains the go to excuse to cover up a lack of growth. The real reason is their technical incompetence combined with activist investor and board pressure that has driven down marketing spend and gutted the company of employees. Unsurprisingly ebay found that, given their marketplace struggles to attract mainstream inventory at competitive prices,  giving away money in the form of sitewide coupons to attract new users was an endeavor that had zero return on investment. Key investors no longer trust ebay's judgement when it comes to spending marketing dollars and rightfully so. Perhaps if they weren't hell bent on continuing to try to fool google with laughable attempts at black hat SEO techniques via product catalog manipulation they might actually gain organic traffic.

Efficient buyer is executive double talk for an educated and informed buyer that seeks a competitive price for in season, current year inventory. The platform is infested with low quality and scammer sellers which makes it extremely difficult to establish a value proposition for an educated consumer. Simply put, ebay is not worth the risk for a minimal savings. These buyers already pay sales tax and that simply is not a factor.

The choice is binary, do I buy from the crappy dollar store or do I buy from the luxury store? If the price is the same or minimally different, nobody chooses willingly to shop at the dollar store. Hence we have ebay pivoting to pinning their hopes on a dual strategy: 1) highlight their discount/collectible merchandise 2) compete in mainstream categories by using a bait and switch approach of lowering/eliminating FVF and gaming sellers into paying for promoted listings at a higher rate than the original FVF. Given that ebay has spent the last few years destroying the business of your OOAK/collectible sellers with punitive policies and ill conceived changes to their best match algorithm I struggle to see how they are going to grow that inventory pool. New sellers are routinely scammed by the bottom of the barrel ebay customer base that regularly engages in retail fraud with no consequence. Regular sellers have already diversified where they list. Replacing FVF with promoted listing fees only works for a short period as most sellers cotton on to the fact that changing marketing spend has severely diminish returns, so again I fail to see how either pivot will move the needle.

They are throwing money at existing site users to encourage more frequent spend while fully intending on using promoted listings to manipulate sellers to increase margins. A better strategy would be gutting the company of executives with a work experience that has entirely been spent on the precious verticals they want to promote. Replace them all with people who understand ecommerce rather than solely understanding how to burn through capital with zero results. As much as they all want ebay to be the go to place to buy high fashion it is never going to happen. The only positive here is that there is an element of self-admission from a top level executive that ebay is not a high end department store and will never attract those buyers in a meaninful fashion when viewed in market share.

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This user has validated their user name. by: NoMoreEbay

Tue Feb 11 18:36:41 2020

@ShortSeller

Spot on.

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by: Flying Childers This user has validated their user name.

Tue Feb 11 18:57:20 2020

Short Seller- EXCELLENT POST.  Thank you.

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This user has validated their user name. by: toolguy

Tue Feb 11 20:34:33 2020

"Simply put, ebay is not worth the risk for a minimal savings"

What are you talking about?

eBay sides with the buyer almost all the time!

We hear that over and over here on this forum. . . . . .

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This user has validated their user name. by: toolguy

Tue Feb 11 20:43:50 2020

@short seller

I'm confused

You state: "Simply put, ebay is not worth the risk for a minimal savings."

So a "educated consumer" is at risk

Yet in the next paragraph you say: "New sellers are routinely scammed by the bottom of the barrel ebay customer base that regularly engages in retail fraud with no consequence."

So now the seller is at risk!

Which way is it? 1 has to have more risk then the other!


You sound just like eBay management, play both sides of the field and everything is fine! ROTFLMAO

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

by: ShortSeller This user has validated their user name.

Tue Feb 11 20:56:26 2020

"
What are you talking about?

eBay sides with the buyer almost all the time!

We hear that over and over here on this forum. . . . . ."

Buyer experience is everything. With ebay the buyer experience is a very mixed bag. Unless the savings are significant an "efficient buyer" will opt to shop with their preferred retailers or Amazon rather than risk a subpar experience with ebay. The fact that the post sale problem solving process at ebay is adversarial to begin with is enough to put this sort of buyer off.

With the mainstream verticals they are referencing, current cycle/in season product is simply better bought from a more direct source which enables a more compelling experience pre and post sale. With collectibles, OOAK, previous season product, etc that isn't a problem as lack of alternatives becomes an issue.  

The proof was in the pudding when ebay shelled out a ton of money on site wide coupons to attract new buyers only to find that very few of those customers returned to make purchases, nowhere near enough of a ROI to justify the marketing expenditure. Most of those customers simply chose to look at products that were not typically discounted or MAP priced elsewhere and leveraged the coupons. Once the coupons evaporated so to did the buying activity.

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

by: industrystones This user has validated their user name.

Tue Feb 11 21:19:55 2020

"NoMoreEbay" said it best on the previous post. Haaaaa!

-We are currently engaging in a scalable and proactive strategy to review the paradigm of the granular benchmark which will provide vertical restructuring to enhance customer value. While our penetration is not disruptive, we will work in a matrix structure for a more leveraged outcome.
- Bunch of trendy millennial "Buzz words". Ebay has always (and lovingly) been an online flea market, nothing more.

Ebay needs to stop pretending it's a cancer research collaborative needing annual summits. Doctors from all corners of the globe flown in to meet within an underground 007 like fortress miles beneath the Earths crust - deciding the fate of mankind and the universal health care system and how it pertains to an ever growing ecommerce structured multi-layered cohesive element of trade.

SEE HOW STUPID IT SOUNDS!???????????  GET 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: pace306 This user has validated their user name.

Tue Feb 11 22:05:01 2020

He spoke alot of nonsense but did validate what most of us here have said over and over ....

eBay isnt Amazon and wont ever be. eBays customer base ISNT necessarily Amazons - but in some certain cases - it could be.

eBay refuses to understand the business and position its in. Take electronics - in most cases eBay items "could be cheaper" simply because most makers dont make you abide by MAP on eBay - but they do on Amazon.

If you dont understand how things work - you can be as vertical as a tree - it wont matter!

eBay has more competition then ever yet still chooses to abuse its sellers - thinking they are still the end all and be all.

All of those other sites have better returns policies (Posh and mercari have 3-4 day policies for returns - then the seller gets their money) AND they are easier to list on - no mandatory UPC nonesense, no picture requirements, no forced details and short descriptions in the listing. eBay STILL forces sellers to build its catalogs and demands it gets done for free or that the seller pay by paying FVF if theres actually a sale.

The tax issue is BS - as its a level platform and ALL online platforms must charge tax. Amazon charges tax as do the others.

"When asked about growth, Schenkel said, "Regardless of who's running the company, it's about what categories or verticals make sense for us." ... verticals wont ever properly work if you dont stop warring with your sellers. Sellers WILL put good merchandise on eBay - profitable items all around - IF/WHEN they know eBay has their back - and they know eBay does not. "Dont sell something that you cant afford to loose" should be on the top of every eBay office - and until that statement goes to its grave - eBay wont be "fixed". Nothing is %100 - but now its %5 ... the odds are better in Vegas/AC!

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

by: nsc This user has validated their user name.
Web Site

Tue Feb 11 23:06:56 2020

@ShortSeller,
Yes, second that, spot on.

Does this mean eBay realizes they must stop throwing themselves at the 'efficient buyer' and try to recover the traffic they could get back? Or is it just lip service because they are unwilling to ever make any change that will lower their take rate? which they must do to recover inventory?

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by: catskill This user has validated their user name.

Tue Feb 11 23:53:49 2020

Ebay fee'ed their sellers to death. Many sellers left. The sellers that stayed just raised their prices to compensate for the higher fees.

Buyers then discovered that they can buy products cheaper on web sites instead of ebay and left. To make matters worse Ebay can't afford to advertise to bring in more buyers.

Ebay knows that they would have to lower fees and controls to bring back both buyers and sellers. But, this would cause a massive shock to shareholders, who would then sell their stock.

So, now the management of Ebay stares at their financials looking for a magic tweak that will make the whole problem go away. Ebay is headed for the scrap pile if they don't take drastic steps to correct the past. Or, they must make drastic corrective actions that will probably get themselves fired.

This is what a sinking ship looks like.

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

by: ShortSeller This user has validated their user name.

Wed Feb 12 01:35:18 2020

"@ShortSeller,
Does this mean eBay realizes they must stop throwing themselves at the 'efficient buyer' and try to recover the traffic they could get back? Or is it just lip service because they are unwilling to ever make any change that will lower their take rate? which they must do to recover inventory?"

This smacks of lip service to appease investors who are rightfully concerned at the results being delivered by the previous leadership and those still in place. At the same time they are obviously aware that their approach to Amazon the site and hope they will get that mainstream buyers is not going to work at scale.

I don't think they have any intention of dropping their average seller take but rather they are experimenting with the idea of just re-branding their fee model for the more competitive mainstream categories from one that is clear and objective (set final value fees) to one that is far more opaque (trending promoted listing rate) and that they can manipulate. If other established marketplaces and start ups are stealing market share they clearly feel they can buy that share back by simply converting to a no FVF model then ratcheting pressure on sellers to participate in promoted listings. These are traditionally categories with higher average margins and their thinking will likely be that sellers will have more room to pay for promoted listing fees, especially once they get thrown off the best match cliff.

Internally they have always been concerned about the volume of their listing inventory to the point where they are actively paying other sites and marketplaces for listings. It's the classic throw crap at the wall and see what sticks strategy. Moving forward their approach seems to be focused on trying to pry listing inventory away from competitors by duping sellers into the promise of lower fees. They are under pressure to raise margins, not drop them, so whatever is lost in FVF will be made up elsewhere. It's a strategy that might pay dividends (the irony on that last word is not lost on me) for a few quarters at best. Any seller doing reasonable volumes is already listing on multiple marketplaces.

They need to go back to the drawing board and do a much better job presenting the listing inventory they already have to customers whether directly on site or organically through search engine traffic. Right now their organic traffic is a complete mess as it is marred by copious amounts of dummy product catalog entries they have added that redirect products with no active inventory to irrelevant products. That is a huge no-no. If you haven't curated your existing listing inventory efficiently and are failing at organic traffic then throwing more listings at the wall won't solve the problem. Normally as a retailer you would discount your way out of this sort of a problem to gain share, but ebay tried that and flopped and they have backed themselves into a corner given that sellers already pay 15-20% end to end in selling costs. You can't have brick and mortar overhead in ecommerce and hope to gain market share. That math doesn't work.  

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by: Snapped This user has validated their user name.

Wed Feb 12 07:18:04 2020

Rarely does one have the pleasure of reading such a definitive and cogently accurate and synopsis such as posted by ShortSeller. Well done indeed.

Nitpick all you want (you know who you are), but you don’t rate an oar seat on that boat.

This part, particularly focused: “ Given that ebay has spent the last few years destroying the business of your OOAK/collectible sellers with punitive policies and ill conceived changes to their best match algorithm I struggle to see how they are going to grow that inventory pool.”

That’s their trash picking approach it seems. A dumpster dive to retrieve that “successful past”, tossed in favor of a decade long attempt to chase a bandwagon on their crippled infrastructure legs.

And more ‘experiments’. In an arena they once ruled, unchallenged. Desperate despots all. At the risk of sounding oxymoronic, it’s just laughably sad. That inventory boost they seek? Funny thing, those markets require trust to perform profitably, because of their OOAK nature. eBay’s lips move in apparent acknowledgement of same, interestingly, but they fail to recognize (or are in denial) that they have irretrievably broken that trust, both with their TRUE customers, and endemically now across the platform for those markets.

Experiments? On who? Wanna be a lab rat? And then PAY for the privilege? KYO.

Hope. It’s all they have left to offer really, and still false for all that. Another round of ‘judiciously sanitized’ answers so to appear responsive. Again. What happened to the last? Another serving of MBA word salad. From the ‘team’ that can’t seem to code the difference between M & W Clothing sizes for over 4 (24/7) months now. And they seek to accurately attribute the infinite variance of the unique?

Even if a miracle occurs and they approach success reclaiming that inventory, who’s going to line up to be robbed by eBay AND their lack of transaction consummation security?

Smells pretty desperate. And hope won’t mask that stink.

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by: plcombs This user has validated their user name.

Wed Feb 12 07:22:06 2020

All of this is being exacerbated with many employees at the company looking for jobs elsewhere.  They are doing this now, rather than wait to be suddenly fired in the lurch some Friday afternoon.  

Also, Curiously nobody mentions the Affiliate Program (aka EPN) defections, over the last 3 years eBay has eviscerated EPN by reducing commissions by around 50%, eliminating bonus programs and basically doing everything they can to de-incentivize them.  Which is crazy stupid as the Affiliates ONLY get paid when they pull in traffic...the traffic they bring is considerable.

eBay is blind right now, they have no direction and have trapped themselves in the Q to Q box, when the stock goes back into the mid to upper 20's I expect to see buy-out or two on the table for the company. The only option left.

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by: lancecorp This user has validated their user name.

Wed Feb 12 08:31:22 2020

And the coupons they have rolled out are really benefiting the overseas sellers. One thread alone on a deal board  posting one of the $3 off $3.01 promotions yielded over 340,000 views with over 700 responses as to what to buy with the coupon. Most of these buyer's have multiple accounts and wait for these kinds of deals and slip up - like the sneaker debacle.

These do not attract buyers in the long run - only those who hit the clearance section in every store.

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by: lancecorp This user has validated their user name.

Wed Feb 12 08:31:22 2020

And the coupons they have rolled out are really benefiting the overseas sellers. One thread alone on a deal board  posting one of the $3 off $3.01 promotions yielded over 340,000 views with over 700 responses as to what to buy with the coupon. Most of these buyer's have multiple accounts and wait for these kinds of deals and slip up - like the sneaker debacle.

These do not attract buyers in the long run - only those who hit the clearance section in every store.

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This user has validated their user name. by: NoMoreEbay

Wed Feb 12 10:38:25 2020

You don't paint a car if the engine is dead.

Until ebay repairs it's core fundamentals, i.e. search, search and search, catalogs, brand, reputation, executive pool, Chinese flood of counterfeits, large scamming customer base, disruptive and abusive policies, constant unnecessary changes, lousy outsourced unreliable CS, daily glitches and overall narcissistic attitude. Nothing below it like vertical, horizontal and enthusiast should even be on the table.

ebay's problem is not buyers, not sellers, not taxes. ebay's problem is ebay.  

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