Sales on eBay dropped 10% in the three months ended September 30th year-over-year. The number of active buyers on eBay declined 5%. But eBay put more in its own pocket in the third quarter thanks to collecting more fees from sellers.
eBay attributed much of the growth in its revenue to Managed Payments - it's now processing 90% of sales volume globally with over 18 million sellers migrated to the new payments system.
As we noted on Tuesday, when shipping costs rise, eBay makes more money - both from payment-processing fees and commission fees - but it doesn't break down how much incremental revenue that drives. (As sellers are all too aware, shipping costs are constantly on the rise.)
eBay also said it took in more fees from sellers who advertise, growing Promoted Listings ad revenue by 12% in the quarter. While a simplistic take, that means in the aggregate, eBay sellers paid 12% more in advertising fees for 10% fewer sales. (On an individual basis, it may mean some sellers are advertising more just to maintain sales.)
The number of active buyers declined by 5%, and during a post earnings call on Wednesday, eBay said it was spending less on certain forms of marketing (more on that below).
During the call with investors, eBay executives referred to low-value buyers versus high-value buyers as they had in August when reporting second-quarter earnings - see an explanation in the August 15th EcommerceBytes blog post
eBay CEO Jamie Iannone said eBay shifted its marketing to "upper funnel" marketing, events, partnerships and working with social influencers. It's also enabling sellers to drive purchases from repeat buyers through the use of seller-funded coupons.
Iannone and Chief Financial Officer Steve Priest referred to eBay's "innovation playbook" - which we've described as eBay's "vertical strategy" - and Iannone described new features eBay has rolled out in sneakers, luxury watches, handbags, and trading cards categories.
The CEO cited an example of a buyer of a $500 pocketbook who will spend $5,000 in other categories on eBay as his reasoning behind focusing on "high-value buyers."
Priest said eBay will expand its innovation playbook to more categories and countries.
Other highlights from eBay's post-earnings call with Wall Street analysts:
- For those who miss coupons and the eBay Bucks loyalty program, Priest had this to say: "Sales & Marketing expenses were lower in part due to a reduction in coupons and rewards program that were previously targeted toward "low-value buyers."" (And it also shifted some of the marketing costs to sellers through seller-funded coupons, as Iannone mentioned.)
- Tomorrow, eBay will introduce 3D image capabilities in sneakers that give a 360 degree view of items. But, Iannone qualified, it's a very early test pilot with select sellers.
- In the third quarter, eBay explored ways to syndicate ads off eBay through external Promoted Listings.
- eBay has been increasing traffic to Stores, and it continues to improve its Stores experience to make eBay the "seller platform of choice."
- eBay will integrate listings from Parts & Accessories into its eBay Motors mobile app.
- eBay will hold an investors' event in early 2022. (eBay's last Analyst Day was held in 2013.)
One thing eBay noted during its post-earnings conference call: third-quarter GMV was actually up 9% compared to the same quarter 2 years ago, an indication that the pandemic sales boost it got Q3 2020 was temporary. (eBay grew sales 22% in the third quarter of 2020.)
The CFO also said that in the US, GMV (sales) grew 22% compared to the same quarter in 2019. The Q3-2021 earnings press release is posted to the eBay Inc blog