Sellers have long questioned how eBay determines Gross Merchandise Volume (GMV) when reporting quarterly earnings to the US Securities and Exchange Commission. On Wednesday, eBay made its past practices clearer and vowed to change its reporting methodology.
In a press release on its Investor Relations website titled, "eBay Announces Change to Gross Merchandise Volume Definition and Releases Updated Historical Metrics," eBay revealed figures that give a sense of how much it had overcounted sales each quarter. In the fourth quarter of 2020, for example, it added up to a $3.5 billion difference.
"Previously, eBay reported GMV regardless of whether the buyer and seller actually consummated the transaction," it wrote.
Going forward, it will now report only paid transactions. However, the number will continue to overstate sales compared to how its sellers report them: eBay will include shipping and taxes in its GMV figure. ("Sales taxes collected by a retailer are not part of its sales revenues," says the Accounting Coach
- or any accountant, for that matter.)
eBay said it was making the change "enabled by the increased visibility derived from the Company's transition to managing payments globally."
Yet it was able to restate GMV figures for past quarters using the new methodology. And it's a big difference, as you can see by looking at how the new practice impacts eBay's GMV for the fourth quarter of 2020.
eBay reported its fourth-quarter 2020 GMV was $26.6 billion when it reported earnings in February 2021. Yesterday, eBay revised that number downward to $23.13 billion using the new methodology.
It did not explain why it will include sales tax and shipping in its sales metric going forward.
How eBay displays selling prices in search results had sellers suspicious of how eBay calculated GMV. For example, in 2013
, sellers noticed eBay overstated selling prices in search results on listings where buyers paid less than the starting price through best offers.
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