Ebay plays the strong cards. Is it Enough?

I left eBay three years ago to launch Requiremints.com after spending 4 wonderful years there. I thought it was time to check out what's changed and see where eBay is heading from a strategic point of view.

This analysis is a part of the work we did at Requiremints to understand the leading e-commerce players better, in order to develop a more effective strategy of our own.

Given my fondness for eBay (it was my home for four years), I felt compelled to share my thoughts.

Important numbers of ebays

To better understand eBay's plans for the coming years, we need to examine eBay's financial reports for 2022 and the first half of 2023.

As of the close of 2022, eBay stood as a major player in the e-commerce industry. eBay boasted 134 billion active buyers, with a total gross sales (GMV) of $74 billion and 1.7 billion global listings, but it reported a net loss of $1.3 billion.

When we examine eBay's sales trend over the last 10 years (GMV), we can see that the sales numbers have remained relatively stable, except for 2022, which proved to be a challenging year for the entire e-commerce industry.

Comparing to Amazon

When comparing eBay to Amazon, it's evident that eBay's sales numbers aren't growing, while Amazon's marketplace business outperforms eBay by a factor of about 7 (after subtracting AWS's $85 billion in sales in 2022).

In 2022, eBay reported a loss of $1.3 billion, whereas Amazon's marketplace (excluding AWS) incurred a loss of approximately $10 billion.

Looking back over the past 10 years, it becomes clear that eBay has been more profitable than Amazon's marketplace business. Additionally, when considering profit margins, eBay appears less risky compared to Amazon, which deals with substantial logistics and warehouse expenses.

Another significant factor to note is that eBay's market share in the United States has declined by 5.5% between 2014 and 2022, dropping from 9% to just 3.5%. While Amazon remains the largest player, Walmart and Apple have surpassed eBay, relegating it to the fourth position.

In summary, from a financial perspective, eBay is still a major player with billions in sales, but it is losing market share to competitors, and its sales numbers are not showing growth.

Does this signify the decline of the company that pioneered e-commerce? I am not entirely certain. eBay still offers a unique value proposition and generates substantial revenue. My primary question is what eBay should do to foster growth or, at the very least, safeguard its existing territory.

Ebay’s Strategy

To gain more clarity about the potential of ebay and its strategy, it's imperative to delve deeper into eBay's future plans and its foundational tenets.

Beginning with eBay's core values and beliefs, lucidly expressed in its mission statement:

“We connect people and build communities to create economic opportunities for all.”

eBay takes pride in its capacity to create opportunities for businesses. Anyone can sell on eBay, and, distinctively, unlike Amazon, eBay doesn't compete with its vendors. This distinctive approach, which I profoundly appreciate, empowers eBay to offer sellers a unique platform unlike any other. It indicates that eBay holds higher relevance for small to medium businesses (SMBs) and individual sellers (B2C) who wish for a frictionless selling experience.

In my opinion, this is ebay’s unique offering and the last major competitive advantage.

The pressing question remains: does eBay's current strategy align with its mission and can it pave the way for exponential growth?

Ebay’s focus these days

eBay’s Q2/2023 investors public report highlighted three main focus areas:

• Relevant experiences (improve buying and selling user experiences)

• Scalable solution (i.e. international shipping)

• Magical innovation - using AI to improve listing process (similar to 1 I guess)

Their business emphasis is on:

• Motor parts and accessories.

• Authenticating luxury items, especially in fashion

In short, eBay appears to be focusing its energy on the second-hand luxury market and authenticity services, termed "recommerce". This is what ebay believes it should mainly do.

Is focusing on the second-hand luxury market a correct strategy?

In my view, the highlight of eBay's strategy is recognizing its strength in the second-hand market and supporting small to medium-sized businesses that struggle to establish on platforms like Amazon or Walmart.

It seems eBay acknowledges they can't directly compete with Amazon when it comes to brand-new products. Amazon's efficient inventory management and excellent customer service are hard to match. However, eBay provides items that Amazon either doesn't have or chooses not to sell.

But still, is this enough? How difficult would it be for giants like Amazon, and Walmart to tap into the second-hand market, using their already massive reach? Or for social media platforms like Meta, Instagram, and TikTok to expand further into e-commerce, potentially taking away from eBay's share?

My main concern about ebay’s strategy is whether eBay plays it too safe by zeroing in on a specific niche. Even if this niche is considerable and lucrative and in the core of ebay’s competitive advantage, I'm uncertain if it's big enough to sustain a company of eBay's size and meet long-term growth expectations.

In Conclusion

Ebay is still a dominant player in Ecommerce, the company makes billions of dollars in revenue consistently and is probably the only place where buyers can find whatever they need, the only place that sells in scale collectible products, and the easiest place for a small new seller to start its business.

From a strategy perspective, Ebay is very much focused these days on dominating the industry of collectible items. Ebay decided to focus on the “blue-ocean” market where there is no real competition or good solution for this 2nd hand market of luxury items and collectibles. I admire the focus of ebay these days, it can pay off and I have no doubt that ebay will win this market.

My only concern is if ebay plays it too safe, i truly expect from a big sized company as ebay to lead the way to bigger groundbreaking innovations, for example to really reshape the 2nd hand market for all categories, or offering ecommerce solutions for local businesses in their neighborhood. 

I guess only time will tell. In the meantime, I am happy that ebay really understands its competitive advantages and stays focused on a clear business strategy that meets its mission statement that I truly admire.

Best of luck ebay