eBay reported better than expected first-quarter results for 2021, suggesting there has been some general turnaround from the mediocre performance prior to the pandemic. However, investors still appear skittish about eBay’s long-term vision as the company’s light earnings guidance caused a sell-off and dropped the stock about 11 percent Thursday morning.
“The first quarter of 2021 was an excellent start to the year for sellers and buyers on eBay. Gross merchandise volume grew 24% ahead of expectations. Revenue grew 38%, outpacing volume primarily due to payments and advertising. This is the fastest our revenues have grown, since 2005, and moving further into technology and vertical marketing investments, but still delivered $1.09 in non-GAAP earnings per share, above our expectations.”Jamie Iannone, Chief Executive Officer at eBay
Here are curated highlights for eBay sellers and buyers from the eBay first-quarter 2021 earnings call on Wednesday night. All bullet points are direct quotes. Editorial clarifications are noted in brackets.
Comments from eBay CEO Jamie Iannone
- Active sellers grew 8% to 20 million globally, more small businesses are joining the platform and more consumers are engaging and selling.
- Active buyers grew 7% to 187 million globally. We are retaining buyers acquired over the last year at similar rates as pre-pandemic level and we’re seeing higher customer satisfaction in several categories as well as increased spend per buyer.
- Managed payments ended Q1 with over 4 million sellers migrated. This includes millions of consumer sellers and hundreds of thousands of businesses globally.
- During the quarter, eBay managed payments representing over 52% of on-platform volume, up from 38% last quarter. In the US, we exited the quarter over 80% complete.
- We continue to see higher seller satisfaction due to simpler end-to-end experience that reduces cost and complexity. For many years before managed payments, sellers had to managed delays between purchase and payment across two platforms that tied up their inventory. As sellers migrate to managed payments, that pain point is resolved saving time and money and in Q1, we reduced unpaid items by approximately 80% on fixed price transactions.
- On the payment side, I would say yes, not only buyers now have more choices of how to pay including Google Pay, Apple Pay, credit card, debit, PayPal, etc., but you no longer have to set up two different accounts you no longer have to manage the claims process returns process in two different areas. It’s one eBay money back guarantee. So to us a dramatically simplifies the whole experience for a buyer and makes it easier, they keep that payment on file, and it’s just a dramatically easier experience. And then it’s helping the seller to because I mentioned the unpaid item example earlier on the call, but also the ability for them to manage all of their business in one place, it makes it much more streamlined to just run a business on eBay.
- More than 1.3 million sellers promoted close to 400 million listings during the quarter. Growth was driven by increased seller adoption and AI improvements that increased conversion.
- We reached $1 billion of advertising revenue in 2020 primarily through Promoted Listings… To capture our next billion, we are running multiple experiments, including an ad product for auctions and cost per click capabilities. We are also exploring a new capability that expand seller exposure by increasing off eBay traffic to Promoted Listings.
- Our sellers are seeing a great return on the ad spend and we think there is a lot of opportunity left from that perspective to help them be able to move their products with velocity. So what we are announcing this quarter is that we’re basically rolling out three new experiments or pilots in our advertising business.
- In Q1, sneakers valued above $100, grew at a triple-digit rate once again. Since launching authentication, we verified hundreds of thousands of sneakers and we’re seeing buyer satisfaction above 80 as a result. In addition, we are expanding our engagement with Gen Z and Millennials through a wide range of social channels.
- In luxury watches, we saw growth accelerate from 16% in Q4 to 38% in Q1 in the US. For authenticated items, we are seeing customer satisfaction levels close to 90% and it is changing customer behavior. Sellers are listing more items and seeing a higher price realization. Buyers are visiting eBay more often and spending more. One of the key advantages of our platform is cross category shopping. Our luxury watch buyers like our sneakers enthusiasts spend thousands of dollars on other categories across the platform.
- For our certified refurbished experience, eBay sellers continue to see strong velocity and we’ve expanded in the US to over 150 brands. We have also rolled certified refurbish out of the UK, Canada, and Germany with more than 100 top brands signed up already.
- In the US, GMV [in Trading Cards] was over $1 billion in Q1, which represents more than half of 2020’s record setting volume. Active buyers of Trading Cards doubled and existing buyers purchased more items at higher prices than last year.
- To acquire more buyers, we are also adding new ad formats to our display and social marketing, including video and we improved the inventory feeds to power them. Once we acquire these buyers, we are making changes to increase engagement and trust in their first 90 days and beyond. As an example, we are leveraging a mobile-first approach and revamping key communications buyers we have seized.
- In Q1, we increased conversion by improving our search engines understanding of longer complex queries and we added functionality be help buyers identify free local pickup items in their community.
- Since eBay was founded over 25 years ago, re-commerce or the resale of pre-owned goods has been an integral part of our platform and purpose. Our community connects and trades pre-owned items that hold meaning and usefulness and keep these items out of landfills. A recent survey confirm that re-commerce resonates with our customers. In the US, 87% of respondents say they have sold pre-owned goods in the last 12 months. And they aren’t just selling, 81% of Gen Z customer surveys said that buying pre-owned items has become more common in the last year.
- This quarter we’re rolling out CRM capabilities, which has been a long-standing ask if there is so that they can remarket to buyers through packing slips through email etc.
- One of the pain points that’s existed in the eBay community for our sellers has been unpaid items for since the company really started, payments was divorced from or separated from purchase and so seller sometimes would have a transaction closed without getting paid… Now that we’ve launched managed payments and we’re migrating a bunch of new technologies, we actually reduced that by 80% for our sellers. So that’s a pain point that we’re really happy to be able to eliminate for them.
Complete eBay Earnings Information
Please see the eBay Investor Relations website for more details on the company’s first quarter 2021 results.
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