Last week eBay President and CEO Jamie Iannone participated at the 43rd NASDAQ investor conference, which was held virtually this year due to COVID health and safety restrictions.
Iannone joined eBay in April of this year, in the midst of the COVID first wave in the U.S. when many online sellers and marketplaces were overrun due to local lockdown restrictions. This shifted the purchase of essential goods for many consumers from physical stores to online, catching marketplaces and online retailers off guard but also adding the challenge to deal with thousands of scammers.
He also inherited a company that was going through a boardroom drama with institutional investors successfully encouraging eBay’s board to sell off divisions such as StubHub and its Classifieds Group, leaving the core marketplace as the primary businesses.
And to make matter worse, an ugly episode of cyberstalking targeting the publishers of an online blog perpetrated by former eBay middle managers and employees dogged the company during the summer. It raised questions about the corporate culture under Devin Wenig who had abruptly left the company in 2019 after the situation became known to the board, but before it became public this year.
To say the start of his tenure as eBay’s CEO was a bit unusual and full of immediate challenges is probably an understatement. But Iannone had been with eBay before from 2001 to 2009, so he surely had some basic familiarity about the company, even if that went back a decade.
With about 8 months under his belt through this tumultuous time, last week, Iannone gave investors at the investor conference some insight on where eBay is today and where he wants to take the company.
Here are the interesting take-aways from Iannone’s Q&A at the 43rd NASDAQ investor conference with Morgan Stanley’s Brian Nowak. All text in italics are quotes from Jamie Iannone.
Why take the job?
Iannone spent 8 years at eBay before from 2001 to 2009, a portion of that time some sellers consider the golden years of eBay as selling requirements were more flexible and buyers more patient.
But it was also a time of corporate growth through acquisition at eBay when the company bought companies such as PayPal and Skype. PayPal drove revenues at eBay for years before being spun off into a separate company, while Skype ended up being a bust for eBay.
The core marketplace was changing too with more sellers offering new products, including high-profile brand names. In many ways, sellers were trying to use the platform made for auctions and used products to sell new items to compete with Amazon and other online commerce retailers.
After leaving eBay, Iannone spent 4 years at Barnes & Noble and 6 years at Walmart, all in roles dealing with online commerce battling Amazon’s growing dominance. It seems that is what interested Iannone to come back to eBay because unlike those two companies, eBay is still different and offered opportunities to expand in other directions.
“And having spent 20 years in different omnichannel, retailers, et cetera, coming back to eBay, I saw a couple of things. One is this amazing culture, this amazing brand and so much untapped potential and opportunity for the business.”
“I felt like eBay was a little bit too much trying to chase new in-season and be like other competitors, like places I was at, when eBay has so much opportunity in its core business of non-new essentials, in consumer selling and in those areas.”
“And I think one of the things that’s misunderstood about eBay is, while a large percentage of the product is new, this non-new in-season is more than 50% of what’s available on the site.”
“We have allowed smaller niche competitors to build experiences in specific verticals. And what you see now is eBay really taking a step back and saying, let’s look at our end-to-end experience and figure out how we change it.”
“We have $4,000 of items in our houses that we could sell and less than 20% of that is online.”
While Iannone acknowledges that new products make up a big piece of the pie on eBay now, he is also saying something that hasn’t been heard for a while, it shouldn’t be the singular focus.
Under both recent eBay CEOs, John Donahoe and Devin Wenig, there appeared to be this desire to turn eBay into Amazon but without providing sufficient resources to eBay sellers that the third-party marketplace sellers enjoyed at Amazon.
Iannone is signaling a shift but is this the shift some sellers hoped for?
One of the big complaints from long-time sellers is how sales today are not as good as they were 10, 15, or 20 years ago. Often they blame platform changes when the reality is usually much more complicated because it includes factors such as competition, category popularity, consumer trends, and industry shifts.
Iannone is not suggesting eBay must go back to the way it operated in the initial years of his first stint. There is not going to be a reversal to the simple comment only feedback system, eBay will continue to favor business sellers that meet today’s consumer expectations (ie: free shipping and returns), and listings will need to include structured data (item specifics) and good pictures to surface at the top of platform searches.
With that said, Iannone is looking to expand eBay’s potential to have more listings offering non-new items that include inventory from both the B2C (Business to Consumer) and C2C (Consumer to Consumer) sellers.
As he already mentioned, most people have about $4,000 worth of stuff at home they could list on eBay, and in some cases that may be unique items that one could only find on eBay.
This C2C seller has been mostly ignored over the past two CEOs, and as it became more complicated to sell products on eBay left many “consumer” sellers frustrated. COVID may have resurrected this seller group as more people were looking to turn their stuff into cash.
“The C2C growth, if you look over the past few quarters, actually outpaced our B2C growth,” explained Iannone, “but B2C is still the majority, the vast majority of what’s on the platform.”
He believes the key to success with C2C sellers lies in simplifying the listing process, “The process of listing and selling is still too hard, and so we’re dramatically looking at how do we simplify that experience and really leaning into consumer sellers.”
“And over the course of the next few quarters, you will see a completely different selling experience on the site and some key improvements, because it’s an area that we are leaning into pretty significantly.”
This could also be good news for hobby sellers and part-time sellers as tools developed for consumer sellers should be beneficial for “semi-professional” sellers as well.
On the B2C side of this shift toward non-new products, Iannone is expanding with refurbished products, a category that already has a significant presence on the platform.
“Certified refurbished is a tens of billions of dollar of opportunity…. And what we wanted to do is a game changing level of trust there. So we added a two-year warranty, 30-day returns, eBay money back guarantee, all part of certified refurbished. And we went out and recruited brands like De’Longhi and Makita and Lenovo. In a lot of cases, we’re the exclusive distribution channel for their certified refurbished product.”
Parts of his statement may make some sellers nervous because it suggests eBay is trying to attract large brands to sell on the platform. But let’s be honest, this is already happening as some brands maintain an official outlet store, while others use large liquidators to move discontinued or refurbished products on eBay.
The refurbished business as an industry appears large enough to welcome sellers of all sizes. Even if eBay is courting major brands, there should be enough opportunity for smaller sellers.
Managed Payments 2.0
Let’s start out by saying that eBay’s Managed Payments is not going away. Iannone is actually doubling down on the service and calls it Managed Payments 2.0.
“We just launched our consumer selling experience with Managed Payments 2.0. So we’re starting that now. We had to make a number of modifications to just make it easier for consumers started to come online. And obviously that’s going to take a little bit longer than a business seller, just because they’re not coming to the site all the time, and we need to actually convert them. But what we’re doing is building capabilities over time and unlocking more countries, and that’s really the gating factor to getting to our goal of having it all complete by the end of ’21.”
Furthermore, he says Managed Payments 2.0 will become a wallet experience, “… once we have a wallet, once we have the integrated payments, both for buyers and sellers, it just opens up the opportunity for eBay to do new things on the payment side that we’ve never been able to do before, when we’ve only managed the commerce and the payments have been handled separately. And that excites me too, because as we complete this transition and get into 2022, it gives us opportunities to just do more with the customer experience and with both our sellers and our buyers.”
One can read a lot into this Managed Payments 2.0 wallet, everything from a full PayPal competitor to being able to use the funds with approved third-party partners, such as listing or shipping services. Time will tell!
Iannone further said about Managed Paments, “Sellers in general hate change on the platform. So to see them really embracing this change, liking the clarity, liking the simplicity, shows you that we’re on to something.”
Some sellers may disagree with that notion, but regardless, the program is here to stay and it looks like it will expand to offer more options to use the funds from within the eBay wallet.
Other areas Iannone mentioned
Promoted Listings continue to grow on the platform and Iannone said the business grew 35 percent in the last quarter with sellers “finding value in the product, and so that’s what’s driving the growth.” eBay will also be making advertising on the platform simpler and expects to bring C2C sellers to the product.
On eBay Search and Buyer Conversions, Iannone commented, “We continue to make investments in our search and our buyer conversion experience. In fact, last quarter we launched some great new technology and search that actually helps our conversion pretty considerably. We’re making improvements across our selling platforms to make it much simpler to list, much simpler to deal with item specifics.”
Item specifics have been a paint point for sellers that purely rely on the eBay platform to manage them. Some third-party selling tools make this process much easier, but they always are a bit time consuming. Anything eBay can do to help with item specifics should be a positive for sellers.
The COVID pandemic has sent many shoppers online and eBay experienced significant Buyer Growth during the summer. “We acquired 9 million new buyers over the last two quarters coming on,” said Iannone.
“80% of the traffic that comes into eBay is organic. People literally coming directly to ebay.com. And that’s because we’ve really done a good job of turning buyers into enthusiasts,” he added.
One interesting revelation Iannone offered is that eBay is targeting younger demographics and seeing some positive results from their efforts. “… a lot of the acquisition that we’re seeing is actually from Gen Z and Millennial and from younger consumers” and “we had a TikTok promotion that went extremely viral. We got 4 billion views on that.”
eBay as a company no longer has the luxury to rely on revenues from business divisions not related to the core marketplace. It must find ways to improve revenues and sales (GMV) by making the core marketplace easier to use and inclusive to more seller types from C2C sellers to large brands who want to use the platform to sell non-new or discontinued products.
Trying to balance all of this under one marketplace is a challenge. Jamie Iannone was at eBay when the shift started from an auction to a fixed-price centric marketplace. That was a big philosophical change that did not sit well with many sellers at that time. There is no indication auctions are making a significant comeback as a growth strategy and consumer shopping behavior favors “instant” gratification and that means more fixed price listings.
Today’s online consumer is a different consumer from 15 or 20 years ago. Many of the changes made on eBay over the last two decades were to adjust to this shift in online shopping. The implementation at times appeared half-hazard and the company had to walk back some policy changes, demonstrating a lack of understanding of how it sellers operated or marketed on the platform.
With Iannone in charge now, there appears to be a refocus to bring more unique or unusual inventory into the spotlight, much of this being non-new products ranging from used items sold by C2C sellers to certified refurbished items sold through authorized resellers or the brands themselves.
On the surface, this strategy should be less reliant on fast, free shipping. However, fast and free shipping with easy returns are the norm of today’s online shopping experience and cannot be dismissed even with non-new goods.
eBay’s job should be to provide tools that work and help sellers become successful. It has struggled at times to do that because the focus was somewhere else. At the same time, some sellers want to pretend it’s 2003 and that is just not how one is likely to find success on eBay.
Much of Iannone’s answers focused on improving seller experiences, making it easier to list and sell on the platform. That shift in focus is already a fresh attitude not seen for years at the company and indicates a strategic change that should be welcomed by sellers.
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