“I just sit in my office and read all day.”
This is how Warren Buffett, one of the wealthiest and most successful people in the business world, describes his day. Sitting. Reading.
If you’re reading this blog, it means you’re taking your eBay business seriously. I believe that, in order to build a successful eBay business, it’s important to have a deep understanding of how eBay works and thinks. It’s even more important to understand eBay’s plans for the future as they affect sellers future directly. For example, If eBay were to increase final value fees to 20% many sellers will stop selling on eBay as it won’t be profitable anymore.
In order to achieve such a deep understanding, we follow all the major data points regarding eBay – from annual reports to interviews with the leadership team.
Below are the 3 key insights eBay’s CEO Devin Wenig shared in a recent interview and our take on them. Devin talk about eBay future plans and mentions some crucial points which suggest where eBay is aiming for the future for both sellers and buyers.
#3: eBay doesn’t want to be like Amazon
Amazon is not only bigger than eBay, but it also grows faster. In fact, Amazon is the undisputed leader in e-commerce, expected to generate $160-180 billion in revenue during 2018. Amazon’s sales in the 3rd quarter of 2017 grew by 34%.
This raises a question for eBay, being far behind at 2nd place, with an expected revenue of $9-10 billion and a modest annual growth of 3-5%. Should eBay copy Amazon’s strategy to achieve substantial growth in the marketplace?
Apparently, the answer is “no”. eBay is playing a different game; thus it has a different strategy to increase growth.
Amazon focuses on achieving growth, innovation and competitive edge at any cost – it’s known for selling products for a loss to gain market share in several categories, such as baby diapers. Amazon also invests heavily in logistics and distribution network.
This strategy cause growth for Amazon, but it doesn’t produce much profit. Amazon is spending all its revenue to fuel growth, which resulted in marginal profits over the years.
On the other hand, eBay is making a 20-25% net profit consistently (i.e not reinvesting all the revenue in growth as Amazon does), mostly generated by its core business – connecting buyers and sellers of various products, as opposed to being a retailer itself (like Amazon).
ebay future – eBay doesn’t want to be like Amazon
If eBay ever wants to, it has enough cash and capabilities to copy Amazon’s strategy and increase growth on the account of profitability. However, this is not what it aims to do, according to eBay’s CEO Devin Wenig:
“I don’t have to be like Amazon, I don’t need to be like anyone else. The world doesn’t need an almost-as-good Amazon; it needs a better eBay… I’d rather have a billion unique items that arrive in 3 days than a billion commodity items that arrive in one day.”
What does this mean for you as an eBay seller?
We need to realize that eBay does not want to compete with Amazon over commodity items. Amazon will probably always offer lower prices and faster shipping, so this doesn’t look like the winning formula for eBay’s future.
As Devin says – “If you’re running low on toilet paper and need it in under an hour, you can head over to Amazon.”
eBay is the place for you if you can add value in forms other than pricing or shipping speed.
I talked about this concept in the previous post – “How we found the perfect eBay niche“.
eBay is a place where you can create value, offer your expertise and compelling, content-rich product listings to educate buyers about your products.
There is a huge segment of customers who look for added value besides price and shipping. Think about your competitive advantage – What value can you offer to your customers that Amazon can’t?
#2: What’s eBay’s future?
Devin speaks about eBay’s future as the marketplace where you go for “Incredible unique items and incredible deals, even on brands”.
eBay’s brand has suffered in the last few years so the new management team under Devin’s leadership is aiming to renew the marketplace’s branding from just “The auction site”. The new eBay is much more than that.
eBay today is not just the place where you get 2nd hand, used items. In fact, according to Devin, used items only make up a small and declining part of eBay’s business.
If you’re looking for a specific car part that can’t be found anywhere else though, you’ll probably be happy to get it from an eBay seller within 2-3 days.
eBay aims to offer great deals on every version across every SKU.
This is how the marketplace generates $80 billion in gross merchandise value sold via the marketplace.
What does this mean for you as an eBay seller?
Simply put – aim to offer “incredible unique items and incredible deals”.
Offer items in various conditions, such as manufacturer refurbished – this is what eBay buyers are looking for. eBay aims to win all those buyers who search for “refurbished iPhone 6” or “A Chevrolet corvette 76′ front bumper “.
#1: eBay future: From chaos to structured catalog
“eBay used to be a very unmanaged market place, though it’s a highly intermediated marketplace now,” said Devin. He mentions that eBay sellers delivered two-thirds of ordered products within three days during the last holiday season.
This comes as a refreshment because eBay of the last decade is usually thought of as “the auction site, where you get your order within a roughly estimated time frame”.
With 160 million active users and over a billion products – eBay is the world’s largest catalog. This present a great challenge of matching the right product with the right buyer.
What does this mean for you as an eBay seller?
eBay is no longer the “wild west” it used to be in the past.
It invested heavily in becoming easier to search and more predictable in terms of shipping timeframes.
eBay future: going from chaos to structured data
As a business selling on eBay, you want to ensure you’re aligned with the company’s strategy. eBay will naturally push up the businesses that operate according to its strategy.
To translate this to actionable advice –
- Make sure you add item specifics to your listings to help eBay structure its data and present highly relevant results to buyers.
- Be accurate with your shipping time. It’s ok if you offer a 5, 8 or 14 days’ delivery as long as you set the right expectations . eBay aims for sellers to offer incredible items – not necessarily incredible shipping times.
That’s it for this week,
happy selling!
