Will eBay Do More Than Improve Its Look And Feel?

A recent Forrester report estimates that the US online sales will account for 17% of all US retail sales by the year 2022 from 12.7% in 2017. E-commerce player eBay (Nasdaq: EBAY) recently reported its fourth quarter results, that met market expectations.

eBay’s Financials

eBay’s revenues grew 9% over the year to $2.6 billion, in line with the Street’s expectations. This was the fifth consecutive quarter that eBay reported volume acceleration in its U.S. marketplace. Adjusted EPS of $0.59 was also in line with the market’s forecast for the quarter. Like others in the country, eBay is taking a $1.9 billion tax charge for the repatriation of its foreign earnings.

By segments, transaction revenues grew 8% to $2.04 billion. Marketplace transaction revenues grew 8% to $1.73 billion with international markets bringing in 61% revenues for the quarter. Stubhub transaction revenues grew 12% to $306 million. Revenues from marketing services and others grew 11% to $578 million driven by 21% growth in Classifieds revenue to $244 million.

Among operating metrics, eBay’s active buyers grew 5% to 170 million at the end of the quarter. Gross merchandise value transacted on the platform grew 9% to $23 billion. GMV for Stubhub improved 16% to $1.4 billion.

eBay ended the year with revenues growing 7% to $9.57 billion. EPS grew 6% to $1.88.

For the current quarter, eBay forecast revenues of $2.57-$2.61 billion with an EPS of $0.52-$0.54. The market was looking for revenues of $2.39 billion for the quarter with an EPS of $0.52. eBay expects full-year revenues of $10.9-$11.1 billion with earnings of $2.25 to $2.30 per share. The Street was looking for revenues of $10.28 billion for the year with an EPS of $2.23.

eBay’s Site Improvements

eBay’s performance in the quarter was driven by the improvements it has made on its digital storefront. This was the first quarter that eBay rolled out Group listings, which allows buyers to go through a product-based commerce experience on eBay.

During the current year, eBay plans to remain focused on these initiatives. It is enhancing the search experience by leveraging data and AI to improve recall and relevance. It is working with sellers to improve customer satisfaction, expand delivery network, and simplify the returns process. Its technology innovation will focus on emerging platforms such as artificial intelligence, voice and image technology, virtual and augmented reality, and distributive commerce. It plans to leverage AI by focusing it on computer vision, personalization, search, and dynamic pricing capabilities for its sellers.

This year, it will take the first step toward unifying conversational commerce with the core eBay shopping experience, by providing seamless voice for tech assistance when needed within its desktop and other platforms. For customer self-service, it is rolling out new AI-enabled mobile and desktop pages that will address service requests. Finally, it is working on a digital assistant that will be able to directly handle certain service requests instantly, without human intervention.

The biggest surprise though, was eBay’s announcement to cut off ties with PayPal. To deliver a more seamless experience and for a better economic performance, eBay will begin intermediate payments on its platform. It has begun building this capability and will make Adyen its primary partner in this endeavor. PayPal will remain an option of payment at checkout within the new payment model.

Questions for the eBay Board

eBay has done a lot and continues to do much more in improving its sales page and customer experience. But despite those moves, it is still a distant runner-up to Amazon’s prowess. What concrete measures is eBay taking to address the giant? Is it looking at buying niche e-commerce marketplaces to give Amazon a tougher competition?

Its stock is trading at $43.54 with a market capitalization of $44.07 billion. It touched a 52-week high of $46.99 earlier last month. It has recovered from the 52-week low of $31.89 it had fallen to in April last year.

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Photo credit: Mike Knell/Flickr.com.