Shieldpay stories

What's eBay's next move?

“It is better to have a bad plan than no plan.”

               ∼  Garry Kasparov, former world chess champion

Amazon dominates retail. It recently moved past a $1 trillion market capitalisation, leaving a host of competitors damaged, if not put out of business, by its power and reach.

One competitor who won’t lie down is eBay. It’s one of the oldest beasts in marketplace history. With a focus on personalisation and technology, eBay has a plan to fight back.

 

    A long rivalry

Amazon was founded in 1994 and has been a fierce rival of eBay since 1995, when a computer scientist called Pierre Omidyar created the company.  

Given how people want to buy everything from one place (the so-called "everything store"), Amazon’s product range and low prices make it the one-stop-shop for online shoppers. With product volumes thin in comparison, eBay struggles to attract buyers, which is depressing the number of sellers.

There is also increased competition across the sector, as niche marketplaces steal market share. Etsy gives creatives the chance to sell directly to consumers. Often, these competitors have lower fees than eBay, which has aggressively raised costs for sellers in recent years.

It looks as if eBay is caught between two stools: Is it a one-stop shop taking on Amazon? Or is it a niche provider seeking to dominate the likes of Etsy? Or can it do both?

 

    Personalisation play

Despite its challenges, eBay is still huge. It’s worth $33 billion but 2018 has seen slowing growth and falling revenue. So how is it going to turn things around?

eBay knows the importance of customer experience when fighting beasts like Amazon. So it’s doubling down on trying to make the perfect marketplace for every single user. To promote a first-class experience, it’s building a convenient search function for buyers. With 1 billion items to browse, ensuring shoppers quickly find products they want is key. If they don’t, they leave.

So eBay is doing all it can to personalise its platform. For example, the eBay homepage is now built around your browsing history and they have launched a new ‘Interests’ feature. Amazon may be vast but it does personalisation badly. eBay has taken note.

 

    Tech-led

Amazon’s user base and capital reserves make it the toughest competitor, but there are clear signs that eBay is going to take it on with technology. Using its structured data initiative, eBay is building AI-led functionality that will further streamline the product search process for its users. This could indicate a wider strategy, where eBay looks to gain parity through the correct use of technology. This also includes what technologies it chooses not to use.

Earlier this year, eBay announced it was ending its partnership with PayPal and building its own payments platform to improve and simplify the user experience for all users, using technology provided by Adyen. Importantly, this move will lower costs for sellers. 

eBay is not short of customers. Its 175 million active users trail Amazon's 310 million but it's a competitive landscape. Amazon destroys eBay in revenue-per-user from sales, posting $197 billion worth of goods sold to U.S. customers in 2017 compared to eBay’s $32 billion. So eBay has more than half as many users as Amazon. But it only generates 16% of its revenue. Amazon generates $0.64 per user. eBay generates just $0.18.

One reason for this is that it’s easier to become a seller on eBay. Hence, it has more casual sellers than Amazon, most of whom don’t sell much at all. But eBay hopes to change this.

The break with PayPal will lower the cost of selling, as there will no longer be a third party charge when its in-house platform completes the transaction. eBay sellers will have more functionality around tracking and monitoring finances, too. Buyers will also be given improved payment options at checkout. That’s the plan, anyway.

 

    Will it work?

Amazon continues to dominate online retail but there’s a sense that the biggest marketplace might be getting a little too crowded for its millions of sellers. There might be an opportunity for a simple, customer-focused, highly-personalised alternative - like eBay - to regain market share.

Sellers are key. If they feel crowded out on Amazon, they’ll seek an alternative. eBay is doubling down on this by incentivising sellers through lower costs and offering buyers an improved user experience. This dual approach will take time to bed in (Adyen’s platform won’t be fully integrated until 2021) but it’s clearly focused on areas where eBay thinks it can better Amazon.

At Shieldpay, we’ll be watching eagerly to find out if this approach can stop Amazon’s seemingly inexorable rise. But, as Kasparov says, at least eBay has a plan.

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Shieldpay protects both buyer and seller in any transaction so that you can deal with anyone, anywhere with total confidence.


How do we do it? We verify the identity of both sides, funds are held securely in the Shieldpay vault and only released when both sides agree they’re happy. If anything doesn’t go to plan, we help out with any disputes! 

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