Record high eBay Quarterly Earnings as sellers billed $80m in additional fees

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eBay just turned in record eBay quarterly earnings with revenues of almost $2.9 billion and net profits of $670 million.

In what might be seen as a bribe against the ramifications of Elliott’s letter complaining about company performance (which eBay declined to discuss in the earnings call), eBay have announce their first ever quarterly dividend of $0.14 per share from March 2019 and the expectation that they will return approximately $7.0 billion to shareholders through dividends and repurchases over the next two years. eBay expect approximately $5.5 billion to be returned in 2019.

“We delivered record earnings for the fourth quarter and full year 2018. In 2019, our focus will be on further improvements to the eBay user experience, while pursuing significant long-term growth opportunities in advertising and payments. We are confident in the strength of our business and future growth prospects, as demonstrated by our decision to institute eBay’s first-ever dividend and increase our share repurchase program.”
– Devin Wenig, President and CEO, eBay Inc

eBay sting sellers for $80 million in additional fees

eBay revealed that part of their growth is due to stinging sellers for more fees. Revenue from eBay Promoted Listings has exploded with 150% growth and around $80 million revenue. Now, 600,000 sellers are paying additional fees to promote 200 million listings. To put that into perspective eBay have around 1.1 billion listings so sellers are coughing up an additional fee to promote almost 1 in every 5 listings live on eBay. eBay expect the adoption of Promoted Listings to increase further in 2019 describing the revenue stream as already ‘scaling nicely’ and ‘we expect it to continue to scale’.

eBay promoted listings are currently displayed in the 1st, 4th and 5th positions in eBay search. This means that a seller with a low quality listing can buy the 1st position in search results and be positioned to buyers ahead of the best quality most relevant listing from the highest quality seller in natural Best Match search results. One might ask why bother trying to get a quality listing when a low quality listing can buy its way to the top… and it looks like with almost 1 in 5 listings promoted plenty of sellers are prepared to pay.

The result of these additional fees to eBay have seen their net income running at around 23% of their revenues for the 4th quarter of 2018.

11 Responses

  1. The problem for sellers is that Ebay’s focus has shifted on increasing revenue for THEM, as opposed to increasing sales on the site, which benefits both Ebay AND sellers.

    This is bad news, not just because sellers can expect the trend for sharp fee rises under Wenig to continue. But because the prospect of Ebay growing significantly in the future is nil.

    Essentially, this means sellers will be paying more for less.

    The best thing any seller can do is to make sure they are not 100% reliant on Ebay.

    Everyone selling on Ebay needs to have a separate income source to survive.

    If talk of carpetbaggers on the board trying to break Ebay up is correct, then the end for Ebay could come quickly. Once the tailspin starts it will be impossible to stop.

  2. Ebay….. you must offer the best service, bets price, best delivery, best everything… we insist or else we will punish you…
    Then we will allow those failing on these points to under cut you and get higher rankings for a small fee, which is proberly worthwhile due to the savings they make by not having to jump through all ebays hoops.
    This will be great for the buyer experience, which will plummet and we will hammer decent sellers already hitting our targets to try and hide our lack of any intelligence…

    Sounds like a plan!

  3. Ebays` get rich quick scheme is doing just fine (for themselves and for now). Lets see where they stand in 5 years time when everyone has tried promoting everything (therefore negating any advantage of doing so) and all the buyers have gone. Amazon mk2 you aint and never will be Ebay – try getting used to the idea and get back to what you WERE good at.

  4. A new glitch on eBay for 2+ orders sent as one parcel.

    “This tracking number is already associated with another active delivery. ”

    Anybody else seeing this problem?

  5. eBay is still full of glitches on their mobile app. When I try to enter shipping information for worldwide shipping I get taken to a blank page to where I am unable to enter the Postal classification (ie First Class worldwide). I called about this and was finally able to speak to someone, but I could barely understand what she was saying. Then I was told there was nothing they could do about it.

  6. EBay is just ripping off sellers outright now. They make more profit per item than the seller does. It’s a disgrace. Pure greed.

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