How bad were eBay Q3 2019 results? (Ans… not that bad at all)

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eBay shares dropped after close yesterday following the publication of earnings, but how bad were the eBay Q3 2019 results? In the grand scheme of things they’re not that bad at all, but more concerning is a long term mediocre performance compared to ecommerce as a whole.

When you look at the numbers and consider all of the problems the marketplace faces – the CEO leaving, Investors diverting their attention with an asset review, you could conclude that eBay turned in a surprisingly solid quarter. It’s worth comparing the numbers with the same quarter from 2018:


Q3 2018

Q3 2019

Revenue $2.6 billion $2.6 billion
GAAP and Non-GAAP EPS per diluted shhare $0.73 and $0.56 $0.37 and $0.67
Returns to shareholders $1.0 billion of common stock $1.0 billion of share repurchase
$115 million paid in cash dividends
Net income $554 million
($0.56 per diluted share)
$563 million
($0.67 per diluted share)

Taken as a whole, the numbers are comparable in many ways to this time last year, but the one thing that is missing is growth. Ecommerce is growing so why isn’t eBay. Also, after returning $115 million to shareholders in dividends, on exactly the same revenue eBay made an additional $9 million profit. That money can only come from one place and that’s pretty much $124 million additional fees on flat sales. It could be argued that some if this comes from mediated payments where eBay charges fees rather than PayPal, but equally it could be argued a lot of it comes from Promoted Listings where sellers volunteer to pay more on every sale.

Where eBay has really come off the rails in their Q3 results isn’t their performance itself which was solid, but a lowering of expectations for revenue in Q4 in the range $2.77 billion to $2.82 billion, representing with EPS in the range of $0.73 to $0.76. (ANalysts had expected $2.85 billion revenue and EPS of $0.76).

The biggest concerns for sellers should be active buyers are increasing and so are total fees but sales aren’t growing. eBay are barely holding level and in real terms as ecommerce accelerate that puts them in a downward market share with revenues (sales) effectively flat over the past two years and only modest growth for the past five years.

eBay touted improvements in their earnings notes but, whilst some may be welcomed, none are programmes which are going to increase overall buyer activity and generate more sales in anything other than an incremental way: Payments (grows eBay’s profit but doesn’t grow sales), Promoted Listings (costs sellers but effectively appears to just moves sales around rather than growing overall sales), Terapeak integration (sellers could previously use as a standalone product), additional seller protection (no help if you’re not selling anything), Managed Delivery fulfillment service (relatively small to date), and Multi-User Account Access in the US (might help with account security but doesn’t grow sales).

Whilst all that sounds a bit glum, let’s not forget that eBay is still a $95 billion marketplace and that’s an enormous amount of business up for grabs. What it does mean is that on eBay you have to work harder for sales and if you’re not working smart then you’ll be forced to pay more for sales as eBay increase their percentage take rate. Putting aside execution of the recent Item Specifics, filling out attributes and tidying up all areas of listings from returns and delivery options to optimising titles and ensuring prices are competitive is just as important as considering pay to play eBay Promoted Listings.

Even with price rises in recent years, selling on eBay is largely cheaper for merchants than selling on Amazon. What we now need is a new eBay CEO who will push investors to the sidelines, get rid of distractions, either sell off or keep strategic assets, and get on with taking a long hard look at the marketplace and get to grips with why buyers aren’t buying more and generating double digit revenue growth. I hesitate to tell them how to do their job, but perhaps lowering the visibility of cheap goods shipping from China and (where appropriate) highlighting products listed domestically that can ship fast and can be delivered on a one-day courier might be great places to start.

At the least, if eBay are going to beat sellers in order to qualify for Premium Service listings then they could at least enable buyers to filter search to show Premium Service listings ensuring they are offered a free economy delivery service and a reasonably priced express option for those that want an item in a hurry. That is after all simply today’s Retail Standards that every other online venue offers as a routine minimum.

11 Responses

  1. There was a time I could not look past eBay, even when using Amazon FBA we were still making most our profit from eBay. That has all changed since 2017.
    Now we still have eBay but it is barely used, no advantage to TRS sending 24hrs ( everything is now 48), high fees stealth fees, we are having to deal with counterfeit sellers and misellers all Been on the increase in last couple of years.
    However it is more than eBay and Amazon race to the bottom out there now.
    Mirkal have an excellent programme of retailer marketplaces and social media has been growing for us a lot. Combined with website. we can get the message out easier and at the end of the day are 40 per cent better priced direct. People are more confident to buy direct also these days and YES eBay is still huge but is very fast becoming obsolete.

  2. The whole ebay selling, process has become over complicated
    Rather than forcing what ebay think buyers want ,
    Let the buyer decide
    Most buyers just want honesty reliability and value for money
    Delivered in reasonable time
    Ebay seem to need bells whistles fog horns alarms klaxons flashing lights

  3. Increasing fees to sellers coupled with allowing overseas sellers to avoid VAT etc, eBay is quickly becoming a market place that we can not operate in. While we have been forced to use the promoted listing tool to ensure consistent sales, we are now reducing the use of this purely to preserve profits. It will be interesting to see what next years result are and how much they have made from promoted listings. Year after year, they get it wrong.

  4. It’s simple Ebay is effectivity stuck in naughties, apart from a few tweaks, and some updated html , how has Ebay changed in the last 10 years??? What innovations have they introduced, they are the most arrogant marketplace and continue to trade on past glories, whilst losing marketshare. They are a case study in how an online marketplaces with 1st mover advantage and scale, has lost its way, which according to most, once you have the scale and scope and a a dominant position online your should never loose (apparently). Any new innoventions, places short term profits above buyers and sellers interests and continues to erode what non-existent trust there is in the marketplace. I will forever be grateful for Ebay enabling me to launch my online business, 10 years ago. From being 100% of business then, you are now less then 8%. I don’t expect it to ever recover or get back above 10% of my revenues

  5. @ed martin
    In my humble opinion Amazon offers the whole package.
    Most people have a PRIME account. I very rarely buy anything on Amazon it is expensive, but I love my tennis for example so pay for it for the TV and of course the music, and if I have forgot a birthday or something I may make a purchase.

    As far as selling I jumped ship also in 2017 (when they are making more on a deal than I am that is only going one way)…I only sell now WHERE I can see genuine margins and never get involved in penny chasing.
    Most the money I have made over the years was put into some property (so I don’t spend it again on these places as it is I repeat only going one way), and now tinker, build the brand and make some money where I can.
    I have bought in for PEAK but not anywhere at the levels I used to.

    Amazon have been brilliant at selling the myth they are cheap (they are not)….but the big thing has always been the convenience, it is easy, it is just one click etc, and also the fulfilment, people got sick of Fail Mail over the years the eBay issues etc , everyone I speak to say they buy on Amazon as the believe it is cheap and they are guaranteed delivery in a timely manner. they will burn through merchants and really do not care as someone is always ready to replace.
    People are working longer harder for less and do not have the time to really compare the market out there and Amazon have sold the myth they are the one stop shop for everything really well, the high prices etc will filter through also however to Joe Public…who will catch on.
    Of course the massive tax avoidance and worker exploitation has been a great help to them also.

    However saying all that Amazon will run its course at the end of the day just like eBay, Jeff Bezos said that himself.

    ebay is just been poorly run and never really evolved, short term profit by ever what means they can. I do not know anyone who uses it anymore.

    I was speaking to some smarty pants person the other day and getting some insights from them, these guys builds mobile shopping apps for some of the biggest UK firms, looking at his stuff (very impressive) and we have all used them, and he basically said the future will be Social Media and a Website running alongside it to look professional.
    Even told me to stop running Google ads and just do Facebook ones. So there is going to be some big changes.

  6. The biggest money grab by eBay is the way they take from every aspect.

    For example If we need to sell an item at £1 and £1 shipping the options are just that or £2 free shipping.
    They take 11% so 22 pence.

    Then as time goes by the cost of anything in that item increase whether it be shipping or packaging or the import or the overall manufacturing costs.

    These are all market forces that a seller cannot get around.
    So eBay in its wisdom gets a pay increase without doing anything.

    Item £2 shipping £2 so eBay now get 44 pence.

    But no they are not happy with that they then ask for more to promote and more in fees then want to do the money processing etc so our items go up and up and up in price on eBay.
    One of the fastest growing platforms in the UK was On Buy and they have lower fees and its glaringly obvious items are cheaper.
    I feel like running all our descriptions saying please check out our same item on On Buy as its cheaper. for the same item and same security.
    Amazon just works due to the fact no matter what you search they pop up.

  7. My Q3 eBay results: Sales down ↓↓ 64%

    Amazon Q3 results: Sales up ↑↑ 63%

    Shopify Q3 results: Sales up ↑↑ 56%

    18 months ago, eBay was our main revenue stream. It’s where we started, probably like most sellers on here. Now it just represents 20% or so of our revenue. Days go by with no sales on eBay, we’d never seen that until Q1 this year, even when I was running out of my spare bedroom in the early days years ago…

    We sell the same stock across all 3 platforms, with eBay usually being within £1 of our own site, Amazon maybe £5-10 more, but the buyers have just left. eBay is still important, but becoming less so every day.



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