eBay ‘must revamp online experience’

Internet Retailing

21st Jul 2016

Despite solid quarterly financial results, a US-based analyst has urged eBay to “revamp its whole online experience” in the face of rising competition from the likes of Etsy and Amazon.

“On a headline basis the 6 per cent increase in net revenue represents a solid performance for eBay, and one that is a marked improvement on the uplifts that were being delivered at the back end of the prior fiscal year,” said Neil Saunders, CEO of Conlumino. 

However, Saunders raised concerns over weakness in the company’s marketplace division where growth was 3.6 per cent, coming off the back of a 2.7 per cent decline in the previous year.

“Moreover, all of the growth came from StubHub, where revenue increased by 39.8 per cent year-over-year. In isolation the traditional marketplace part of the division saw revenues fall by 0.2 per cent, an unfavourable outcome given last year’s weakness,” Saunders said.  

“As the marketplace business represents the biggest slice of eBay’s revenue, this is a worrying outcome, and one that underscores the fact that on the product side the business continues to lose market share and to underperform other online players, like Amazon, by a very wide margin.

“On the platform front, while eBay’s systems work well the shopping experience itself can be hard to navigate and therefore frustrating. This is, at least in part, a function of the extensive inventory, over which eBay has little control; this makes it much more difficult for eBay to curate its products in a way that a traditional retailer is able to do. eBay has been actively addressing this with its initiative to create a more structured and disciplined listing process – indeed, it believes that 90 per cent of listings can be structured.” 

Saunders noted that eBay has been working to improve the onsite experience, with improved product pages and information that is easier to digest.

“However, while some of this is evident on the site, it does not yet seem to be having an impact on sales,” said Saunders. “In our view eBay needs to go much further in revamping the whole online experience in order to bring it up to par with the likes of Amazon.”

According to Saunders, eBay should develop a more compelling landing page, easier search and navigation functions and better pages for individual products. 

“This is all something of a work in progress, along with an increase in the number of listings covered by its new structured process which now stands at around 60 per cent – up from 37 per cent at the back end of last year.”

Saunders said the improvements are expected to boost revenue, however eBay continues to face increased competition in the marketplace business.

“This is not just from rivals like Etsy, but also from a growing array of Chinese players like AliExpress which have become adept at shipping from the Chinese mainland to other geographies,” said Saunders. “As such, there is a sense that all of these efforts will help eBay stand still, but will not help it power ahead and grow share.”