How Has eBay’s Marketplace Business Performed So Far In 2016?

August 24th, 2016 by Trefis Team
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eBay (NASDAQ:EBAY) has had some trouble competing with Amazon (NASDAQ:AMZN) in the global e-commerce market in the last couple of years. This was reflected in the company’s first quarter results, with its global net marketplaces revenue falling 2.3% year-over-year (y-o-y) to $1.5 billion compared to Amazon’s 25% y-o-y growth to $26.6 billion in the same period. In the second quarter, the company’s revenue increased 6% y-o-y to $2.2 billion compared to Amazon’s 29% growth. eBay has especially been struggling in the domestic market, which contributes about 46% of its total marketplaces revenue, including the StubHub business. ebay-10

As evident from the above table, eBay’s marketplace sales in the domestic market declined 3% in the first six months this year compared to flat sales in the international market. However, StubHub sales in the domestic market grew at an impressive 40% in the same period. Going forward, eBay will need to focus on improving its domestic business and competing effectively with retailing giants Amazon as well as Walmart.ebay-5

eBay’s active user base (those active in the last one year) increased from 157 million at the end of June 2015 to 164 million at the end of June 2016. However, the rate of user growth consistently declined from 8% in Q1 2015 to 4% in Q2 2016. eBay will need to address this trend in the near term to ensure consistent growth in its top line. User growth becomes even more important when we consider that the average spend per user has actually declined over last year.

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One silver lining in eBay’s subscriber metrics is that its marketplace GMV registered growth in the first two quarters this year after four quarters of consistent declines. eBay’s recent initiatives, such as structuring data into catalogs (for search engine optimization) and diversifying traffic sources, are helping to improve gross sales on its platform. It will be interesting to see if this growth can be sustained in the near to medium term.
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