$EBAY has long been one of the most optically undervalued names in the internet space, due in part to disappointing fx-neutral GMV growth over the last few years. Now its position in the e-commerce space is under attack — Amazon is ahead of the pack and likely to stay that way, and the rest of the space is crowded with challengers. Walmart and others are making significant investments in their marketplace businesses and see EBAY as market share opportunity in the space.
Ebay’s main defense against this is a move to a product-based catalog from a listings-based catalog, otherwise known as their structured data initiative. This is meant to improve performance in organic search and product discovery. The latter still needs a lot of work in both of the key elements of discovery: Inventory and Personalization.
Problems with Inventory
I tried looking for a Fitbit and the first result is the very original Charge from two years ago. None of the top 5 models are a new product. Just compare that to Amazon’s search results on the right:
Problems with Personalization
Ebay still has work left to do on personalization as well — just look at the main page screenshots below. When entering my login credentials (right) and without login (left). Most items are either the same product or in a similar category to the rest. There is no personalization here, which is quite sad considering I have made dozens of purchases over the last couple of years.
But Are Things Turning?
Ebay does seem to be making improvements, however. In its Q2 results, EBAY posted an fxn (fx neutral) GMV beat and guided up full year revenues with management pointing to early benefits from the structured data rollout. This coupled with improved profitability pushed the stock up massively.
For Q3, the structured data rollout will continue to be a focus. Our Mosaic data shows some competing trends here. Analysts expect fxn GMV to decelerate (blue line w/ markers), but website traffic (orange) continues to remain at very elevated levels, although the relationship has admittedly broken down a bit. Channeladvisor SSS data (purple) and Google Trends (green) are also ticking up on the quarter but are not indicating a material dislocation vs. expectations.
We also see engagement significantly improving in the charts below, supporting the thesis of an improved user experience. Monthly average pages displayed (left) and monthly average stay per visitor (right) both seem to be accelerating.
EBAY seems to be making some improvements to the user experience and has seen early positive results. While EBAY stands to benefit from the e-commerce wave, it must still navigate a changing landscape riddled with immense competition.