Here's eBay's 5-point plan to boost growth, improve customer experience

eBay allayed a bevy of fears in the third quarter, but it remains to be seen how its plan to bring in new users while keeping its core customers happy plays out.
Written by Larry Dignan, Contributor on
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eBay reported better-than-expected third quarter results and upped its outlook while noting that it has a few big initiatives ahead that will take months to pay off.

The company reported third quarter net income of $720 million, or 73 cents a share, on sales of $2.6 billion. Non-GAAP earnings for the quarter were 56 cents a share. Active buyers were up 4 percent on the eBay platform to total 177 million.

As for the outlook, eBay projected fourth quarter revenue between $2.85 billion and $2.89 billion with non-GAAP earnings of 67 cents a share to 69 cents a share. For the year, eBay is projecting net revenue between $10.72 billion to $10.76 billion with non-GAAP earnings between $2.29 a share to $2.31 a share.


That outlook was ahead of expectations.

Nevertheless, worries about how eBay will compete against Amazon remain. In addition, concerns about eBay's payment mechanisms without PayPal are also a concern.

See: eBay might need PayPal more than it thought | eBay built its own servers in push to replatform its backend infrastructure | eBay announces Apple Pay acceptance as part of payments revamp

However, it's not like eBay doesn't have a plan. Here's a look at the eBay to-do list via CEO Devin Wenig, who outlined key initiatives on an earnings conference call.

Improve the customer experience. Wenig noted that eBay changes to its platform have been well received among new users, but "our existing buyer base has been slower to adapt to these changes."

The solution for eBay has partly revolved around a big branding campaign to bring in new users to the platform. From there, eBay is optimistic it can work newbies down the buying funnel.

Wenig said:

Setting eBay up for future growth requires us to continue to build a comprehensive catalog, further simplifying and improve the user experience and address customer imperatives such as trust and shipping. It also requires that we redefine perceptions of eBay's brand in business. Given that we have a large, stable and successful business but must also build for the future, we're shifting our tactics to balance the needs of the habituated base of customers who are used to shopping on eBay in a certain way, while pursuing an even larger base of potential customers who have different expectations. We'll continue to focus on delivering significant product experience changes for new customers while evolving the experience for our existing base of users at a more measured pace.

Bolster the product platform. Wenig noted that eBay is building out its catalog by enabling sellers to contribute product information directly. The company is using data services to reduce friction in the selling flow and improve price recommendations.


Grow advertising revenue. Wenig said advertising via promoted listing is expected to be about $180 million in revenue for the year. eBay's total marketplace advertising portfolio is expected to top $600 million in sales. eBay said it has more than 400,000 sellers promoting more than $160 million listings. Wenig noted:

We have further aggressive expansion plans for this service, and we believe that our total Advertising portfolio has the potential to contribute $1 billion in annual revenue in the next few years.

Boost payments on eBay. Wenig said that eBay is just a month into a "multiyear managed payment journey." eBay is working to reduce friction in its payment model and accept multiple forms to reduce seller costs. Apple Pay has 12 percent share of addressable volume. Wenig said:

Sellers are already realizing significant savings and a simpler interface with 1 place to manage their eBay business. We're working to expand the program with more sellers driving more volume and realizing more savings as we ramp to 5% in the U.S. At the same time, we'll continue to improve the experience, implementing new features and functionality, including new payment methods such as PayPal.

Reposition the brand while keeping the base. eBay is an early Internet brand and Wenig noted that the company is "very well recognized, but not always well understood." New users get the eBay design and new approach, but legacy users struggle.

"Existing customers, some of them shop on eBay, they've been shopping at eBay for 20 years so it's a new experience and there's always some friction when you change an experience. I think some of it is time and habituation. Some of it is education," said Wenig.

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