eBay CEO Jamie Iannone Pushes Focus On High Value Buyers
One part of eBay's Q2 2021 earnings call seems to have really resonated with the seller community - CEO Jamie Iannone's focus on "high value buyers".
eBay lost 2 million active buyers in Q2 (excellent analysis of those numbers from eSeller365) but Iannone said he's not concerned because it's part of his long term growth strategy to pivot the focus to "high-value buyers; buyers that are buying over $800, buying six times a year, or buyers who sell."
We've discontinued legacy tactics that led to low value, infrequent or one and done buyers. Our buyer base is starting to evolve based on this strategy. These high-volume buyers are growing compared to a year-ago and their spend on eBay is growing even faster. This higher-quality mix of buyers increases value for sellers and will lead to improved health of our ecosystem over the long-term.
This is something that I laid out last July when we talked about the tech-led reimagination as being focused on turning buyers into lifelong enthusiasts on the platform and moving away from the tactics that we had in 2019 what was really just about the number of active buyers even low value buyers or one and done buyers. I've got the whole organization pivoted to focusing on those high-value buyers; buyers that are buying over $800, buying six times a year, or buyers who sell.
And so as you think about these buyers, they're so strong at eBay they are 20% of them make up 75% of GMV and the goal is how do we turn more buyers into these lifelong enthusiasts. I've met a lot of buyers. They wake up and get a cup of coffee and they turn to eBay and open the eBay app and our focus is really not on just the total number, but really focused on how are we driving these buyers to become enthusiasts. The metrics that we show on the board deck are trailing 12-month metrics so obviously lapping the buyers that we acquired in Q2.
But going forward our focus will really be on these long-term enthusiasts. So I'm excited to say that their GMV is growing, they are growing as a population and more and more you're going to see us doing things to drive that longevity because we know the things that move buyers up the cohort curves into long-term buyers.
This post in the eBay community is one of the more active topics I've seen recently, showing there are clearly some strong opinions about Iannone's statements.
Some sellers were very happy about this new focus, believing the long term investment in bringing in higher value buyers will have broad benefits for sellers across all categories and price points.
In response to Sr. Manager, Seller Advocacy and Engagement Brian Burke posting a link to the earning's call, one seller said:
Very helpful to read all this, and congratulations on a fantastic year. Your CEO is doing a good job, stocks are up, more people buying more expensive things and coming back for more. Something is definately going right here for ebay and all of us here.
Here's another positive take:
I just read the article and all I can say is by George .........I think he`s on to something.
It makes a lot of sense what he had to say....focusing on retaining the whales on ebay is an important task since they do love to spend.
To me its like New York where a small percentage of taxpayers is floating most of the boros.
The buyers who are spendig the big $$ need to be retained at the cost of some dreck sales.
Another seller said:
Well it’s about time this site started to get a rep for higher end stuff rather than cheap trash that sells in the millions but make little dent in the GMV.
Some sellers expressed concerns about seller protections, stating it's all well and good to focus on high value buyers, but if sellers with high value inventory can't be confident they will be protected from scams and abuse, they're not likely to list it on eBay.
The high number of low value buyers may have something to do with the fact that a lot of sellers will not list high dollar items on eBay since they cannot afford to take the loss in the event of a scam. Maybe eBay should give some thought to the other side of the coin but of course their focus has ALWAYS been on the buyers never the sellers.
Even if I had luxury items such as you describe this is the last place I would post them there are simply too many other viable sites with less risk and lower operating costs where this merchandise can be moved.
On the high value items - we no longer even list items that are over $200 on this site, let alone, anything that is considered expensive. They first need to tackle all the fraud on this site and make it SAFE for BOTH Sellers and Buyers.
The site is all about buyer confidence but neglects seller confidence - realising that charge-backs, bogus returns and the like are a small minority of transactions, these are still loopholes that have the potential to become larger problems. The "unrecognized charge-back" could be fixed if eBay returned to putting the seller's ID in the line item instead of the generic "eBay, inc" which I have seen. There needs not to be empty space between a return and a charge back, etc. IAC, it's all in the optics - sellers of high-end merchandise are going to be less willing to list it here if they don't have confidence. Anyway, I see that as a stumbling block.
Perhaps the CEO should be placing more importance on how to protect sellers from losing high end money from this high end inventory before taking any further steps.
The eBay Catch Cry: Don't list what you can't afford to lose......
Since many of the high value buyers eBay is currently focused on are in verticals like sneakers and watches where eBay has introduced authentication programs, some sellers were also concerned that the efforts to retain these high value buyers could prove to be economically unfeasible.
While the authentication programs are a step in the right direction as far as preventing SNAD claims and the sale of counterfeit items I would agree with you that at some point it becomes economically unfeasible since it requires resources to run the programs and that digs into eBay's bottom line. It also does not prevent the chargebacks which appear to be an increasing problem due to the way eBay posts the transaction to buyers CC statements.
I see this being a very valid concern, especially in the sneakers category. eBay charges no fees to either the buyer or seller for authentication while also still maintaining that sneaker sales over $100 incur no final value or per transaction fees. It's basically a loss leader with eBay betting on the hope that these high value buyers will spend more money across other categories.
That means the overhead costs of the authentication programs (whether through eBay directly or one of their third party authenticators) is not being covered by these sales - it has to come from somewhere else, like the fee increase most other categories experienced in April or eBay's ever increasing take rates on advertising, also discussed in the earnings call.
The one thing I found most odd about Iannone's repeated references to the focus on high value buyers was he completely left out any mention of eBay's Top Star Buyer Loyalty program.
Liz Morton
According to eBay, Top Star is "for our most loyal buyers in select categories, and is an invite-only program." It gives these buyers access to special "Top Star only" events and experiences as well as offering exclusive access to purchase in demand sneakers at retail prices.
This all fits right in line with what Iannone described as a "high value buyer" - one who purchases frequently and/or higher $ amounts and who is an "enthusiast" that comes to eBay for the "experience" not just to be a "one and done" buyer.
Why wouldn't the CEO at least mention this clearly relevant initiative that is targeting exactly the high value buyer base he mentioned multiple times in the earnings call?
