Bad Macro Conditions to ‘Wear’ on Consumers Long-Term: eBay CFO

Gross merchandise volume (GMV) declined 14% in the quarter, “as we lapped the elevated mobility restrictions in 2021,” said Chief Financial Officer Stephen Priest. “We also contended with a more challenging macro environment this year due to the conflict in Ukraine, ongoing supply chain challenges and rising inflation across our major markets,” he said. “In spite of these headwinds, we saw volumes remain relatively stable as we progressed through the quarter, with GMV growing 5% versus our pre-COVID baseline in Q2 of 2019.”

U.S. GMV grew 15% in Q2 from the same 2019 quarter, while international GMV was down 3% over the same time period, said Priest. “The growth differential between our U.S. and international markets was exacerbated by recent macro and geopolitical developments as our European markets have been more meaningfully impacted, given their proximity to Ukraine.”

The U.S. also benefited from stronger economic growth, leading up to the Ukraine conflict, “while our international markets were more exposed to the supply chain challenges impacting cross-border trade,” said Priest. Senior management is encouraged that “our focus categories are outperforming the rest of the marketplace on a global basis,” though the level of outperformance “is slightly higher in the U.S. due to the timing of launches and the relative category mix,” he said.

The eBay business “has remained resilient in recent months despite escalating macro headwinds, but the operating environment remains dynamic and difficult to predict,” said Priest. The spread of COVID-19 variants, persistent supply chain issues, elevated inflation and the impact of rising interest rates “will likely wear" on consumers' discretionary spending "for some time,” he said. “The duration and severity of the economic impact from the Ukraine war and related sanctions are even more challenging to anticipate.”

Iannone defended using 2019 comparisons in the current financials, based on “just the massive acceleration that we saw over the COVID time period.” EBay believes “we're definitely coming out of the pandemic much stronger than we came into it,” he said.

It’s often “hard to differentiate” between discretionary and nondiscretionary consumer spending on the eBay platform, said Iannone. “When times are tough, people trade down,” and that's where the eBay Refurbished program “is helping out,” he said. EBay Refurbished in Q2 added more sellers and expanded its categories to include headphones, audio products, gaming consoles and smart home devices, said Iannone. “Refurbished products are growing faster than new products in the same category, in part due to increased customer satisfaction,” he said.

In the second quarter, eBay began beta-testing a live shopping initiative called eBay Live, said Iannone. The company calls it a dedicated shopping platform that gives people a new way to browse and buy products in a live, interactive environment.

Though Western market adoption of live shopping remains low, “we are optimizing our user experience ahead of this emerging trend,” said Iannone. “Early pilots have seen users engage, on average, for 15 minutes at a time, with approximately one-fourth of them interacting directly with the event,” he said. “We will continue to optimize this capability in future quarters.”

The company is still “very early” in the “test phase” of eBay Live, Iannone told a questioner who asked about his possible ambitions to scale the program for the holiday selling season. “I would say from our early test that we're excited by what we saw” in the early trials in terms of the amount of time shoppers remained “engaged,” especially when factoring in the limited “attention span” of today’s consumers, he said. “So we feel really good about what it can be.” Early lessons suggest eBay Live has had “a lot more traction in the Asia region than it has here,” he said.