EBay (NASDAQ:EBAY) is facing an avalanche of competition from larger retailers who are building up dominant e-commerce sales channels. Wal-Mart Stores has built a $15 billion e-commerce business that posted 69% growth in gross merchandise volume (GMV) in its most recent quarter. Amazon.com has already well exceeded $100 billion in annual sales and is still growing like a start-up. Meanwhile, eBay's $85 billion in trailing-12-month GMV has only barely nudged from $83 billion in 2013. 

As these large retailers continue to invest heavily in their online business, eBay has been attempting to redefine itself as another mainstream retailer, as opposed to its traditional image as an auction site. For the second quarter, eBay didn't post any meaningful improvement over its typical mid-single-digit growth trend (excluding the negative impact of currency headwinds). Nonetheless, results were at least consistent, which shows eBay is holding its ground for the time being.

Here's what management had to say around three key areas where eBay is trying to improve its competitive position.

eBay headquarters in San Jose, California.


Structured data initiative

As online shopping becomes more mainstream in today's world, eBay has been focused on reshaping its marketplace business to look more like an online retailer rather than an auction site. To do this, management has been incorporating the use of artificial intelligence (AI) and machine learning to organize the one billion listings on eBay's marketplace so as to showcase items as products as opposed to listings.

The end goal is a more personalized shopping experience, and a simpler and more modern website that makes it easy for buyers to find what they are looking for. CEO Devin Wenig likes the early results (courtesy of S&P Global Market Intelligence):

The rollout of our new homepage has expanded to all users across eight key geographies. We leveraged our structured data and AI to deliver an experience tailored to each eBay user's interests and passions. Early evidence shows users are responding well to the new homepage with lower bounce rates and better engagement. This tells us we're matching users with content that's more relevant to them.

New marketing campaign

Along with structured data, eBay is also reshaping its brand image with more aggressive marketing centered around its new "Fill Your Cart with Color" campaign, which launched across television, digital, and social channels. Wenig had this to say about the campaign:

In April, we rolled out a national fashion campaign and in June we launched the first activation of our new brand platform -- "Fill Your Cart with Color" -- using multiple channels including television, digital and social. And while it's still very early to determine the overall efficacy of our brand advertising, we're seeing promising early results with [...] better purchase consideration in our fashion category and an increase in traffic from new eBay visitors.

Sales and marketing expense dropped to 26.2% of revenue in the 2017 second quarter from 26.7% in the year ago quarter. Essentially, eBay is enjoying the increase in traffic from the new brand platform without cutting into margins or earnings. This was achieved by reallocations of spending and productivity gains within sales and marketing, which offset the increase in spending for marketplace brand advertising.

Business seller growth accelerated

Last but not least, growth in the number of business sellers worldwide accelerated for the second straight quarter. Why is this important? It's just one data point, but it does show eBay is still a relevant place for businesses to find buyers. What's more, eBay found a powerful new partner in Shopify:

We announced the partnership with Shopify to enable their merchants to list and sell their products on eBay directly from their Shopify account, which will expand merchants and inventory over time.

The end goal with structured data, marketing, and attracting business sellers is to build more choice for buyers when they visit eBay's marketplace. The new advertising campaign is helping to increase traffic, structured data is helping those visitors navigate the site more easily, and more business sellers bring more selection. These are three critical elements eBay has to continue to build on if it wants to stay relevant in an Amazonian competitive landscape.

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