Please ensure Javascript is enabled for purposes of website accessibility

3 Ways eBay Is Becoming More Like Amazon

By Adam Levy - Feb 8, 2018 at 3:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

eBay isn't reinventing the wheel, but it doesn't have to.

Amazon (AMZN 3.90%) dominates online retail. A large part of that is because it captures about half of online product searches. Additionally, Amazon Prime has attracted millions of subscribers, making it the first and last stop for shoppers that need (or want) their items quickly. Meanwhile, Amazon is attracting more third-party merchants to its seller platform and helping them find customers through its growing advertising business.

All of this comes at the cost of competing online marketplaces like eBay (EBAY 3.99%). eBay's gross product sales growth has paled in comparison to Amazon's over the past decade. So, eBay is starting to take some tips from its biggest competitor, and it's becoming a bit more like Amazon.

Interior of eBay's office in Seoul, Korea.

Image source: eBay.

Many sellers, one product

One of the biggest problems with eBay's product search is that you can find a ton of sellers offering the exact same item. Amazon's search results also include multiple sellers for the same item, but it almost always groups all of those sellers into one product listing. eBay is working to offer customers a similar experience on its marketplace.

In order to do so, eBay is leveraging what it calls "structured data." Sellers are now mandated to include certain product identifiers like brand, manufacturer part numbers, or international standard book numbers when they list new products. eBay can then aggregate all products with the same identifiers into a group listing.

CEO Devin Wenig told investors that group listings "performed well" during the fourth-quarter earnings call. Overall, 14% of traffic to landed on one of its new structured data catalog experiences.

This year, management plans to launch "a full product-based commerce experience for relevant inventory," said Wenig on the fourth-quarter earnings call. "This experience will leverage our structured data catalog in a more holistic way than we previously have done."

As eBay shifts to a more product-based experience instead of a seller-based experience, it could improve the amount of direct searches on its platform as well as the amount of traffic coming from general web search engines.

Guaranteed 3-day, 2-day, or next-day shipping

There's no doubt Amazon Prime has been great for Amazon. The $99 per year membership provides unlimited two-day shipping for over 100 million items listed on Some 90 million U.S. households subscribe to Prime.

eBay introduced Guaranteed Delivery last quarter, offering guaranteed shipping within 3 days or less on over 20 million items in the U.S. By the end of the quarter, over 150,000 shoppers were using guaranteed delivery each day. While the shipping isn't always free, it does provide greater confidence in eBay's platform for shoppers.

Guaranteed Delivery is currently limited to the United States. "There are different issues in different markets," Wenig said. "But we do anticipate something like guaranteed delivery coming to other markets." For reference, Amazon Prime's shipping benefits are now available in 10 countries.

Getting products noticed

One of Amazon's biggest profit drivers recently has been its growing advertising business. Amazon helps third-party merchants promote their products in search results, enabling them to establish a brand and find new customers. Likewise, eBay is shifting its focus to similar promoted listings to grow its ad business.

eBay revamped its ad sales team early last year, and the results have been great so far. "Nearly 160,000 sellers used promoted listings to advertise over 100 million items in the quarter, driving over 50% sequential revenue growth in Q4," Wenig told investors on the fourth-quarter earnings call.

eBay lumps its promoted listing sales in with its transaction revenue instead of its marketing services revenue. As such, investors should expect to see a positive trend in transaction revenue and take rate but a negative impact on the marketing services and other line item.

First-party advertisements like promoted listings are ultimately a much more beneficial for eBay than third-party advertisements. Not only does eBay collect ad revenue, but first-party ads keep customers in the eBay ecosystem instead of sending them to another website. That helps increase gross merchandise volume, and higher sales volume attracts more merchant listings, creating a network effect.

eBay's efforts to mimic Amazon have produced good results so far. As the company ramps up its investment in its structured data initiatives, first-party ad sales this year, and just improving the overall customer experience, the positive trends should continue.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

eBay Inc. Stock Quote
eBay Inc.
$46.60 (3.99%) $1.79, Inc. Stock Quote, Inc.
$2,218.70 (3.90%) $83.20

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.