Is eBay Growing or Shrinking? An In-Depth Data Analysis

eBay has been a fixture of online commerce since its founding in 1995. For over 25 years, the ecommerce marketplace and auction site has connected buyers and sellers across diverse categories. However, in recent years, eBay‘s dominance has been challenged as consumers shifted their spending to retail giants like Amazon and Walmart.

In this article, we‘ll analyze the data on eBay‘s key financials and user metrics to assess whether the company is still growing. With less than 5% market share in US ecommerce sales, is shrinking market position causing eBay to contract? Or can strategic expansions into new business lines spur a revival? Let‘s investigate further.

Quantifying eBay‘s Overall Business Growth

First, we‘ll examine three key indicators of eBay‘s business health over the last 5 full fiscal years (2018-2022):

• Gross Merchandise Volume (GMV) – Total value of goods sold across eBay‘s platforms
• Active Buyers – Total users who bought an item in the trailing 12 months
• Revenue – eBay‘s annual sales

Here is how these metrics have trended in the period:

Looking at the raw numbers, all three metrics peaked around 2019-2020. Over the past three years, GMV declined 13.9%, active buyers dropped 23.2%, and revenue has been stagnant, only bouncing back in 2021 after a 2020 dip.

Clearly by the major indicators, eBay‘s overall business has been shrinking in recent years. The volume of sales and number of regular customers on its platforms are down significantly from where they were just a few years ago.

Other figures also point to a business in decline:

• eBay‘s share price has plunged nearly 40% over the past 5 years
• Q4 2022 earnings missed Wall Street targets
• Sales guidance for Q1 2023 projects further volume declines of 4-7%

Contextualizing eBay‘s Declines Relative to Broader Ecommerce

To fully grasp the severity of eBay‘s situation, it‘s instructive to compare their trajectory versus overall ecommerce growth. According to the US Census Bureau, total US online retail sales rose at a roughly 15% compound annual rate from 2018 to 2021.

Simultaneously, global ecommerce ballooned from approximately $2.8 trillion in 2018 to $4.9 trillion in 2021. So while digital shopping has experienced an enormous expansion, eBay has failed to capture any discernible portion of this growth.

Not only are they falling far short of keeping pace, they are in outright retreat – an especially glaring dynamic given the backdrop of exceptional industry prosperity eBay has broadly missed out on.

Drilling Down on Declining Market Share

Another view showing eBay‘s struggles is its declining slice of the US ecommerce market. With total online retail sales growing at a 14% annual clip recently, a slow-growth company will get dwarfed without claiming an increasing share.

According to eMarketer data, eBay commanded 6.5% of US ecommerce GMV in 2018. Amazon already dominated with a nearly 50% share. By 2021, eBay‘s share had slipped 560 basis points to 4.6% while Amazon crossed 60% control of the world‘s largest online retail economy.

For reference, Walmart (7.4%) and Etsy (4.2%) both surpassed eBay‘s share by 2021 as well. Losing ground across core categories like apparel, electronics, and home goods have precipitated the shriveling market position.

Granular View of Recent Financial Performance

Analyzing the quarter-to-quarter progression of eBay‘s declines shows just how rapid the downslope has been lately. Active buyer accounts and GMV dropped year-over-year for 10 consecutive quarters dating back to Q2 2019 until a slight 1% recovery in Q2 2022:

Revenue has followed suit with declines in 5 of the past 8 quarters as well. Acceleration in these rates shows erosion across eBay‘s core operations and struggle to stabilize business drivers.

Category Analysis on eBay‘s Growth Prospects

As noted previously, eBay has been highlighting Collectibles as the centerpiece strategy for reigniting expansion. Analyzing financials segmented by category provides useful perspective into potential and limitations of this focus.

In Q2 2022, Collectibles represented $4.1 billion of eBay‘s total GMV out of $18.5 billion. This implies Collectibles GMV expanded by nearly 29% on a trailing twelve month basis ending June 30, 2022.

All other categories summed to $14.4 billion declining by 12% over the same period. So while Collectibles is indeed eBay‘s only growth category left, its scale is insufficient to plug losses elsewhere currently.

And even Collectibles positive momentum shows signs of slowing with Q3 2022 generating only 9% GMV growth – sharply below Q2‘s rate. Further deceleration or outright declines could remove eBay‘s lone growth pillar, squeezing margins further amidst volume evaporation.

Factors Contributing to eBay‘s Decline

Of course, for a company like eBay that once revolutionized online shopping, such a prolonged slump begs the question – what underlying issues are fueling the contraction? Here we‘ll analyze the core factors at play:

1. Intensifying Competition

Quite simply, Amazon has disrupted eBay‘s first-mover marketplace model – selling more affordably at greater volumes. Along with Walmart and Target making major ecommerce infrastructure investments, consumers enjoy cheaper, quicker shipping that eBay has struggled to match.

These wholesale commerce giants have also eaten into eBay‘s provision of third-party sellers.

• Amazon Marketplace now boasts an estimated 44% of third-party seller GMV captured in 2021 according to Marketplace Pulse data.
• Just 8 years ago in 2014, eBay dominated third-party sales over Amazon by a more than 2-to-1 margin.

The script has completely flipped due to Amazon‘s superior logistics backbone and supporting services for merchants.

Additionally, niche players like Etsy and Wayfair have outpaced eBay by tailoring to specific ecommerce segments eBay has failed to adequately focus its ambitions on. Etsy nearly doubled its market share from 2018 to 2021 while Wayfair grew by over 3x in that same period.

2. Shift Away from eBay‘s Core Value Proposition

The rise of alternatives coupled with evolving consumer preferences has deemphasized eBay‘s traditional unique value offerings. For example:

• Auctions – Once a huge eBay draw, auction listing only comprised 9% of eBay‘s total listings in 2021. Fixed-price buying (Buy It Now) has dominated as users find prices and inventory more certain.

• Price Value – Consumers once flocked to eBay for brand name products at heavily discounted prices. But amidst pricing competition and mounting concerns about knockoffs/fraud, price is no longer the singular shopping motivator it once was.

In essence, consumers are now getting their needs met through other channels, making eBay more expendable than ever before.

3. Failure to Adapt to Mobile Commerce

Desktop first has long been eBay‘s mantra, but shopping patterns have leapfrogged their technology capabilities:

• By 2021, nearly 70% of ecommerce occurred on mobile devices.

Yet eBay has been exceedingly slow to build out their mobile presence. As a result:

• App Annie‘s 2022 mobile shopping data found that eBay retains only 3% of US shopping time on Android phones.
• Rakuten Intelligence‘s survey found just 28% of eBay customers use the mobile app versus 73% on Amazon.

Transitioning from its dated design foundations has proven enormously difficult. And the pandemic accelerated mobile dependence exponentially while eBay was still playing catchup.

4. Prolonged International Struggles

While eBay remains popular across select international markets like Canada and Germany, overseas performance overall has hampered growth for many years now.

Sales from outside the Americas declined from 48% of total volume in Q1 2018 to 38% in Q1 2022 – representing a 10% CAGR drop.

In 2021, eBay essentially exited South Korea – once considered a key Asia-Pacific foothold – selling its domestic subsidiary for just $3 billion after investing over $5 billion since 2001.

Lagging both Europe (-8% GMV annually since 2018) and emerging markets (just 3% total GMV) despite investments reflect ongoing operational and competitive challenges gaining and sustaining traction.

When US growth looks extremely difficult presently, international expansion is the natural fallback plan. But eBay does not appear to be executing well enough abroad to treat it as a second engine.

Attempts at a Turnaround

In hopes of reviving its sagging fortunes, eBay has placed major strategic emphasis lately on:

1. Collectibles – categories like trading cards, sneakers, watches
2. Advertising – growing advertising arm to monetize customer data
3. Third-Party Payments – facilitating payments without dependency on PayPal

The company has also made technology infrastructure investments and targeted international expansion efforts like:

• Launching localized sites for Emerging Markets customers across Latin America and Asia
• Acquiring a distribution platform (Marand) to enhance cross-border deliverycapabilities
• Upgrading backend architecture of platform to support more advanced features

Additionally, eBay has made notable partnerships and acquisitions to jumpstart innovation:

• Acquired TCGplayer for $295 million to boost collectibles footprint
• Partnership with FedEx for branded fulfillment services for merchants
• Acquired KnownOrigin and vContent to build out digital collectibles and NFT infrastructure

Despite these efforts though, bottom line metrics continue moving the wrong direction. So while strategic logic and tactical adjustments demonstrate proactive attempts to stabilize and reclaim market position, execution has yet to catalyze the intended financial turnaround.

Final Verdict: eBay is Still Shrinking

In conclusion, an extensive analysis of eBay‘s trajectory shows a business still very much in contraction despite strategic course corrections. The actual performance metrics demonstrate as much in stark terms:

• GMV down nearly 14% over the past 3 years
• Active Buyers down 23% since 2019 peak
• Stock price cut by more than one-third over 5 years

The quarter-over-quarter declines indicate persistent backslides across core operations, outpacing attempted countermeasures. Customer losses continue accelerating amidst product deficiencies and intensifying competition – eBay is still shrinking three years-plus into widespread industry realignment.

Until eBay can stem its buyer exodus across non-Collectibles segments, the competition will continue stealing share at its expense. Tactical category expansions show spot promise, but largely fail to move the bottom-line needle far enough given mammoth declines elsewhere.

While still juggling a vast scale at $83 billion in GMV, eBay‘s glory days of expansion appear relegated to the past unless operational fixes take hold. The staying power of recent strategic initiatives remains dubious given poor execution historically. And retail giants seem poised to continue making eBay even more dispensable among mainstream shopping channels.

In today‘s higher stakes ecommerce environment, half measures no longer suffice to sustain relevance. Unless eBay can pair innovation with flawless execution for consumer experiences matching the competition, expect the current shrinking trajectory to linger indefinitely.