eBay Says New Sales Tax Laws Impact Revenues and More Sellers Use Promoted Listings

After eBay announced Q2 2019 earnings today, the company held its earnings call with analysts to discuss the financials and answer questions.

READ MORE: eBay GMV down slightly but beats Q2 earnings estimates

Within that discussion there are always some interesting tidbits that are of interest to sellers. So we highlighted them here.

The quotes are either from Devin Wenig (Wenig), President and CEO eBay, Inc. or Scott Schenkel (Schenkel), CFO, eBay, Inc.

Internet sales tax – eBay calls for federal legislation

“One emerging challenge for our small business sellers in the US is the rapidly evolving landscape for internet sales tax. At the start of the year, only a handful of states had active legislation requiring marketplaces to collect sales tax. By the end of the year, that number will grow to more than 30 states, and it’ll cover the majority of US GMV.” – Wenig

“In Q2, this impacted the U.S. business by more than 1 point. And we’re taking active measures to mitigate this challenge. However, this headwind is likely to further pressure US results until we lap a fully rolled out internet sales tax landscape.” – Wenig

“And I’ll just take the opportunity to say for a second, as a policy matter, this is exactly what we said, which would happen, which is small US businesses are being disfavored, the impact is disproportionate… It’s favoring larger businesses and retailers and it’s also favoring international businesses. So, we again will call for a federal legislation on internet sales tax and a small business exemption. And I’ll say that you’ll continue to hear me say that because what we’re seeing is exactly what we had feared and what we had said.” – Schenkel

Promoted listings

“Over 940,000 sellers promoted over 250 million listings in the quarter. Sellers are increasingly choosing to invest in Promoted Listings and are seeing strong conversion and velocity.” – Wenig

“I should also point out that next week, we have a very large seller event called eBay Open and we have thousands of our customers coming to that. And we’ll have more to say about the future of ads and we’ll have more to say about that and other things. It should be an exciting week for us next week.” – Wenig

Portfolio review (Potential sale of StubHub, Classifieds and other assets)

“We’re making significant progress in actively reviewing the role and value of StubHub and Classifieds in our portfolio. Review is underway and we’re focused on determining the best path forward to create shareholder value. In addition to that ongoing work, today we are announcing two other actions aimed at further strengthening our portfolio.” – Wenig

“First, we’ve reached a commercial agreement with Paytm Mall to bring our global inventory on to one of the largest marketplaces in India. eBay will open a store on Paytm Mall, which will provide hundreds of millions of Paytm and Paytm Mall’s customers with access to our global inventory. As part of this collaboration, eBay is making an investment in Paytm Mall for a stake of approximately 5.5%.” – Wenig

“Second, we’ve reached an agreement to sell our flash sale German business brands4friends. Divesting this business will allow our German team to focus on the opportunities in the core business.” – Wenig

When pressed for more information on portfolio review, Wenig answered:

“…we’re just not going to say anything [more] about it. We’ll let people know when there is something to say, but until then, we’re just not going to say a word about the process or what’s going on.” – Wenig

READ MORE: Report: eBay has multiple interested buyers for StubHub

eBay managed payments

“…we continue to see accelerated adoption of managed payments in the US. Since the launch in late Q3 last year through the end of Q2, we’ve now processed over $636 million in payments for over 6,000 sellers participating the day.” – Wenig

“In June, they chose to pay with credit cards, Google Pay and Apple Pay approximately two-thirds of the time. Our run rate of annualized GMV is now well over $1 billion as we continue to make steady progress towards our financial targets.” – Schenkel

Fulfillment

“…70% of what’s sold on the site are ready comes with free shipping in the U.S. And in the U.S., nearly two-thirds of items arrive in three days or less. So, I think the intent of the program is to further enhance via guaranteed delivery program, those types of metrics to further improve the user experience.” – Schenkel

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