The New eBay Vault – What We Know So Far

Last week, during eBay’s Investor Day, the company announced it will soon launch eBay Vault, a place where users can store high-value physical goods.

I must admit, when I first saw the announcement, my first thought drifted to a story I watched a few years ago on where some of the super-wealthy are storing valuables in old military bunkers in the Swiss Alps that have been converted into secure vaults to store gold bars, arts, jewelry and other high-value assets.

While eBay didn’t reveal where its vault is located, let’s say it’s unlikely in the Swiss Alps and more likely in some nondescript commercial business park here in the US.

With eBay Vault, the company is banking on an increasing appetite of buyers that look at collectibles as investments, not items they want to display or show off to their friends.

The idea isn’t completely new as online trading card marketplace PWCC launched a vault for trading cards in 2018. eBay’s vision is to take the vault idea a bit further and it might be on to something here.

eBay Vault – What We Know

eBay says its secure vault will be a 31,000 square foot facility where sellers can store authenticated products safely for sale on the marketplace.

When an item sells, the ownership is transferred instantly to the new buyer, who then can continue to store the product in the vault or ask eBay to ship it to them.

This should not be confused with a fulfillment operation such as Amazon FBA or DHL eCommerce. Those are designed to fulfill physical goods quickly to customers and that is not the function of the eBay Vault program

By comparison, the primary purpose of the eBay Vault is to offer a secure storage solution for alternative asset investors.

With the eBay Vault, the company will even be able to offer sellers the ability to sell partial or fractional ownership of a collectible. This enables buyers to own a piece of collectible and even sell that fractional ownership to another buyer on eBay.

This is similar to investing in stocks using micro-investing platforms such as Acorns or Robinhood.

eBay didn’t explain yet how its fractional ownership will work because there are some liquidity questions that need to be answered. However, the most likely path will be with NFTs since eBay has already opened its marketplace for select sellers to sell NFTs on the platform.

The biggest advantage eBay has by offering the eBay Vault service is trust.

As a well-known brand, even one that historically has been underperforming in eCommerce, the company has a long track record of being a profitable enterprise. In other words, it won’t disappear tomorrow and leave users hanging on how they will recover their assets.

Investors interested in these kinds of alternative assets are more likely to feel comfortable with eBay versus a niche player that they may never have heard of or has little history in the business.

My Take

eBay announced very few details for its new eBay Vault. It definitely sounds like an intriguing idea and while the company is not inventing anything here, it has an opportunity to use its brand equity to attract alternative asset investors.

Once an item is in the eBay Vault, and especially if it is turned into a fractional asset, it should result in recurring selling fees for the company as investors flip assets. This should drive repeat sales of higher-end products, something the company desperately needs to turn around declining GMV.

In addition, I am sure the company will have a fee for storing products in the vault. It won’t bring huge revenue, but still another small profit to add to the bottom line.

The eBay Vault could also open up the door for more categories to become part of its authentication program, such as jewelry, fine art, stamps, coins, etc., further expanding and evolving the marketplace to higher-end products.

While I still believe eBay’s latest fixation on high-value buyers was an ad-hoc “strategy” (excuse) introduced last year to whitewash the fact eBay wasn’t able to hold on to buyers gained during the pandemic, the eBay Vault may actually bring this high-value buyer target audience to the marketplace.

Who knows, maybe one day eBay will even accept gold bars and the company has to get one of those mountainside Swiss vaults.

eBay Vault is expected to be available to US users in the second quarter of 2022.

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