Jamie Iannone:
-: On the expenses side, I wouldn’t think about it as pulling back in areas that we think will drive growth in the business, but more what I talked about earlier, which is finding opportunities to create leverage out of the model. When you think of things like cost of payments, when you think of things like how we’re going to use AI to enable our – the efficiency of the organization, you know, the whole motto here is ‘control what we can control.’ And, that’s why we think we’ve planned for the architecture that Steve laid out, and we’re really not going to get ahead of ourselves on anything more from 2024. But our main goal, and we’ve been doing this through the structured cost program, is to drive efficiency in the organization without driving the key layers, the key levers and the innovations that have driven growth on the platform.
Lee Horowitz: Helpful. Thank you.
Operator: Thank you. Our next question comes from the line of Michael Morton from MoffettNathanson. Please go ahead with your question.
Michael Morton: Thank you. I appreciate the question. If we could start maybe with authentication. For a few quarters now, you’ve highlighted as a headwind to gross margins, which makes sense. And I’d love to note, this is a line item that we should expect to see some leverage on as we go forward in the future. It’s just tricky to think about as we’re all like marketplace analysts, right, And there’s really high income and margins. But when you’re doing something like authenticating, like if you double the amount of shoes you’re authenticating, like if people are touching boxes, its inventory. So any thoughts there on how we should think about that line item going forward in the next 12, 24 months? You don’t need to get too detailed, but just the leverage aspect.
And then just talking about the leverage that you saw in sales and marketing, I understand and appreciate that you have a lot of direct traffic, but so do some other marketplaces that have seen a lot of increased competition across social, in search. So just impressive to see that leverage and would love to – and I know you guys have invested in full funnel advertising over the last 12 months to really get your improved product out there. So just to help us understand how you’re seeing that leverage when other marketplaces are having such a challenging environment would be great as well. Thank you.
Steve Priest: Hi, Michael, I’ll pick up the first one. So we’ve been really pleased with the levels of trust that we are continuing to build on eBay, particularly focused around our focus categories. And so the first thing I would say is thinking about authentication as a trust metric that’s really driving CSAT. And so it’s a great return on investment, because it’s not just about the category that one shops in, but also it’s about the cross-category shopping that goes away from that. So every consumer that spends about $400 of sneakers on the average buyer spends $2,000 elsewhere on the platform. And it’s really the fact they get attracted to it. So you should be thinking about this as an investment that we’re making and the requisite return on investment.
The second thing I would say is it’s not just about authentication, because some people look into eBay and think it’s all about authentication. Fitment is to P&A and warranties are to seller refurbished and certified refurbished, which authentication is to watches, sneakers and handbags. And so we’re continuing to, (A) get scale as we’re sort of driving this through the overall platform, but also we’re getting the benefits of trust and the benefits of cross-category shopping as we go that forward. So it continues to be relatively de-minimis, but I would think of it as an overall return on investment. Jamie, do you want to pick up the question with regards to the traffic?
Jamie Iannone: Yeah, look, we’ve shifted our marketing strategy as we’ve talked about, and we’re telling our story in new and different ways. Rather than focus on those large brand campaigns, we’ve been doing really targeted marketing spend to enthusiasts in our focus categories through this full funnel approach, using a real full funnel, mid, lower, upper. And all of that full funnel makes our lower funnel work harder. We’ve been doing partnerships with influencers, leveraging social media in better ways. And so the whole shift in our marketing strategy is not to just go after kind of active buyers and a big brand campaign, but really market the value proposition that we have on the platform with a really targeted approach to go after enthusiasts in that category.
And that’s why I think you’re seeing the results that we’ve talked about in P&A, which is our third quarter of in-market lines of growth in the mid-single digits is because of the effect of the marketing programs.
Steve Priest: The other thing I would add is just the size and scale of eBay and the general operation efficiencies we get with this. To Jamie’s point on full funnel marketing, we get to a point where we’ve got paid, owned, and now earned marketing across the board, which really brings additional consumers to eBay and continues to drive that level of trust on the platform to ultimately drive the underlying GMV momentum.
Michael Morton: Thank you.
Operator: Thank you. Our next question is from the line of Eric Sheridan from Goldman Sachs. Please go ahead with your question.
Eric Sheridan: Thanks so much for taking the questions. Maybe two if I could. Going back to the comments on the broader softening of the e-commerce environment, how does that typically show up in your model? When you think about what you’ve seen in the UK or Germany, is it slower buyer growth? Is it less velocity or repeat behavior on the shopping level, is it basket size? How should we be thinking about the signals you’re watching for elements of the softening versus what might be a recovery as we move through Q4 and into next year? That would be number one. And then when you look about the seller services side of the equation, I know you’ve made a lot of progress on ads and payments and shipping. What do you think the biggest friction points still are to continue to solidify the seller services side of the equation for the marketplace, especially if the macro environment does become a little more uncertain and sellers are looking for assistance from marketplaces?
Thanks.
Steve Priest: Hi. Good afternoon, Eric. I’ll take the first one. It generally shows up in traffic, as you would imagine. When you think about eBay and consumers looking at discretionary spend and the wallets generally get a little pressured, that’s really where it tends to show up. If I reflect on our business, and let’s not forget, half of eBay’s GMV is generated outside the US. And if you think about Europe, you think about the likes of the UK and Germany, our second and third largest markets. When you look at the data in terms of e-commerce, excluding grocery, UK was shrinking at three points in September and Germany was down minus seven. And so we’re seeing quite a precipitous decline in some of that e-commerce growth out of those couple of key markets. And invariably, as those consumers continue to get pressured in their wallets, it has an ultimate impact on traffic and discretionary spend. Jamie, in terms of the other items?
Jamie Iannone: Yeah, on seller services, Eric, it’s really been across the board. If you think about our B2C sellers, it’s been a key focus for us for over three years now. We started with eBay stores and a lot of innovation that we did when I first got back to eBay. Since then, we’ve been building out the ad portfolio, as we’ve been talking about each quarter. We continue to enhance our shipping profile and our shipping services. So one example is like in our P&A category, we now have the ability for a B2C seller to say, I have multiple warehouses that I can ship out of, and we’ll ship out of the one closest to the buyer to get it faster to the buyer. In our German business, we just launched a more expedited returns process, which helps sellers manage returns in easier ways.
EIS is helping them get more global scale demand. Payments is giving them more payment choices. So, when you think about it, I was just with a seller in Australia who sells tires, and he’s like, I love the integration that you guys did with Afterpay, because in this economy, a lot of people buying a new set of tires are using the buy now, pay later solutions. So I would say it’s a combination of all of the things that we’ve done that are really being great services for B2C. At the same time, we’ve been investing a lot in the C2C experience with things like the magical listings, really letting them list with a whole lot more ease. As I’ve talked about last quarter, the customer satisfaction for a brand new product there is amongst the highest I’ve ever seen.
And what casual sellers are telling us is this is going to allow them to unlock more inventory because of how easy we’re making it. And that’s now scaled out to 100% of our business across U.S., UK, and DE. So we continue to invest a lot in our sellers. We continue to grow the number of live listings on the platform, and we continue to raise the customer value proposition that we’re giving them on eBay.
John Egbert : Operator, can we do one last question, please?
Operator: Absolutely. Our final question comes from the line of Deepak Mathivanan from Wolfe Research. Please go ahead with your question.
Deepak Mathivanan: Great. Thanks for taking the questions. Jamie, given that consumers are increasingly looking at deal shopping during this holiday season due to macro pressures and inflationary environment, some of the other e-commerce platforms like Etsy are kind of incentivizing sellers to step up discounts and are also doing promos on their own to drive volume. Is that something that eBay can do? Do your buyers react to this? And do you see opportunities to maybe mitigate some of these macro pressures with product initiatives if this kind of persists for a while next year? And then now maybe one quick one for Steve. Steve, can you help quantify the cash outflow due to the taxes in 4Q? Is that a constraint to kind of stay on your buyback cadence for 4Q or any additional color you can provide? That would be great. Thank you so much, guys.
