Retail Week examines the three big marketplaces’ second-quarter results to understand who traded best over the tumultuous coronavirus lockdown period.
Retail news has been dominated by headlines of declining footfall, store closures and job losses since lockdown came into force in March. And who better to take advantage of rapidly shifting demand towards online than the three titans of ecommerce Amazon, eBay and Shopify?
While all three reported substantial year-on-year revenue increases versus their previous results, it was Shopify that led the way as its revenues skyrocketed by almost 100% to $714.3m (£550m) in the second quarter.
The Canadian ecommerce platform was bolstered by a 71% uplift in the creation of new online stores, and those stores created post-lockdown showed gross merchandise volumes above those created prior to it.
While the majority of this growth could be attributed to Shopify’s 90-day free store trial, which ended during May, it is now in prime position to reap the benefits of new customers converting into long-term paid subscribers.
eBay’s growth was similarly supported by a rush of new sellers on its marketplace, ultimately reaching 256% growth in new business sign-ups in the UK.
On top of that, “approximately 8 million new customers” joined the global marketplace to deliver an active customer base of 182 million.
Going into the third quarter, eBay expects growth to come in at a more muted 14%, which makes sense as lockdowns begin to ease and footfall slowly returns to give physical retailers a much-needed rise in sales.
However, it will be critical for the marketplace to ensure it engages well with its new influx of sellers and buyers to ensure they stay loyal, with so many other buying platforms, such as Shpock, Rakuten, Bonanza and Depop, active in the same space.
The biggest name in online retail, Amazon, had no intentions of allowing a “highly unusual quarter” to dampen its long-term growth prospects.
Despite sinking more than $4bn (£3.1bn) into coronavirus-related costs during quarter two, revenue growth of 40% demonstrated how much customers have relied on Amazon over the last few months – this led to a doubling of net income to $5.2bn (£3.9bn).
Amazon will now be seeking to reap the benefits of its large-scale investment in grocery delivery capacity, particularly in the UK, where it has made its Fresh service free to more than 15 million estimated Prime subscribers.
Measured by gross merchandise volume (GMV), it is clear to see that one platform has benefited more than others.
Although growing from a smaller base than eBay and Amazon, a 119% growth rate has led to Shopify outgrowing its closest competitor, eBay.
Even more impressively, that was against a prior year in which it grew 50% and when GMV through Shopify point-of-sale systems plummeted 29%, further confirming that any growth to be had was from online operations.
EBay attributed its success to improvements in customer acquisition, conversion and traffic, but acknowledged that was “driven by consumer behaviour shift to ecommerce shopping resulting from the Covid-19 pandemic”.
Looking at what supported the platforms’ GMV growth, Shopify put it down to significant consumption of food, beverages and tobacco as sales doubled relative to the first quarter. It was a more standard affair from eBay, which experienced acceleration in electronics, home and garden and collectibles.
Amazon revealed that online grocery sales tripled in its second quarter. Although that was mainly in the US, this demonstrates the potential still to come as shoppers increasingly shift their spending online.
The etailer’s results also showed that third-party sales increases outpaced those of first-party vendors – presenting opportunities to rival its marketplace competitors.
As retail’s traditional peak period nears, one thing is clear. Retailers will need to become platform-agnostic and look at what benefits a presence on Amazon, eBay and other marketplaces could give them while consumer uncertainty remains rife.
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