The ecommerce marketplace eBay has caught the generative artificial intelligence (GAI) bug and is building a foundation of tools across the site to help advertisers and those who list products for sale.
“The foundational work we've accomplished over the past 3 years has set us up for a new phase of innovation,” said Jamie Iannone, CEO at eBay, during the company’s Q2 conference call. “Our teams are focused on thinking bigger and moving faster as we build game-changing features and functionality for customers to keep eBay at the forefront of ecommerce.”
During the next few years, eBay expects to implement advancements in artificial intelligence (AI), including generative AI (GAI) to impact nearly every aspect of the organization.
Lannone said the company continues to increase features on the site that run on GAI, which will enable customer-facing experiences, such as the Magical Listing and make it “significantly easier” for sellers to list their inventory.
One of the biggest challenges to operating a listings-based marketplace is the burden on sellers to fill in descriptions and item aspects for their products. eBay in May launched the first version of Magical Listing. Then eBay integrated Azure's open AI API into its core listing procedure. Now sellers can choose to have detailed product information instantly populated by GAI based on the product's title, category and any other characteristic.
The beta feature during the past quarter ramped up to more than 50% of iOS and Android users in the U.S., with an expectation to reach 100% in the coming weeks.
Approximately 30% of the users who have tried the feature at least once. Of those, acceptance rates are more than 90% for AI-generated descriptions, including those with edits.
Advertising pushed up revenue in the quarter, becoming the largest driver in the quarter, sequentially and year-over-year. eBay’s ad business grew 35%, up 12-point acceleration versus Q1.
Overall, revenue rose 5% to $2.54 billion, outpacing volume by 6 points. Non-GAAP operating margin is 26.9%, down roughly 1.7 points year-over-year, primarily due to the impact of eBay international shipping ramp and recent mergers and acquisitions.
The company reported that first-party ads grew 49% faster than volume as the gross merchandise value (GMV) delta widened by 17 points, sequentially. Roughly 4 points of this gap were related to a one-time accounting adjustment of deferred revenue on cost per click ad fees following the halo attribution change Jamie discussed earlier.
The deferral program, announced last year, defers the selling fee payments from sellers for 30 days to provide some relief. This program brought in approximately $9 million of ad revenue to Q2.
The results in eBay’s ads business were driven by continued optimization of promoted listings standards and the expansion of our emerging products like advanced and external promoted listings.
The company, per the earnings call, still anticipate advertising revenue will outpace GMV for the foreseeable future.