EBay (NASDAQ: EBAY) is attempting to jumpstart its growth by implementing more artificial intelligence to create preferences for both buyers and sellers.
The online marketplace began using AI agents that work with engineers for writing code. EBay’s platform will include features from AI that know what items buyers like and make it easier for sellers.
EBay CEO Jamie Iannone said AI is an “opportunity to really be on the leading edge, both with our customer experience, but also with how we innovate,” according to the Wall Street Journal.
But eBay is not the only company adopting the use of AI for its platform. The online retailer has to compete with behemoths such as Amazon (NASDAQ: AMZN), Etsy (NASDAQ: ETSY), and Walmart (NYSE: WMT), which have also added tech to their platforms in an effort to encourage more sales despite higher inflation and interest rates.
Sellers can use AI to write descriptions of the photos they upload via a new feature called “magical listings.” It can even recommend a price for the item. Some buyers on social media said they prefer listings from sellers that do not use the AI feature because the content appears to be less knowledgeable about the product. EBay made improvements after receiving the feedback.
EBay said that as AI itself has improved, it has continued to make improvements to its tech based on feedback from buyers and sellers, and sellers always have control over the final product description.
Another advantage that eBay has is that its databases hold over 30 years of purchasing data, helping the company find trends.
Revenue has grown slowly for the company compared to its rivals. EBay reported revenue of $2.73 billion compared to Wall Street’s estimate of $2.64 billion on earnings per share of $1.37 adjusted compared to forecasts of $1.30. EBay’s dollar value of items sold, or its GMV, increased by 6% year over year to $19.5 billion, beating estimates of $18.9 billion.
The online retailer estimates that revenue will reach between $2.69 billion and $2.74 billion for the third quarter and adjusted earnings per share of $1.29 to $1.34.
Investors have been rewarded with the stock rising 37% during the past six months while gaining 41.5% over the past year.
But eBay has never been able to compete with Amazon, which expanded from selling books online to selling items consumers can use frequently, replacing discount retailers.
EBay has stuck to its original strategy of matching sellers of refurbished or slightly used attire, tableware, and other collectibles with buyers eager to add to their collection. The company’s more niche approach results in fewer repeat customers, but eBay recently began advertising on Facebook Marketplace.
Amazon took a different approach and invested billions of dollars into technology, supply chain, and delivery, and sells nearly everything that a household can use in their daily lives, plus other collector’s items.
The company’s founder and former CEO, Jeff Bezos, is known as a disruptor of the retail industry for changing how consumers shop, launching quicker, free shipping, and realizing and adopting the value of cloud computing.
Amazon invested in an AI-powered shopping assistant called Rufus in 2024. Rufus helps consumers shop on the platform and answer questions about the items they are interested in purchasing.
But eBay may not need to capture a larger amount of the market share from retailers, said
Deutsche Bank analyst Lee Horowitz. Investors will be satisfied to see continual growth from the company.
“The investments they are making into their technology stack around AI are putting them in a position to take share in the verticals they’re focused on,” said Horowitz, according to the Wall Street Journal.
Investors could benefit from eBay’s investment in AI that can help consumers shop for more popular items such as electronics and sporting goods, producing more sales for the online marketplace.
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