Ukraine War Stifling E-Commerce Growth in Europe, Says eBay CEO

Considering the challenges facing eBay customers globally, “we are pleased with our performance to start the year,” said CEO Jamie Iannone on a Q1 earnings call Wednesday. Revenue in the quarter declined 6% to $2.48 billion.The stock closed 11.7% lower Thursday at $48.04.

Since late February, when the war in Ukraine began , “we have seen lower e-commerce traffic,” said Iannone. Inflation in gas prices and home energy costs and “historically low consumer confidence,” especially in the U.K. and Germany, further impeded demand, he said. “We expect more near-term headwinds to e-commerce growth rates this year.” EBay said it’s waiving Ukrainian seller fees, and protecting Ukraine sellers from late shipment penalties. It’s also matching employee donations to organizations supporting Ukraine.

EBay’s international business “experienced softer economic growth and greater exposure to the supply chain challenges impacting cross-border trade,” said Chief Financial Officer Steve Priest. “When we spoke at our March Investor Day, we were beginning to observe modest softness in our European markets during the early weeks of Russia's invasion of Ukraine,” he said. “But ... the headwinds to our business became more pronounced.”

Though Russia and Ukraine historically were less than 1% of eBay’s global volume, “the war in Ukraine has measurably impacted economic growth and consumer confidence throughout Europe and other parts of the world,” said Priest. “This conflict arose as global economies were already contending with inflationary pressures and supply chain challenges. On top of that, rising interest rates may further hinder near-term economic growth, while sanctions related to the war could raise already high fuel prices.” EBay thinks the net effect will be “additional pressure on consumer spending,” said the CFO.

One positive highlight during the quarter was the eBay Refurbished program, said Iannone. “After success with certified products direct from manufacturers, we have significantly expanded the program across smartwatches, tablets, laptops and desktops,” he said. “Now buyers can shop from sellers across a wide range of refurbished inventory, backed by eBay's money-back guarantee and warranties.”