eBay and Etsy are relatively confident despite tariff pressures
The secondhand market, like many parts of the broader business landscape, is feeling the knock of President Donald Trump’s tariffs. Despite these challenges, both eBay and Etsy seem to be handling the situation with relative ease and even optimism.
Positive Earnings Amid Tariff Concerns
In their most recent Q1 2025 earnings announcements, both companies took a close look at the tariff issue. Unlike some of their rivals, such as Temu and Shein—which increased prices to counter tariff costs—eBay and Etsy benefit from a seller base that largely sources items locally. This strategy helps them minimize the impact that tariffs could have on their overall business operations.
Local Sourcing: A Defining Edge
One of the key reasons behind this resilience is the approach taken by many U.S. sellers on both platforms. Sellers on eBay and Etsy predominantly offer used, vintage, or handmade products that are sourced domestically. This local sourcing drastically reduces the exposure to foreign tariffs compared to competitors who rely more heavily on imports.
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Key Insights from Leadership
- eBay: CEO Jamie Iannone mentioned during the earnings call that shipments from Greater China make up roughly 5% of their total gross merchandise value (GMV), with overall China-related activity contributing less than 10%. This limited exposure has helped eBay maintain steady performance even as tariffs loom.
- Etsy: CFO Lanny Baker noted that only slightly over 1% of Etsy’s gross merchandise sales come from imports of items purchased from China. CEO Josh Silverman further explained that about 90% of Etsy’s suppliers operate domestically, with most being solo entrepreneurs working from home. This low level of tariff exposure underpins the company’s confidence in its current business model.
Market Dynamics and Consumer Behavior
While both companies benefit from their strong local networks, the broader secondhand marketplace still grapples with ongoing economic uncertainties. Consumer spending has become unpredictable, and even if sellers are well-prepared for tariffs, overall demand can lag. Etsy, in particular, has experienced some headwinds amid this wavering consumer confidence.
Etsy’s focus on handcrafted and vintage items, which are generally priced at a premium, has contributed to a modest downturn in buyer activity. Recent data revealed a 3.4% year-over-year drop in active buyers—bringing the total number to 88.5 million—and habitual buyer numbers fell by 11% to 6.2 million. Additionally, gross merchandise sales (GMS) on the platform decreased by 8.9%, landing at $2.3 billion.
Opportunities Amid Challenges
Despite these challenges, Etsy is not without its advantages. Its acquisition of Depop, a popular secondhand fashion platform, continues to pay off. Depop has reached record-high GMS levels since being integrated into Etsy’s ecosystem in 2021, underscoring the potential for growth in niche markets even against a backdrop of economic uncertainty.
Conversely, eBay appears better positioned in the current landscape. A significant portion of its inventory—over 40%—includes used and refurbished items that attract price-sensitive consumers. This trend has allowed eBay to capture increased spending from customers trying to avoid the complexities and potential price hikes due to tariffs.
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eBay’s Resilient Strategy
eBay’s CFO, Steve Priest, highlighted that the company observed a healthy volume trend driven by its core categories. He also mentioned that there appears to be a modest pull-forward of demand among consumers who are wary of rising costs and potential complications at U.S. customs.
The company’s performance in Q1 2025 reflects this strategy, with gross merchandise volume (GMV) reaching $18.8 billion and revenue increasing by over 1% to $2.58 billion.
Conclusion
Both eBay and Etsy have showcased their ability to adapt to an evolving economic landscape. By leveraging local sourcing strategies and focusing on their unique seller bases, these platforms diminish the negative consequences of tariffs. While Etsy faces some challenges due to a decline in buyer activity, its strategic initiatives, such as the successful integration of Depop, offer a promising counterbalance. eBay, meanwhile, continues to benefit from its appeal to cost-conscious shoppers. As the tariff debate continues, both companies seem well-prepared to navigate the complexities of the market.
This balanced approach demonstrates that even in challenging times, thoughtful sourcing and agile market strategies can play a crucial role in sustaining business success.
