The Checkout Line
Mars won the battle a long time ago. Not any of the Roman mythology ones, it won the checkout line. Any checkout line. Loading lumber? Grab a Snickers while you're at it. You're picking up pork chops? Milky Way is there in your way at checkout. Shopping for summer fits? Surely you could fit in a Three Musketeers. Shoppers buy most candy impulsively.
The unlock for Mars and for whatever markets stocked Mars' candy was a captive audience: customers waiting in line to check out. Customers already buying something are primed to also buy something else. Checkout displays help them do that.
Physical limits put some constraints on in-store checkout displays. Candy bars are something that just fits there. Digital storefronts don't have the same limits. Companies enjoy much more latitude to experiment.
One-click checkout
Since losing ecommerce to Amazon, eBay has been on a soul-searching walkabout to find its identity. It began as a "anyone can buy or sell anything" digital marketplace. Digital battle lines shifted. Amazon won the battle to sell most new stuff. Craigslist and Facebook Marketplace put up stiff competition for used goods. eBay's been working to reinvent itself serving specialty storefronts: handbags, sneakers, watches, trading cards, car parts.
What do handbags and car parts have in common?
eBay's sellers had all the stuff that shoppers might buy. It needed reliable, active shopping traffic. Each of these categories support active second-hand economies — exactly the thing where eBay started. They're all collector or enthusiast-driven where many participants both buy and sell regularly and trust is a premium feature. They're not shopping for deals or convenience first, they're shopping for scarcity. eBay has built a suite of services to support those categories — including making sure that a Rolex is a Rolex — that make it really easy for buyers and sellers to be active.
Just like for candy bars, activity unlocks more activity.
Those buyers and sellers can also buy other stuff on eBay not in those categories. And they do. Just like our DIYer grabbing a snickers at the hardware store, eBayers will spend more on the site than just for their sneakers or handbag. If eBayers buy a $500 pair of sneakers, they're likely to spend $500 on other stuff too. They're not limited to candy bars. It can, like Amazon et. al., put up whatever else shoppers are most likely to buy. This has kept eBay's line moving even as the platform sheds traffic.
Wait, the site is shrinking? That seems bad…
eBay has been losing traffic to the rest of the internet. 174 million people shopped on the site in 2019. Customers dropped to 134 million by March 2025. eBay's sells the most in the US, Germany and the UK. The UK and Germany have faced challenging economic conditions. Flagging overall traffic, shaky markets and much flashier ecommerce alternatives kept investors and its share price at bay.
Impulse sales
Negative headlines buried the "focused category" lede. Investors stayed unimpressed by eBay's success in sneakers, handbags, watches, trading cards and car parts. Since 2021, those categories have grown about 13% per year. eBayers active in those markets now make up a third of the site's activity. Amazon and Craigslist aren't coming in to steal them. It's driven by collector and enthusiast activity for specialty stuff that's much harder to buy or sell just anywhere. Collectors don't want to list their loved Rolex Submariner next to someone's used $4 Timex Ironman.
In this market, eBay is still the biggest. It's been able to deliver more value to its marketplace, bringing together buyers and sellers and focusing on trust. It's also been able to keep some of that value for itself. It earned $2.41 per share in cash in 2019. In 2024, it earned $3.90, an expansion of 10% per year.
The headline traffic loss and stagnant overall volume continue to weigh on shares. Investors haven't completely woken up to eBay’s success growing collector and enthusiast platforms and its improving economics. The wedge between these offers investors the chance to pick up shares at an enticing price.
Disclaimer: None of this is investment advice. It's meant to illustrate ways LCM thinks about investing. Things that LCM decides are good investments for LCM and its clients are based on many criteria, not all of which are covered here. Some or all of LCM's ideas may not be suitable for other investors. LCM does not recommend investing either long or short any position mentioned. LCM may own positions in some of the companies mentioned. Some of its ideas will lose money — investing entails risk. See full disclaimer here.