The e-retailer heads into the holiday shopping season behind a 30% increase in fulfillment spending and a widening net loss. North American sales increased ...
Or did criminals cause slower growth for the online marketplace instead of Google’s search formula update? Then again, maybe Google punished eBay, experts say.
First a cyberattack and then a Google Inc. search demotion: May 2014 is a month that eBay Inc. likely wants to forget.
According to several experts, the online marketplace’s sales declined in the wake of the May 21 announcement that a database storing 145 million encrypted passwords and other “non-financial data” was the target of a cyberattack between late February and early March. That same week, Google released an update of its search algorithm that represented a further effort by Google to reward high-quality web sites with better rankings in organic search results. Though Google says Panda 4.0, as the update is called, affects about 7.5% of English-language searches, the change could have impacted up to 80.0% of eBay pages, estimates Scot Wingo, CEO of ChannelAdvisor Corp., which helps retailers sell on marketplaces operated by eBay, Amazon.com Inc. and other companies.
In general, Google considers poor-quality web content as consisting of some form of spam, such as packing pages full of keywords or invisible text—keywords hidden in the background of a web site where search engines, but not regular web site visitors, can see them. These techniques are used purely to boost a web site’s rankings in search results instead of making the site more relevant for consumers, and Google for years has sought to counter these tactics.
EBay did not respond to requests for comment, and Google gave no specific details about why eBay’s search traffic dropped as much as 33.0% after the Panda 4.0 update, according to an estimate from search engine optimization services provider Searchmetrics GmbH. One theory has Google manually punishing eBay for what Wingo describes as “eBay's SEO strategies pushing the envelope.” Google will typically punish e-retailers that try to game its search governance.
Analysts who follow eBay are still trying to assess the effect of the Google update. “Our initial checks with larger [eBay] sellers suggested little to no impact from Panda changes,” says Colin Sebastian, an e-commerce analyst for investment firm Robert W. Baird & Co. “However, a Google action could have disproportionately impacted smaller sellers.”
Sebastian says that while eBay experienced “strong (mid-teens) growth” in early May, that pace dropped to “single digits” in the last half of the month. Wingo says that same-store sales on eBay for ChannelAdvisor clients grew 11.5% year over year in May, down from 14.0% year-over-year growth in April. EBay’s auction sales dropped 11.1% year over year in May while fixed-price sales increased 13.0%.
After the data breach, eBay’s same-store sales decreased 5.4% between May 22 and May 31. By comparison, Amazon sales fell 3.3% during that period, ChannelAdvisor says. “Our conclusion is that there does seem to be an impact on the eBay business from Panda [and the] breach,” Wingo says. “It's impossible to know if it was Panda- or breach-related or how long it will last.”
At least one search expert reports no significant harm to e-retailers from the Panda update. “For our retail clients, we have seen positive gains since this was announced, with no significant deviations across industry or product category,” says Tyson Braun, associate director of search for digital marketing agency Resolution Media. “In general, we take these increases in exposure as affirmation from Google that what they’re producing and promoting is being well received by searchers.”