EBay Uses Pay-by-Bank to Reach New Gen Z Consumers

As eBay looks to reach Generation Z and millennials, the online marketplace is turning to pay-by-bank to meet younger customers’ eCommerce expectations.

On a call with analysts Wednesday (July 31) discussing the company’s second-quarter earnings results, CEO Jamie Iannone said the company’s integration of Venmo payments has yielded positive results.

“Venmo’s mobile-first checkout experiences and strong adoption among Gen Z and millennial audiences are particularly appealing as we continue to broaden our reach in younger demographics,” Iannone said. “The early results of this partnership are encouraging as a significant portion of our [gross merchandise volume (GMV)] from Venmo is coming from new or reactivated buyers.”

PYMNTS Intelligence’s report “Tracking the Digital Payments Takeover: Consumer Familiarity Controls Account-to-Account Payment Growth” revealed that younger consumers are considerably more likely to use pay-by-bank. The study’s survey of more than 3,300 United States consumers found that 11% of the sample overall had used pay-by-bank for online purchases in the previous three months, and that share rose to 19% for Gen Z and millennial consumers.

Pinching Pennies

Iannone highlighted the increasing demand for refurbished items. eBay’s “eBay refurbished” program, which includes partnerships with well-known original equipment manufacturers (OEMs) like Dyson and Seagate, has resonated strongly with consumers. The expansion of this program to new categories, such as golf clubs, underscores shoppers’ growing desire for cost-effective alternatives to new products.

“We’ve seen some shifts in consumer spend driven by the macro environment as cost-conscious consumers are increasingly searching for value,” Iannone said during the call. “… I announced last quarter that … 40% of our products are used or refurbished, and those goods have consistently outpaced the sales of brand-new goods since the pandemic.”

Many consumers look for cheaper ways to get the retail products they want or need. The PYMNTS Intelligence report “Why One-Third of High Earners Live Paycheck to Paycheck,” revealed that as of January, half of consumers reported having switched to cheaper retail merchants in the previous year. Plus, 45% of low-income shoppers (those who earn less than $50,000 annually), 41% of middle-income (those who earn $50,000 to $100,000 annually), and 28% of high-income shoppers said they had traded down on product quality.

Putting on the Ritz

The luxury segment on eBay has seen positive year-over-year GMV growth for six consecutive quarters, driven by acquisitions and the opening of new authentication centers. This has led to an expansion of luxury handbag inventory and an increase in cross-border demand.

EBay’s Authenticity Guarantee Program, which now includes optional authentication for luxury handbags priced between $200 and $500, shows that consumers are willing to invest in pre-owned luxury items when assured of their authenticity. The program has authenticated over 10 million items, further indicating that trust and value are paramount to shoppers.

The cultural relevance of eBay’s luxury offerings was highlighted through various high-profile partnerships and events, such as La La Anthony’s showcase at the Met Gala and the platform’s sponsorship of the McLaren Formula 1 team. These initiatives not only boost brand visibility but also position eBay as a destination for luxury and pre-loved fashion, appealing to a sophisticated and value-conscious consumer base.

The Generative AI Boost

EBay uses artificial intelligence and machine learning to meet consumers’ expectations for personalized and seamless shopping experiences. The introduction of AI-powered features like “Shop the Look” and “Explore” in the United Kingdom market exemplifies this trend. These tools provide tailored fashion recommendations based on users’ sizes, styles and previous purchases, enhancing the shopping journey and driving engagement.

Additionally, eBay’s “magical listing” initiative aims to simplify the selling process, making it easier for users to list items quickly and efficiently. By using generative AI to create detailed product descriptions and optimize imagery, eBay addresses a friction point for sellers, ultimately improving the overall marketplace experience.

As eBay continues to innovate and adapt, the integration of pay-by-bank positions the marketplace to attract and retain Gen Z consumers. By aligning its payment options with the preferences of younger demographics, eBay is not only enhancing the user experience but also tapping into a growing segment of cost-conscious and digitally savvy shoppers. Combined with its focus on refurbished goods, luxury items and AI-driven personalization, eBay is positioned to meet the evolving demands of today’s value-seeking consumers, ensuring its relevance and competitiveness in the dynamic eCommerce landscape.

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