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Chanel handbags, it seems, are making Australian shoppers “feel good”, despite consumer confidence taking a hit from rising interest rates and inflation.
The boss of Australian operations at eBay, David Ramadge, has a unique view into the spending habits and interests of consumers across the country. And while Australians are being showered with messages about tough economic times, he says some product categories are showing “pockets of resilience” – like second-hand designer goods.
Managing director of eBay Australia and New Zealand, David Ramadge. Credit:Wolter Peeters
“Luxury handbags you would possibly think would be hit by a tough economic environment, but we’re seeing very strong growth in people wanting that little piece of luxury. A Chanel bag kind of makes them feel good,” he says.
Data from the online retail marketplace, which has 11 million unique visitors every month, also reveals strong demand for several other categories. Consumers are still chasing car parts online, while trading cards and designer sneakers are having a resurgence.
Around the time lettuce hit $6 a head as food inflation started to bite, sales of lettuce seeds on the platform were up by 200 per cent.
Ebay, which is listed on the Nasdaq with a market capitalisation of $US28 billion ($40.2 billion), has long occupied a unique space in Australia’s online shopping landscape. It’s an early pioneer of e-commerce but doesn’t sell a thing. Instead, the platform exists to help sellers from across the world match products with passionate buyers.
Founded in 1995, the platform has weathered the dot-com bubble bursting, the global financial crisis and coronavirus pandemic. Despite indications that consumer spending is slowing across the world, eBay’s second quarter earnings released last week beat expectations, largely thanks to a cohort of collectors and luxury goods enthusiasts buying goods through the site.
Revenue dropped by 9 per cent for the quarter to $US2.4 billion, but the company had forecast slowing spending and the result was better than the market had expected.
Chief executive Jamie Iannone said the company was in a stronger position that it had been before the pandemic. Shares are up 9 per cent for the month.
Over the past few years, the business has been investing in tools for collectors and consumers of luxury goods, including authenticity guarantees for shoes and handbags.
EBay recently launched a collectables storage facility called eBay Vault, which lets users store products such as trading cards in a climate-controlled and secured warehouse from which they can sell their goods through the eBay platform.
Ramadge has been with eBay Australia for five years, having stepped into the role of senior director of product and shipping after a decade working in Silicon Valley.
He agrees there is plenty of “doom and gloom” in discussions about rising interest rates and inflation, but says now is the time for a company such as eBay to leverage what it does best.
“You can sell and free up some cash if you’ve got stuff around the house,” he said.
“And it’s still a place for you to go and get those nice luxuries, those nice hobby items that can keep you happy even through a tough economic time.”
Australia is a small slice of eBay’s total business, but documents filed with the corporate regulator show the company has increased profit in the face of COVID lockdowns across the country.
The retail giant’s local operations made a $13.6 million profit in 2021, up by 47 per cent on 2020.
Australian retail spending has maintained momentum but is expected to slow in coming months. Credit:Edwina Pickles
At the start of lockdowns in 2020, the platform had a surge in customers logging on to sell used goods for the first time. Ramadge says that trend is happening again now that many households are staring down rising mortgage payments.
It’s four months until the festive shopping season begins, and with early signs that spending is slowing, there are no expectations it will be as strong as previous years.
“I think that the macro environment means it will be a challenging shopping season,” Ramadge said.
“The fact that everyone’s out and about combined with the tighter economic environment means it’ll be a little more challenging this year, that’s for sure.”
But there’s hope that the current conditions will help spur Australians’ passion for the “circular economy”, where second-hand items change hands instead of shoppers going to big department stores for gifts.
This trend plays to eBay’s strengths.
“We’re seeing a lot of activity and interest in buying and selling pre-loved items, especially from younger consumers, like Gen Z, and in areas like fashion,” Ramadge said.
“So I think there are some trends within categories, where you’ll see enormously strong year-over-year growth.”
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