eBay Inc. (NASDAQ:EBAY) Citi Global Technology Conference September 4, 2014 9:30 AM ET
Executives
Devin Wenig - President, eBay Marketplaces
Analysts
Mark May - Citi
Mark May - Citi
I'm Mark May. I'm the Internet analyst at Citi. It's my pleasure to host the eBay today at our conference. One of the things that eBay does that we really appreciate is giving us access to great executives that are in the trenches running the business day to-day and so appreciate Tracey and the team in Investor Relations for giving us access to Devin Wenig, who runs the eBay Global Marketplaces for eBay. So appreciate you doing this.
Devin Wenig
Pleasure to be here. Thank you.
Mark May - Citi
Thanks. So I think that some of us in the audience that maybe have not had a chance to meet you before. So maybe if you wouldn't mind just starting us off, little bit background about yourself, what your role is, and kind of what are your key priorities that you are working on right now?
Devin Wenig
Sure. I have been at eBay for three years. I run Marketplaces. Marketplaces is basically the eBay part of eBay. It's all the eCommerce businesses, eBay StubHub, eBay Classifieds, in essence there is eCommerce and payments and I run that eCommerce part of eBay. Before that I was Chief Executive of the Financial and Media businesses of Thomson Reuters. So it's been an interesting three years in Silicon Valley.
I tried to do a couple of things; I put a priority on growing the user base. I put a priority on globalizing the business. And I put a priority on trying to really quickly evolve the product line so that the eBay that's in people's mind of this auction and used goods consumer sold business is really not the reality of our business any more. It is largely an end-to-end eCommerce business, new goods over 70%, highly engaged and much more approachable user experience. And really that's in the march over the last three years.
Mark May - Citi
If you were to use the baseball analogy, where do you think you are innings wise in terms of changing user perception around what eBay Marketplaces stands for?
Devin Wenig
I think in eCommerce here, you are in is you're perennially – everybody is perennially stuck in the first innings because that's such a rapidly evolving industry. But, I think if you look at the acceleration in our user base, I think we have made a fair bit of progress. I do think there is still a consumer perception gap. I think that the eBay that's perceived is different than the eBay that is. And we are going to take some steps beginning this fall to try to close that gap down by stepping up our brand efforts. So that will start this fall.
I hadn’t wanted to do that until I was confident that the product and customer experience was ready. I don't like going out and screaming about your business if it's not ready for prime time. I now think the product and business is ready to begin to close the perception gap.
Mark May - Citi
Okay.
Devin Wenig
I want people to come to eBay because I think they will be surprised positively by what they see. So we will start some of that effort this fall.
Mark May - Citi
In the last quarter, there was talk about stepping up marketing spend in the context there was more around I think reengaging users after what happened earlier in the year, is it – talk to us a little bit more about what you are doing there specifically, how are you going about trying to reengage people? And maybe is that different from the branding that you just talked about?
Devin Wenig
It's different. When we have the data breach for those who don't know, we required 150 million customers to reset their passwords, which is not a simple thing for an eCommerce company to do. But, to keep our flywheel turning, we engaged in a lot of tactical marketing, couponing, promotions, things like that. And we continue to grow through that period. It obviously created a divot, and we are still seeing a bit of a headwind from that data issue.
But, we have stepped up the marketing and you saw that in the second quarter margin, we spent a lot more on things like Internet marketing and similar. That to me is tactical and necessary to get through the event of the summer. But, what comes starting in October to me is more strategic. It's something we likely would have done irrespective of the issue we had over the summer. And I think that is really about to your question closing the consumer gap to what eBay is today which is much more of an end-to-end eCommerce business.
Mark May - Citi
On the password reset, for a business that's been around as long as eBay, you have some users that have had passwords and email recovery for a very long time.
Devin Wenig
Yes.
Mark May - Citi
Is getting through this is simple as kind of marketing and getting people comfortable with the safety and security were, or there is some technical issues around how long you have been around and kind of the – what happens…
Devin Wenig
It's a great question. It’s not a complicated technical problem, but it is a complicated user muscle-memory problem. So the good news is, we are – users representing over 87% of trailing GMV have now gone through the flow, they are through it. But still, there are 300,000 people a day who are going through that password flow. So we are not done. There is still a bit of a headwind.
We have seen very, very few account closures, so that to me is a good sign that we haven't permanently damaged the business through the brand. We have seen less than a quarter of 1% and a lot of that was just in the couple of weeks after closer account. So this hasn't really dented our user base.
But, exactly to your question, there are 300,000 people a day still going through. And even for those that have, the used case as you pointed out is exactly correct, which is there are group of people that may have an eBay password for 10 years. And now they have a new one and they forget it. And they are going through again.
So in some of our biggest countries we have seen, 14% of the user base go through more than one. So every day this gets a little bit better, but we are not done yet. And as we said in our second quarter earnings, we think it will be till the end of the year that this headwind goes away.
Mark May - Citi
And shifting back to more of an offensive branding – brand marketing, what were – now looking back what are some of the things that you really want to check the box on before you feel comfortable that you could start to do this?
Devin Wenig
I'm very proud of the product and the mobile experience now. I think people that don't eBay say oh, yes, I know what eBay is, then they go to our site, where they go to our mobile app and they are very surprised. It's a simpler experience. It's a more engaging experience. And we've hired some of the top product executives in the world who have been working on this over the last few years might see product officer came from Apple, he has a team from Apple and Google and the products are making a lot of progress. And the selection that sits in those products has also evolved very quickly over the last few years.
So when I bring people to my site or my mobile apps, I feel really good that I could turn that person into a user and that's whey we have seen accelerating user growth throughout the three years. We have seen really healthy mid-teens user growth which to me really is the most important metric of the health of an Internet business. I think you got to grow your user base. And we have grown it pretty quickly. So to me, it was the product experience. Now, that the product experience is ready for prime time, I think we can talk about that story more frequently.
Mark May - Citi
Another element of the user experience is not just UI and search and personalization and selection, but also the seller experience and maybe sure the seller service levels are where you need them to be. What were some of the things that you have done to make sure that customers get a good experience on that side as well?
Devin Wenig
Make it easier to list, make it easier to sell, make our policy simpler and there will be more turns of that coming. We have grown the seller base just as we have grown the consumer base over the last three years. A lot of our emphasis has been retail and brand. We brought over 140 big retailers or big brands into the eBay marketplace in the first half. And I think again, if you are familiar with the eBay story, you know that's been an expansion of our business. But, if you are not you say that's interesting, I can buy from Best Buy or Target or hundreds of others.
What I point to as a really good example of where we are going is, just a month ago we launched something called a Fashion Designer Collective and we have now got 30, 35 of the world's best fashion brands selling in essence in our mall. And it's a really nice beautiful branded experience and you got the world's top fashion brand selling on eBay, I think even that would open some eyes. But that certainly is the direction. We know our consumer base likes choice. We know they like everything from our long tail of 600 million items for sale all the way up to the world's top brand. And that's the direction where we are moving in.
Mark May - Citi
And I want to open it up to the audience for questions; maybe I will ask one more on brand marketing, notoriously difficult to measure…
Devin Wenig
Yes.
Mark May - Citi
But, I know eBay is very much around measurements, so how are you thinking about and approaching and measuring the effectiveness of that?
Devin Wenig
It's a great question. And we are ruthless about measuring return on everything we invest in. And it's important why we haven't historically done brand marketing because the company is very skeptical on marketing. It is a really interesting culture where if we can prove it, we don't like it. And we are very – we are very careful with our marketing dollars. With this brand campaign, we will do it – we think we are going to do some very innovative thing. We have got a team that is absolutely world-class that is devising this so that we can measure – we will turn it on and some DMAs will turn it off and others that wouldn't be everywhere at once, we will measure very carefully.
And brand to me doesn't mean television, it means a combination of all the touch points in which you touch a consumer and we will measure that holistically. So we won't deviate from being tough on ourselves. We haven’t started to read our own press and just going to spread the word around ad hoc. We are going to be really careful about the way we do it.
Mark May - Citi
So maybe if you could raise your hand, if you have a question out there? One right over here?
Question-and-Answer Session
Unidentified Analyst
Great thanks. Obviously there has been a lot of stuff in the press really about your relationship with PayPal and PayPal's longevity in the business or, it seems like last year or beginning this year, your company made a pretty conservative effort to squash any speculation that PayPal and Marketplace will be two separate businesses. And recently some of that has cropped up again, so the message from the company seems to be that nothing has changed from the beginning of this year. Can you just set the records straight as to, have anything actually changed and also just from your perspective, how critical is PayPal being part of eBay to your business?
Devin Wenig
I don't think anything has changed. I think the message has been consistent that we have a great independent Board and they said consistently they will be open and objective about the best way to create shareholder value.
That message started in January when there was a proxy issue and I think we have been very consistent in saying that and it's the Board's duty and I think they absolutely embraced our obligation to look seriously at the best way to create value.
What we have said is, right now the best way to create value is that it's one company. And just speaking from an operating perspective there is no doubt that PayPal helps eBay. I speak for the eBay side of the house. And whether that's sharing PayPal's data to make risk and fraud management better; whether that’s approaching merchant jointly, so that we cross sell that we bring PayPal merchants into sell on eBay and vice versa, or whether that's technology cooperation. Right now, we are in the process of rolling out a very innovative integrated checkout experience in Germany that was the result of a year work of a combined PayPal eBay team.
Could that stuff happen, if PayPal wasn't part of eBay? I'm not sure, may be. But, if certainly operationally easier and in the advantage to eBay to have PayPal's part of the same company. I would imagine, the PayPal side would say the same about eBay being a tremendous flywheel for user acquisition for PayPal. But again, coming back to the message, our Board will consistently and objectively look at the best way to create value.
Mark May - Citi
Any other questions?
Unidentified Analyst
Hi. Good morning, Devin.
Devin Wenig
Hi. Good morning.
Unidentified Analyst
When look post-2014, so you'll get to a steady state for the Marketplace business, 60% of the GMV is outside the United States. Can you talk about the market share opportunities you have in your key markets U.K., Germany, Korea, Australia, Italy?
Devin Wenig
I will talk about that. But, I'd say I'm even more excited about what's happening outside of those markets. Because eCommerce is exploding right now in India, eCommerce is obviously the probably Alibaba investors in here exploding in China. eCommerce is growing rapidly across Latin America and Eastern Europe. So in my first month, we created a global expansion group. And we are about to launch a domestic selling business in Russia. We just localized our sites in Spanish and Portuguese to the Latin America market and we have seen acceleration of that business almost instantly when we did that.
I'm sure there would be a question about China, I will park that for right now. I'm sure I'm going to get plenty of those.
But, so when I look at the kind of next wave, emerging market, these are all markets where there is a rapidly accepting – rapid acceptance of technology in fact of them like India are skipping an entire desktop generation and moving straight to the smartphone. eCommerce growth rates are north of 100% in almost every markets that I just mentioned. And the eBay brand is strong in those markets. So I'm very encouraged by that.
If I look at the more traditional, the more core markets where eBay has a meaningful business today some of which you mentioned. It's a similar story. We are riding a wave of eCommerce, those with more mature markets; we obviously have very high market shares in countries like the U.K. and Germany. But, there is absolutely a lot of runway left in those markets because I don't think the line between offline and online commerce is a meaningful line any more those two are blurred. And I look at this just as a commerce opportunity not an eCommerce opportunity.
And when you look at it that way, the opportunity is $10 trillion retail opportunity. So we see a lot of runway. We are certainly going to protect and hopefully grow our traditional outside the United States core Western European countries. But, I think they will be even a more rapid growth in some of the emerging economies.
Mark May - Citi
Maybe before we take – I'll ask you a question on pricing.
Devin Wenig
Yes.
Mark May - Citi
The Marketplaces business you had a history of kind of optimizing listing in final sell pricing.
Devin Wenig
Yes.
Mark May - Citi
More recently we have had some pricing changes at StubHub, I wonder if you could talk to us about where you are in terms of the pricing and are you still – those are kind of more to come, there is StubHub, the beginning of kind of additional pricing optimization?
Devin Wenig
Yes. So for the core marketplace for the eBay business, if you look at it in the aggregate, pricing actually hasn't changed that much. If you look over 18 months our take rate, our price basically which is our pricing over the entire marketplace has been very level over that 18-month period. Now that masks changes underneath, we changed the incentives on sellers all the time. And we do that to raise the bar as consumer standard adapt, we changed the incentive structure to get our sellers to follow that consumer trend.
So an example would be to get top-rated seller status which is an additional discount to our sellers, you have to ship quicker; you have to offer better service. That's the way a marketplace controls the customer experience without actually controlling the inventory. So we change incentives every year, and that tends to redistribute take rate amongst different sellers, it redistributes the way we make money inside the marketplace, but the aggregate really hasn't changed.
StubHub, it has changed. So we are doing a series of pricing test in StubHub. We are the market leader in secondary ticket market. And that market is evolving. We traditionally had a very nice take rate and a very nice margin in that business. We want to protect that market share. We think there is a nice global runway in the ticket business. But we are doing a series of pricing test and there is very little doubt that StubHub take rate is likely to come down over this year and next year as we preserve that market share.
Mark May - Citi
Okay. Thanks. Question over here?
Unidentified Analyst
Just back on the branding issue. So as you brought in sort of the bigger brands and created these mall concepts, why have you chosen to sort of do that with under the eBay brand as opposed to sort of creating a new brand? I mean I understand there is an asset that there you want to leverage, but at the same time, it seems like you risk sort of clarity of message to the consumer.
Devin Wenig
We haven't seen that. We test that question quite a bit. Everything we do we end up testing and the hardest part of eCommerce is demand. There are 1000 new eCommerce sites that have sprung up in the last few years; very few of them actually have demand. Some of them have great selection. But, they don't have buyers on the other side. eBay is the number 28th brand in the world. And we have gotten 150 million active buyers and growing. So for us when we turn that river of buyers at something it tends to work. And we have proven that time and time again, and the data proves that out.
So when we bring these in, we did – we thought about whether eBay is one business or two, could eBay be a consumer used good sold option site and in essence retail mall. And we have even done tests on that and every time we bring the business together under the eBay brand, it wins. So we are very confident that the right path is to evolve the eBay brand rather than to split the eBay brand.
Mark May - Citi
I think over there, okay.
Unidentified Analyst
What are you experiencing in U.S. user growth in the demographic of under age 35, if it’s not double digits, what are you doing about it to grow that demographic?
Devin Wenig
Yes. It has been double digits and it's been double digits for the last three years. And one of the reasons it's been and I think a big contributing factor to our user growth is mobile. So we embrace mobile very early with the world's leader in mobile eCommerce, last year we did $22 billion in sales on mobile devices and overwhelmingly mobile skews to a younger demographic. It's very interesting to see how the age segment split based on the app, the tablet and then the desktop.
And certainly a lot of the older demographic is still on the desktop and a lot of the new users are being acquired through the mobile app. And we see that not just in the United States but around the world. So interestingly, mobile tends to acquire users that are younger and it is pending too for us to acquire more women than men, which is interesting because historically eBay has been it had a high – a much higher share of men than women shopping in the Marketplace.
So it's on the back of that if we have done things like the Fashion Collective that I spoke about as we acquire more women that tend to shop in those categories more. So it is double-digit and we hope to continue that trend because mobile to me using your analogy is still in the first inning.
Mark May - Citi
Devin, speaking of mobile commerce and particularly women shoppers, we had Zulily here at the conference and they are doing quite well in both of those categories, I wonder what your view is around event-based commerce, deal-based commerce, which would seem to be fitting quite well?
Devin Wenig
It does. And we quietly have one of the largest field businesses now in the world. We haven't – it's a good example for the question before, is eBay one brand or not. We start – we added deals the type that you are speaking about – about two years ago, we started doing deals, we do it a little bit different than Zulily, I think they are doing a nice job. But, we do deals particularly in electronics and other categories and we have got a really active seller base participating in that.
Two and half years ago, we did zero dollars in deal with GMV, revenue whatever you want to call it. And this year will come close to $1 billion. So we are close to $1 billion business just in deal from a standing stock two years ago. And we think there is a lot more runway there as well.
Mark May - Citi
And what do you think about this Tuesday morning kind of – reborn model of event based selling, is that something that really helps to drive serendipity and demand generation or…
Devin Wenig
It could – we are – whether or not that's right for our customers, I'm not sure, I think, different people do it, different businesses do it differently. For us, we are experimenting and testing a number of different things. We are doing some deals on the mobile device family. And we are doing some deals that are – we are starting to separate deals, I think one of the things we haven't spoken about is data, something that I’m very passionate about. It's really endemic in the eBay culture.
I think that data is the sustainable advantage of an eCommerce business in the long run. And we are using our data more and more now to personalize the eBay experience. And Dealz is a good example of that. So when we started a year ago, we just spread deals out across the Marketplace and we hope somebody would buy that thing.
We are now beginning to do highly personalized deal, so we may have 15 or 20 deals running at a single time. But you are only getting one because we know that you have a preponderance of shopping in electronics. And you don't shop fashions, so I'm not going to show you a fashion deal.
And for me that ends up being the next wave of how we grow both the deal business than the core marketplace. It's a much more personal and a much higher touch experience. The next wave of test that we are about to rollout is even the eBay homepage. If you go to the eBay homepage today to the point about it being more engaging, it's a very different experience. It's curated. We have collections. We are telling stories. We are selling groups of items. That's been really successful. We are seeing engagements go up quite a bit on our homepage.
Starting, I think October or November many people are going to see a different eBay homepage, based on what we know about you. You maybe a young shopper; you maybe a fashion shopper; you maybe an electronic shopper, the type of collections., the type of groups of things we are going to show you are going to be different than we show somebody else. So this to me is a natural evolution of just – when you are the world's biggest store, which we are – we have 600 million items for sale taking that down making it approachable and personal is an absolutely key part of our future growth.
Mark May - Citi
Any other ways that you can leverage or are you leveraging data, one thing that comes to mind is like marketing services, we are sure that you are thinking about?
Devin Wenig
I saw a lot of press about what Amazon is doing. And actually we have been doing similar for over two years which is, we have the large advertising business on eBay and was beginning to take that business off of eBay. We are using our data to make that available to advertisers for purposes of retargeting off the eBay Marketplace and that's a business that's small but now growing pretty quickly.
And you are absolutely right that data has a lot of value not just in personalizing the eBay experience but in using it to target half of the core platform.
Mark May - Citi
Maybe pause and see if there are any other questions?
Devin Wenig
I'm shocked I haven't had a China question here.
Mark May - Citi
The pressure is on.
Devin Wenig
There is no Ali investors?
Unidentified Analyst
Sorry, just one China question. Could you give us an update on platform level enhancements such as Cassini? Cassini, two years ago that was an emerging story and that seem to sort of form the way side a bit. Can you help us understand, where you are in Cassini deployment in delivering the benefits you anticipated, is there more to come from that platform overall or we currently realizing the full benefit for it today?
Devin Wenig
It's fully deployed. But the user experience changes are constantly being made. So I would definitely – I think it's a decade worth of improvement, we definitely not done. So the platform is deployed, it's taking a 100% of eBay searches which are over 250 million to 300 million a day. So it's a very robust platform. It's performed in terms of that up to exactly what we have had been expecting.
In terms of the end user benefits, I would say we are at the beginning of optimizing that for the benefits in the Marketplace. I think early on when there were search changes, let's say three years ago, there was the expectation that this might be an infinite exponential curve and that's not – there was a lot of low hanging fruit and now that curve is flattened out.
It's not as easy to constantly deliver those win. But we still are delivering win like just last week we made a change to a search algorithm and it created lift across our European business. So we are – this will be an ongoing evolution but the platform is in place and some of the core functionality that we discussed at the time like the outsearch technology only search the eBay headline, Cassini now searches the body of the entire listing that's now fully in place.
Mark May - Citi
Over here?
Unidentified Analyst
Okay. That there was a previous question about the take rate, I'm going to ask that question, a little bit differently. You have increased your incentives and response to the data breach and the competitive issues than the U.S. market. When can we expect to see a stabilization in the U.S. take rate?
Devin Wenig
It depends on how you define the take rate, if you mean our fees and pricing they haven’t changed. And they are not going to change. What we have done is, we have done things like short-term incentives. We have done couponing. We have increased contra-revenue in response to make sure the demand kept running through that data breach incident. That isn't permanent; we are going to get back to historical levels there, that's not a permanent thing. So that tends to show up through the revenue line but that's different than we changed our pricing. We haven't changed our price.
Unidentified Analyst
...of that or the suspension of that couponing and other incentive?
Devin Wenig
We never suspended but I suspect we will get back to historical levels towards the beginning of the year. I think we are watching it very carefully. And we have gotten our hand on that dial against what we see in terms of the user reengagement post the data breach. And as I said, I think it's getting a little bit better everyday, but it's going to take a few more months to get through it and once we are through it, we will get back to historical levels.
Unidentified Analyst
Thank you.
Devin Wenig
Yes.
Mark May - Citi
You seem to want a China question, so I will go ahead and I will ask…
Devin Wenig
I don't want a China question. I'm just surprised that there hasn't been one.
Mark May - Citi
I will go ahead and go there. One of things that's interesting I guess, one of the key differences, correct me if I'm wrong around China and the U.S. is marketplace business model much more prevalent. And larger share of the overall eCommerce market seems like in China versus the U.S. So maybe you talk a little bit about how you are – it's very competitive market as well. How are you competing in that market and how are you differentiating your offering?
Devin Wenig
I think there are going to be inevitable comparisons to the Alibaba as they go on their road show and become public. And I think it's going to be an interesting couple of years. What people forget is that we are by – we have a very, very large China business, in fact, the world's largest in China export. So our business is exporting tens of thousands of Chinese merchants around the world and we have a great demand flywheel, not just in the United States, but across Asia and Western Europe. And that business is having one of its best years ever, this year.
So that demand flywheel that export business continues to turn. We have very little domestic business and that Ali's business is really a domestic Chinese business. I suspect over the next few years all of the big eCommerce players, all three of them are going to continue to globalize. So we certainly have designed to take our business and our export business into domestic China. There is a long history of eBay failing in that market, but we're not done trying. China is too big and too important for us to, say, we're going to pass on that. It hasn't been an early priority other emerging markets have, but what I'd say is, stay tuned. It's definitely part of our plan to be relevant in China over the next, let's say, three to five years.
Mark May - Citi
And as you go back to the whiteboard, kind of, how will it look differently from the one that you really cleaned up?
Devin Wenig
Well, it's a different landscape now. There are other potential partnerships; there are other potential ways that we might enter that market. I don't really want to say more about it right now than that. But as some of those players globalize and come to the United States and Europe, we'll probably take our business into markets like China. So I suspect everybody will be globalizing. But people say, “Well, you don't have a China business.” We actually have the world's largest China business, the China export.
Mark May - Citi
And on the sort of differential around the market, the rule of the marketplace in these different markets, it feels like that we're also seeing the marketplace business model being adopted more and more here in the U.S. Obviously, Amazon and even some of the traditional multi-channel retailers, their online businesses are adopting more marketplaces. Are you seeing a step-up in competition in that market for sellers and for traffic as well?
Devin Wenig
It's definitely a more competitive market. I guess there are a couple of things. One is, we believe in the marketplace model. We think its great business model. It is fantastic for selection advantages. It's fantastic for creating a flywheel and we've been added for 17 years. So we're pretty good at it. The second – so as marketplace model rises, we really like that. That's a trend that we want to ride in the United States and in Europe to the point that maybe it will come up to the level that it's come up in Asia.
It's also hard to do and it's hard to get scale. And starting a marketplace and getting ones to scale are two very, very different things. So there is no retailer that's created a marketplace that's gotten scale in their marketplace or even close to it. In fact, really when you count real scale, there are only three marketplaces in history that have gotten to scale. So creating one and making them relevant really great creating network effects and a flywheel are two very, very different things. That said, it is a more competitive market. People are trying. And why not, it's a $10 trillion opportunity. We're not going to have the field to ourselves.
Mark May - Citi
Let me see if there are any questions.
Unidentified Analyst
If you look at your new user cohort, how does that compare to your old new user cohort on marketplace maybe by different geographies a little bit as well?
Devin Wenig
On what dimension? On engagement, on buying on --?
Unidentified Analyst
Engagement, sorry.
Devin Wenig
On engagement higher and on buying value lower. So on engagement defined as how often they come to eBay and spend time on eBay significantly higher. On how much are they buying and what at least so far is the – what we call CLV, whole life value of that consumer lower. And that makes sense, particularly as you look at a lower – a younger demographic that's coming in through mobile. They don't spend as much as a 45-year-old who has been on the desktop for 10 years. But I still believe in that. I think that's our future and I – our job is to grow with them. As their income grows, as they grow, we want to grow our share of their wallet over time.
But you've seen user growth. When I started three years ago, GMV growth a year before was about 6% and user growth was about 4%. And to me that's unhealthy. That means I want to – it was really important to me to grow the user growth faster than GMV. To me, that's a health indicator. Now you've seen user growth in the mid-teens, which at least recently has outstripped GMV growth. And the reason for that is exactly the dynamic I just mentioned, which is new users are engaged, but they don't yet spend as much as our historical users. Pretty consistent. Pretty consistent.
Mark May - Citi
We have a question back here.
Unidentified Analyst
Hey, Devin. My question is around users -- my question is on user spending activity before and after the breach. I want understand if users who have reset their passwords, they're spending more or less than they did before the breach. Another analyst commented that management had made remarks to investors that they're finding that users who have reset their passwords are actually spending less. Now, I wanted to confirm whether or not that is the case? And if so, why do you think that is?
Devin Wenig
Not the case that we've seen, particularly for the core user base, that's not the case. Now, I distinguish friction that happens from a reset process from once they are through, then how much they are spending. What we've seen for our core users is once they're through and maybe some of them have gone through twice, they're spending patterns are back to where they were. We haven't seen very much difference at all. And that to me again is why I'm not worried that we've done permanent brand damage, but I'm clear that we're not through with the headwind.
I think we've got a couple quarters more of a decreasing, but still a drag. But it isn't because customers that have gone through and now are stable or spending less. It's because we still have a scale of users that haven't gone through because not everybody comes back to eBay at one time. That's how come we still have 300,000 people a day that are doing it.
Mark May - Citi
We have a question in the back here.
Unidentified Analyst
Yes, the users that are not getting through the process and/or you're losing as a result of the password change. Are they low value uses who just haven't been engaged for a while and things like forgot their hints and all that kind of stuff so what you're losing – what's really the value of those customers that aren't making it through the process?
Devin Wenig
Well, I don't like to lose any users, but we haven't lost very many. The total number of account closures that's been less than one quarter of 1%. And that was almost all in the three weeks after the breach was announced. So we're not seeing any meaningful account closures any more, it's less than a trickle. But that's a different question and as everybody come and gone through that flow, they don't because not everybody comes back at the same time. And in particular, we'll see more of this process as we get to the holiday because a lot of people shop online more frequently during the holiday season. So I suspect that we'll see that number go up just because more users visit eBay during the holiday.
Mark May - Citi
Question up here.
Unidentified Analyst
Thank you. And speaking of holiday, last year the crush with the delivery service at holiday was a mess sort of around the industry. And just wondering, if you could share any thoughts on how – I know an eBay user, if they promise something for Christmas, expects to get it.
Devin Wenig
Yes. We, like Amazon and a bunch of other players to some extent, rely for the last mile on carriers and on the U.S. Post Office and on carriers around the world. So hopefully, they are in meetings right now, planning their holiday season and they are ready and locked and loaded to execute. I won't hold my breath on that. But what I'd say is that, in part, the incentives that we put in place, right now eBay customers are getting packages faster and cheaper than they ever have. In fact, over 50%, I think, this again is eye opening to people. Over 50% of all sold items in the United States are shipped free.
And again, when we talk about brand perception, that's a gap that we want to close. When we look at Amazon Prime and a $129 for two-day free shipping eBay is free and over 50% of everything we sell is now shipped free in our U.S. marketplace. And the time distance in which an average user gets their package has come down every year for the last three years. So overall, with so much depending on private and public carriers and infrastructure, but for the part that we control, we feel great about the experience that customers get, will get on shipping and fulfillment.
Unidentified Analyst
Thanks.
Mark May - Citi
I think that we've run out of time now. But I'd like to appreciate – thanks, Devin and IR team at eBay and thanks for participating.
Devin Wenig
Thanks Mark. My pleasure.
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