eBay and Etsy recently released their Q1 2025 earnings reports. They reported a small positive revenue growth, even among continued tariff headwinds. eBay’s Chief Financial Officer, Steve Priest, reported that the company’s gross merchandise volume (GMV) reached $18.8 billion, while revenue grew over 1% to $2.58 billion. Both companies met the unexpected obstacles of the tariffs with bold action. They knew their competitors—companies such as Shein and Temu—were increasing prices as costs were going up, making a move necessary.
Unlike its wholesale-focused competitors, eBay’s sellers mainly source products locally, frequently providing a robust selection of used, vintage and handmade goods. This local sourcing strategy is one that eBay has executed well, allowing it to create a competitive distinction with much larger competitors. Moreover, China is responsible for under 10% of eBay’s total business. Priest noted, “We have observed healthy volume trends due to strength in our focus categories and what could be a modest pull forward of demand from consumers worried about increased costs and complexity at U.S. customs in the near future.”
Etsy—under the leadership of CEO Josh Silverman—has as large a share of sellers who source their supplies domestically. Nearly 90% of Etsy’s sellers are independent artisans working from their kitchen tables. Etsy has enjoyed this local supply chain, which helps provide defense against the impact of tariffs. None the less, it appears to be a bit more exposed than eBay. Silverman stated, “Most are solo entrepreneurs working from their home with 90% sourcing their supplies domestically.”
Etsy is well-positioned to weather tariffs. Only around 1% of its gross merchandise sales originate from imports purchased from merchants based completely in China. Lanny Baker emphasized this point, saying, “At present, Etsy’s direct tariff exposure appears to be relatively low given that just over 1% of [gross merchandise sales] comes from U.S. imports of items purchased from sellers in China.”
These positives are somewhat masked by the fact that eBay’s unique, habitual buyers fell by -11%, now at 6.2 million total buyers. This double-edged sword makes the prospect of future sales growth look bleak, as consumer habits continue to change. Competing against these external pressures, both companies are upbeat about their ability to adjust and change. Silverman expressed confidence in Etsy’s resilience: “Etsy has a strong track record of navigating turbulent macroeconomic conditions, and we’re confident in our ability to keep adapting.”
In my view, eBay and Etsy’s local sourcing focus means they are able to avoid some of the highest risks associated with tariffs. Both companies are busy adapting to the changing fortunes of the new competitive landscape. They are using their unique competitive advantages to hold off the competition.