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The “activist” investors sent another letter to ebay, expressing disappointment with ebay’s slow progress and failure (so far) to commit to the sale of the Classifieds business.
http://www.starboardvalue.com/wp-content/uploads/Starboard_Value_LP_Letter_to_EBAY_CEO_and_Board_02.04.2020.pdf
For us as small sellers of mostly used stuff, this was the most interesting paragraph:
We also believe eBay should return to its roots in targeting its historical core buyer universe of
“self-expressionists and treasure hunters”, who are seeking unique, hard-to-find, or value-oriented
items. In addition, we believe there is untapped market opportunity in bringing the eBay platform
to existing marketplaces that have historically not utilized an online platform to drive commerce.
We believe that these are areas in which eBay can find success as an online marketplace. This
focus should also enable eBay to increase its assortment from product areas that have historically
had higher take rates and continue de-emphasizing the lower quality GMV that eBay focused on
as it began emphasizing its assortment of new, in-season merchandise over the previous few years. -
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Jay,
Yeah, the idea is sound, but the devil, as always, is in the details….HOW does ebay do this?And, I have to wonder: are they envisioning an ebay dedicated to only used, vintage etc? AND , if successful, would that make it an attractive takeover target for someone like Amazon or WalMart, to provide them with merchandise they don’t otherwise have?
It’s going to be an interesting year for ebay….
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As an armchair CEO, I see it as pretty simple. Make the vintage, flea market business the “face” of eBay. Ride the wave of young people wanting second hand items. Ride the wave of young people “hustling” by selling used items. Then they have money made on eBay that they can spend on eBay.
But once in the door, keep all the new stuff that people will buy. The flea market stuff is the fun, interesting, exciting stuff. All the new commodity items are the stuff people can buy anywhere. But once you get them in the door, then they’ll hopefully buy everything else they need.
We still buy stuff on Amazon, but we buy a lot of new items on eBay just because we have money in our paypal account.
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I also wish they had provided more detail around this: “we believe there is untapped market opportunity in bringing the eBay platform
to existing marketplaces that have historically not utilized an online platform to drive commerce.”What “existing marketplaces” do they have in mind? Antique malls, flea markets, etc? Or something entirely different? I’m not sure.
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That is an intriguing statement. I think either they mean a category of goods or services, some kind of niche that is not yet readily available online (is there anything like that anymore?) or a different physical marketplace, like newspapers. But newspapers are online.
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Wall Street Journal article:
New York Stock Exchange owner Intercontinental Exchange Inc. has made a takeover offer for eBay Inc. that could value the sprawling online marketplace at more than $30 billion, according to people familiar with the matter.
Intercontinental Exchange, known as ICE, has approached eBay in the past and did so again recently, the people said. The companies aren’t currently in formal talks and there is no guarantee eBay would agree to a deal.
Should there be one, it would be big, given eBay’s market value of more than $28 billion and the premium ICE would likely have to pay.
ICE is primarily interested in owning eBay’s core marketplace business, the people said, and not its classified unit, which eBay has been considering selling. The classified unit could fetch around $10 billion in a sale, people familiar with the matter have said.
ICE may see an opening to apply its technological expertise connecting buyers and sellers to eBay’s core e-commerce site covering everything from electronics to collectibles.
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Marketwatch on the stock market’s response to the offer:
Shares of eBay Inc. EBAY, +7.39% shot up 9.5% in afternoon trading, after The Wall Street Journal reported that New York Stock Exchange-parent Intercontinental Exchange Inc. ICE, -4.90% has approached the e-commerce company multiple times regarding a takeover. Citing people familiar with the matter, the WSJ report said ICE has made an offer to eBay that could value the company at more than $30 billion. The stock’s rally on Tuesday has lifted eBay’s market capitalization to $31.15 billion. The companies are currently in formal talks, and there is no guarantee eBay would agree to a deal, the WSJ report said. EBay’s rally comes just two days after the stock closed at a one-year low. Earlier Tuesday, activist investor Starboard Value said eBay was “deeply undervalued,” and urged the company to separate its Classifieds business in an effort to boost shareholder value. The stock has now gained 7.5% over the past 12 months, while the S&P 500 SPX, +1.68% has advanced 21.3%.
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Hopefully they arent just planning to buy an undervalued company, sell off the valuable pieces, load it with huge debt, and profit.
eBay is still a consistently profitable company.
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If ICE is into the trying-to-beat-Amazon game (“lower quality GMV”), we’re doomed. Hopefully they are thinking more like Starboard Value; that the real value enhancer is better execution of the vintage business, which eBay could certainly use.
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ICE appears to be out of the picture…sounds like they had made some informal inquiries at ebay, those had not met with a positive response, and it doesn’t sound like it ever went further than that. So I’d guess ICE is out of the picture , but , of course, Starboard is still in it.
Retro, I think the hardest thing for ebay right now is to accept that , while they were one of the big boys in the online new merchandise market, they haven’t been able to sustain that, in part because they weren’t and aren’t prepared to invest the gazillions they’d need to really compete on shipping time, free shipping, free returns etc. Amazon has spent tons of money on warehouses, trucks, vans, aircraft, ships….WalMart has tons of B&M locations and warehouses…and all of them have actual produtc catalogs and inventory control. ebay never made the kind of real commitment it needed, instead, it has always tried to compete on the cheap, which worked for a number of years in the early days, but no longer works. Absent something drastic, ebay will just keep losing market share. They have spent too many years focusing on new stuff, while neglecting the old stuff.
As you say, they should OWN the used market today, but they let it slip through their fingers. The question is, can they reclaim it? Or is it already too late?
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