eBay (NASDAQ:EBAY) is working on a major upgrade to its search engine to boost sales by improving search results for consumers so that buyers searching for items to buy on its platform get more relevant results. The new search engine will be launched in 2013, and will offer better search results by searching through full product descriptions, use image search algorithms and take into account seller and buyer information for more relevant results. 
The new search algorithm will also factor in past purchase histories, and try to gauge customer intent to offer personalized results. Since eBay’s online marketplace has a lot of unstructured data about the products available on sale by various sellers, as compared to Amazon which has mostly structured data about its products, it is a tough problem to crack.
Any significant improvement in search quality would directly impact the listings-to-sales conversion rate, resulting in an increase in its revenue from Marketplaces. You can check out the impact of any such increase on eBay’s overall value using this chart:
We currently have a $48 Trefis price estimate for eBay, which stands nearly 20% above its market price. Marketplaces accounts for the majority of its overall value. eBay competes primarily with Amazon (NASDAQ:AMZN) in the e-commerce space.Notes: