eBay’s Turnaround Plan : Will This Revive Growth ?
At a recent investor conference, eBay (NASDAQ:EBAY) CEO Devin Wenig shared his vision of how the company intends be a differentiator with its marketplace business. A million small businesses on offering their unique inventory via the eBay platform where buyers can sample simplified product views and pages with an increased ability to compare data. ((eBay Pivots Away from Big Retail, CEO Tells Wall Street, eCommerce Bytes, February 11, 2016)) The company’s stock price has been under pressure over the past year as it cedes market position to other players, in particular the faster growing Amazon. Management now seems to have a plan in place that will allow eBay to regain a competitive edge. The company plans to create a unique and rich offering by going after boutiques and handmade crafters offering buyers a diverse set of inventory. It also plans to make its platform simpler and more effective for both buyers and sellers. We believe a diverse offering from boutique sellers should help eBay to distinguish itself from other e-commerce players. Moreover, the implementation of changes to its platform will be key to attracting new buyers and sellers alike.
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Focus on eBay’s Uniqueness
As the company enriches its offering through partnerships with boutiques and artisans, it is also working on improving its marketplace platform. With its structured data initiative the company has been able to leverage features such as product reviews and pricing data, enabling price trending and comparisons. It plans to improve product discoverability on its platform by improved product listing and encouraging sellers to create product pages. While speaking at the Goldman Sachs Technology and Media Conference, eBay’s CEO David Wenig stated that the company will be on the lookout for acquisitions in 2016, as it works towards its strategy after its separation from Pay Pal. [1] Key strategic acquisitions which provide a competitive edge to eBay could drive long term growth in the company. It is looking to sharpen focus on what is unique to eBay and we believe this will be the key growth driver for the company. As part of its turnaround initiatives, the company plans to give buyers more choice, more data to facilitate better comparisons and provide sellers with more effective tools, better service and fairer policies to enhance their eBay businesses, incentivising them to provide their best inventory and competitive prices on its platform.
We expect eBay’s active users to grow at a healthy rate from 175 million in 2016 to around 225 million by the end of our forecast period.
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Following its separation from Pay-Pal, eBay’s focus appears to be on its core areas and developing a unique identity for itself. We believe an improved and differentiated offering will be key for eBay’s turnaround in 2016. Better enabled sellers with better merchandise should attract increasing numbers of interested buyers, who together could very well accelerate the company’s growth.
Notes:- Ref1 [↩]