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eBay Inc (NASDAQ:EBAY) Takes on Amazon With New Turnaround Strategy

eBay (EBAY)

eBay Inc (NASDAQ:EBAY) has of late struggled to grow its revenues after its split from PayPal, but the good news is that the company has launched a turnaround strategy. During the Goldman Sachs Technology and Media Conference held in San Francisco a week ago, eBay’s Chief Executive Officer Devin Wenig announced plans to shift its mindset from being an open marketplace, to viewing itself as a retailer or a merchandiser.

eBay earnings

eBay, which separated from PayPal in 2015, has been struggling to boost sales and keep investors happy. However, compared with other prolific ecommerce sites such as Amazon and Alibaba, it has found it difficult to draw in online customers.

This is evident in statistics as compiled by ChannelAdvisor: eBay reported that sales rose 4.8 percent during the holiday season, compared with the industry average of 13.3 percent.

All is not lost, however, since the company saw the number of active users on its site increase 5 percent to 162 million the fourth quarter last year. It sold goods valued at $21.9bn in the quarter, up from $21.8bn

Time to Steady the Ship..

eBay marketplace, which mostly deals in auctions of difficult-to-find products and antiques, used cars and clothing, has modeled its strategy over the past five years on sale of new products such as car parts and electronics for a fixed price.

However, Mr. Wenig wants to change all that.

“We’re changing from an unstructured to highly structured marketplace,” disclosed Wenig. “The brilliance of eBay’s model is its greatest challenge. It’s a friction free marketplace, which means sellers can sell anything they want, and that makes it complicated.”

A closer look at the revival plan shows that eBay is oiling itself to challenge Amazon.com, Inc (NASDAQ:AMZN). Some of the changes it wants to include are improving its platform’s search feature to enable finding items much more structured. Rather than list all items available when a particular product is search, users will have the option of categories such as “brand new”, “best value” among other choices. This narrows down their search and provides them with wider choices.

eBay is also set to avail more product reviews to customers to improve their shopping experience, besides adding more data and tools for sellers to grow their sales.

eBay is also concentrating on boosting its ranking on Google’s search engine. The company, in the words of Wenig, wants to “bring more stability in search results”.  The company saw its search engine listings tank in 2014 and 2015 as Google effected new search algorithms.

The Google changes saw it lost an estimated $200m in sales, as traffic dropped due to poor visibility on Google search engine.

However, the company has no plans to take on Amazon on logistics and shipping. This means it will continue partnering with Uber Rush for deliveries rather than establish its own distribution network.

 

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Lindsay Taylor

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