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EBay Inc. has been a resilient internet pioneer and also a confounding one. Now a new leader will have to solve the riddle.
The company announced that Devin Wenig, the chief executive officer since 2015, had stepped down. The company’s chief financial officer, a longtime EBay employee, was named interim CEO while the company hunts for a permanent successor. Ebay shares dipped nearly 2% on the news.
EBay is an oddball of the internet economy. It’s both a success with more than $90 billion in merchandise and event tickets sold each year, and it has vast unfilled potential. In the US, EBay’s market share of online shopping is second only to Amazon.com Inc., although it is a distant No. 2. Its classified websites are popular in several countries, and the company generates most of its revenue outside its home country.
But while online retailing is a naturally growing sector as people shop more from their sofas and smartphones, EBay has stopped growing. The dollar value of transactions on its main shopping businesses started to shrink this year.
EBay’s central problem won’t be easy to solve by a new CEO. People who shop on EBay tend to love it, but a swath of online shoppers never think about EBay at all. This conundrum has vexed several administrations of EBay leaders. And across the industry, changing consumer habits are turning retail shopping upside down, and EBay hasn’t successfully capitalized on emerging niches or trends. Online shopping insurgents such as Etsy Inc. in handmade goods, Goat in sneakers and streetwear and the RealReal Inc. in consignment, have encroached on what should be EBay’s natural turf.
EBay has made deliberate and pragmatic choices not to chase hot e-commerce trends or low-margin areas such as groceries and instead focus on its strengths: its loyal customers, global reach and a business model with better economics and less risk than many online retailers. The approach is sensible, but EBay has been missing opportunities as online shopping reshapes the $20 trillion in annual global retail spending. Investors had lost faith in the company’s approach. It’s not clear a new CEO will have fresh solutions to what EBay should be. It seems more likely now that EBay will ditch some of its assets.
EBay is a test of whether Elliott can help steer a tricky operational challenge, not just nag for a stock-boosting rearrangement of deck chairs. No matter what, EBay’s decision to change CEOs shows that the company’s sensible approach to e-commerce isn’t working, and it’s time to take greater risks to capitalise on changing shopping habits.
—Bloomberg