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Next on the eBay Chopping Block: Enterprise, Magento

In true management-consultant style, former Bainie John Donhoe is chopping up the company he attempted to turn around after he inherited it from Meg Whitman in 2008. Last year, the eBay CEO capitulated to Carl Icahn’s demands that he separate PayPal and eBay, and now he’s further breaking up the company by putting eBay Enterprise on the chopping block – including Magento.

When eBay acquired GSI Commerce in 2011 for $2.4 billion, it was in part a vehicle to encourage large retailers to accept PayPal. It was subsequently rebranded eBay Enterprise. This 2013 EcommerceBytes articleexplained how Donahoe saw the acquisition as a way to turn the eBay brand from its “flea market” image to a more sexy, enterprise retail image.

“It’s impossible to understate the importance of eBay’s acquisition of GSI Commerce 2 years ago – mostly for the access GSI gave eBay to large retailers and brands, but also the impact on eBay’s corporate psyche,” we wrote. “In 2009, it was pursuing the unsexy secondary market (a $500 billion opportunity), but by 2013, it sees itself as a partner to large retailers and brands to help them with their omnichannel challenges (a $10 trillion opportunity).”

Now, eBay is going back to its 2009 strategy, focusing on shoppers who are looking for value and prioritizing areas such as “eBay Deals.”

One might wonder whether eBay management is gutting the Marketplaces business, or if it is shedding distractions to focus on the core ecommerce business.

As we note in another news story today, the layoffs are weighted toward eBay Marketplaces rather than PayPal. In addition, management already said it is leaving eBay Marketplaces with $7.5 billion in debt while PayPal will be debt-free after the split. It also revealed on Wednesday it would be giving eBay Marketplaces $2 billion and PayPal $5 billion in net cash when the companies split.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.