Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Fri Feb 5 2016 23:50:40

Company Calls on Yahoo to Acquire eBay

By: Ina Steiner

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Yahoo should acquire eBay, according to Valuentum. Yahoo is a troubled company right now, under pressure from Wall Street, and the investment research firm sent an open letter to Yahoo CEO Marissa Mayer to add its two cents to the pennies piling up.

It's an interesting idea, especially since eBay has had trouble getting exposure in Google search since 2014. The "content" and "community" of Yahoo could also be a good fit for the "commerce" of eBay. Yahoo could drive shoppers to eBay, and eBay could be a platform for Yahoo's ads. 

The idea of Yahoo acquiring eBay has been around for over a decade (along with other suggested pairings). In 2005, Sramana Mitra had suggested a Yahoo-eBay merger when she heard eBay was considering acquiring Skype (a move she correctly predicted would not work). 

The idea of a Yahoo-eBay merger came up again over the years, including in this 2007 article from ReadWrite.com in which it wrote, "eBay and Yahoo have little overlap in their core businesses, but I think they compliment (sic) each other well. eBay is primarly (sic) an ecommerce business, while Yahoo is an advertising business; a combined company would have a very diversified revenue stream." The publication also noted the fact that the two had a strong working relationship.

But a lot has changed since then. eBay no longer owns PayPal, ecommerce is not a priority for Mayer - and Yahoo may have too many problems of its own to handle such a move.

A reader who sent me a link to the letter said, "Perhaps this would lead to the fresh start eBay needs to reinvigorate its marketplace. No doubt, an acquisition by Yahoo would lead to a house cleaning of eBay's stuck in a rut management and provide the fresh management eBay needs to be resuscitated."

Putting aside whether the merger of Yahoo and eBay makes sense from an investment point of view, how do you think such a deal impact eBay from the seller's point of view? 

Does a Yahoo acquisition of a post-breakup eBay make sense in 2016? Can you think of a better merger than between Yahoo and eBay?




Comments (44) | Leave Comment | Permalink

Readers Comments

Perminate Link for Company Calls on Yahoo to Acquire eBay   Company Calls on Yahoo to Acquire eBay

by: alaska This user has validated their user name.

Sat Feb 6 01:28:01 2016

I think it's a great idea. I see no future for eBay because of the way it is currently being mismanaged. If Marissa can't turn it around, no one can.

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This user has validated their user name. by: toolguy

Sat Feb 6 02:42:00 2016

I think it would be a good move for both companies.

Yahoo needs this deal more then eBay does, eBay makes BIG profits and Yahoo does NOT.

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by: 1beck3 This user has validated their user name.

Sat Feb 6 03:06:05 2016

@alaska - Really? And what exactly do you think that Marissa has done with Yahoo that would make her the *only* person who could turn around eBay?

Is it that there's been almost no growth in Yahoo's main business(es) since she's been on board? Basically all the growth in stock value during her time can be directly attributed to the Alibaba stake they unloaded not long after it went public. Is it all the acquisitions she's made since taking over as CEO? None of those acquisitions have amounted to anything. Is it the recent defection of many excutives recently?

In some circles it has even been argued that her star was fading at Google b/c she was removed from search and reassigned to maps (many considered a demotion since search is *the* money driver for Google). And now there's whispers that Yahoo's board may be looking for a replacement.

Bottom line, I would love for you to explain *specifically* what would make Mayer such a great idea for eBay.

Perminate Link for Company Calls on Yahoo to Acquire eBay   Company Calls on Yahoo to Acquire eBay

by: Beth This user has validated their user name.

Sat Feb 6 05:45:30 2016

I disagree. If Mayer were such a star Yahoo would be in way better shape than it is.

Ebay needs to dump the IT team and start with a fresh search initiative. I'm a longtime buyer and seller and I can't find anything on there. So I order it from etsy or Amazon.

Personally as a seller, I've migrated almost all my  books for sale off ebay and I'm looking to migrate more stuff. I need sales, not free listings - if i had sales I could afford to pay for listings.

And I'm tired of the cheerleader crop talking about how wonderful Feb 17th will be. Sure some things will drop off but the new on-time metric for delivery is a nightmare. How exactly do I control the Post Office.. oh wait, I can find a magic wand on ebay right? Yeah probably not.  

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by: FeelingFroggy This user has validated their user name.

Sat Feb 6 08:06:34 2016

One losing company with useless leadership buying another useless company with useless leadership = A large losing company with useless leadership.

Nothing is going to help either company until those in control are fired and someone with at least half a brain takes over.

In the world of business this will never happen because these positions are fifedoms to be protected at all costs.

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by: Randy This user has validated their user name.

Sat Feb 6 10:38:56 2016

She's attractive, so yea, I'm on-board! LOL I would rather look at her than the current yahoo (pun intended) they have running this sinking eBay ship!  

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This user has validated their user name. by: toolguy

Sat Feb 6 10:39:31 2016

The way I see it, it would be eBay buying Yahoo NOT Yahoo buying eBay!

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This user has validated their user name. by: NiciArt
Web Site

Sat Feb 6 11:20:36 2016

All of these e-commerce sites could use some new management for sure, but Marissa seems to have a controversial record of not being able to bring Yahoo into green.

Why not choose someone with some real talent and understanding of e-commerce specific issues like Deena Varshavskaya of Wanelo. She could definitely shake up Ebay or Etsy in a good way

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by: JQ This user has validated their user name.

Sat Feb 6 11:28:20 2016

On the one hand, if this should happen, it might be a good thing for the eBay selling community, simply because ANY move likely to clean out eBay's current management would be embraced.

On the other hand, after eBay Yahoo might be the single worst run major technology company today. It might be a horse race between who gets shown the door first, Meyer or Wenig. Both present themselves as reforms who are turning around troubled companies but in reality neither has a record of actual accomplishment to stand upon. Their reputations are just PR driven mythologies.

I believe a much more likely way this story will play out is both Meyer and Wenig will be fired by the end of the year. Ebay will be acquired by Alibaba. Yahoo will be dismantled and sold for parts.

Perminate Link for Company Calls on Yahoo to Acquire eBay   Company Calls on Yahoo to Acquire eBay

This user has validated their user name. by: Ric

Sat Feb 6 12:35:03 2016

This proposed merger could possibly solve the problems of both companies.

Yahoo would acquire a business that generates profits, something Yahoo has found to be a pressure point it has yet to find relief for. Elimination of duplicate management created by a merger would serve to increase bottom line profits.

As others have said, Yahoo ads pushed through eBay might benefit Yahoo.

Management changes in an eBay takeover would be beneficial to sellers given the present eBay management team seems content to continue in much the same way the previous management conducted business.

eBay acquired by Yahoo would likely see improved search exposure.  Sure, there might be some pain for sellers as Yahoo would require some data structure changes, but the net result would be positive for sellers. eBay's recent data structure changes have been little more than busy work for sellers while realizing virtually zero improvement.

eBay's Cassini search engine took years and cost multi millions of dollars to build. Past and current eBay management has been reluctant to admit that it's implementation has resulted in a loss of marketplace momentum.

A Yahoo acquisition would free new management to dump Cassini and its many shortcomings without facing the wrath of questioning investors. Replacing Cassini with Yahoo search algorithms and a default search order of time ending soonest would likely reinvigorate transaction volume by eliminating the shortcomings of Best Match, no wild card functionality, and limited search strings.

While Yahoo might be initially criticized for taking on a company that is on a downward trajectory. However, the root causes of eBay's current down turn could be easily reversed and the fortunes of both companies improved in less time than one of JD's failed 3 year turn around plans took.

Perminate Link for Company Calls on Yahoo to Acquire eBay   Company Calls on Yahoo to Acquire eBay

This user has validated their user name. by: Rexford

Sat Feb 6 12:52:20 2016

I had to laugh at the comment "If Marissa Mayer can't turn it around no one can".  Seriously?

Micro-manager to the Nth degree over-hyped, too busy doing Vogue glamour shots and making appearances on the red carpet to be the kind of roll-up-your-sleeves CEO that eBay needs.  It appears that she is on her way out at Yahoo, the portal to no where. She's had three years to turn that internet sloth around....move on.

If you think she'd be a friend of the small sellers think again.  I'm not sure why anyone would suggest that a fledgling company purchase a fledgling company.  

Perminate Link for Company Calls on Yahoo to Acquire eBay   Company Calls on Yahoo to Acquire eBay

This user has validated their user name. by: Marie

Sat Feb 6 13:17:55 2016

@Beth

It is not an "on-time metric for delivery".  It is an on time shipping requirement.  There are three ways in which this new rule can be satisfied.

1.  Upload tracking is validated within your stated handling time.

OR

2.  The delivery scan happens and it shows you shipped within your stated handling time.

OR

3.  If there is no acceptance scan, when the buyer leaves FB, they check the box that says they received the item within the ETA on the listing.

Along with this, if you want to maintain your TRS status, your error rate can not exceed 3%.  

I'm not arguing for or against this new matrix.  I'm just stating how it works, nothing more.  It may work well for some and not so much for others.



Perminate Link for Company Calls on Yahoo to Acquire eBay   Company Calls on Yahoo to Acquire eBay

by: wjleitold This user has validated their user name.

Sat Feb 6 15:51:19 2016

Marissa Mayer has done little to turn around Yahoo's core business.  She has freed up some value by selling parts of the holdings in other ecommerce businesses.  But what is left of core Yahoo business is not worth much nor can it be made into much and so shareholders have been enchanted by a lovely princess but is that worth $300,000,000?  I think not and giving her further assets such as eBay to play with is throwing good money after bad.  Let's wind Yahoo up by selling it and ending this silly fairy tale of the Golden Princess waking the sleeping company.

Perminate Link for Company Calls on Yahoo to Acquire eBay   Company Calls on Yahoo to Acquire eBay

by: pace306 This user has validated their user name.

Sun Feb 7 09:24:21 2016

Yahoo passed on the auction business here in teh states (though it does very well in Japan) so why would it do better if it bought eBays broken down auction system here?

Yes, Cassini could/should be replaced with Yahoo search (at least its remotely organic) but how long would that whole senario last?

Unless Yahoo did an immediate 180 degree turn around on the treatment of sellers and spend BILLIONS in advertising (begging) people to give eBay 3.0 a try - it would break down quickly.

eBays entire business is based on fraud and back room deals. If anyone thinks eBay survives on the 20 cent listing fees and the $2 fvf on a used pair of jeans - you're OUT OF YOUR MIND.

eBay survives on back end deals - to manufactorers to hide listings, to distributors to let them list via a feed when eBay KNOWS FULL WELL they dont have the goods in stock, eBay does deal of the day with certain retailers (theres no way to "apply" to get into the program - you have to be chosen), and of course eBay does back end VERO deals with manufactorers as well.

eBay LONG AGO stopped being an ecommerce site. Sellingold jeans and tools is just the window dressing that they put on to fool people. eBay (when JD came on board) MONETIZED (thier words NOT mine) the entire business.

eBay shed its ecommerce beginnings in 2007 to become a marketing company. They like to make money of ads, they dont care about your old iPod.

eBay doesnt care about returns because it doesnt have to. If 1000 sellers leave - all you need is one good advertiser in their place to pick up the slack. "Not that hard to get" when you (lie) tell people about your "massive traffic and eyeballs".

Would a Yahoo stoop to those types of low business practices?

I dont see how this would work. Marissa is hanging on by a thread, I doubt shed try this hair brained scheme.

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This user has validated their user name. by: eXtinctBay

Sun Feb 7 09:30:29 2016

BABA is patiently waiting for the stock price of both of these floundering companies to hit bottom, and grab them for a bargain basement price.

If eBay search is not at least partially fixed soon, the company will not be worth anything to Wall Street. Blocked and hidden listings cannot be making anyone money.

It happened to the once mighty Wonder Bread / Hostess Cake. Years of mismanagement caused the company to shut their doors (at least temporarily). Many parallels can be drawn between the two.

Perminate Link for Company Calls on Yahoo to Acquire eBay   Company Calls on Yahoo to Acquire eBay

This user has validated their user name. by: Al G

Sun Feb 7 10:19:16 2016

Personally, I feel that mega-mergers for the most part are futile efforts to revive mediocre companies at best. (Exceptions Burlington Northern/Santa Fe, Union Pacific/Southern Pacific).
Don't forget the Silicon Valley mentality; it has to look good on paper, but it depends on who is writing the copy.

In reality, the deals are structured to benefit the people making the deal, i.e. investment bankers, and the top echelons of the corporations merging via golden parachutes. The stockholders generally get a bump in their share prices, but then reality will set in & usually there are major corrections afterward.

The real losers are the company employees who will face sacking due to ''new efficiencies'' due  the merger. Overworked customer service reps will have their productivity improved to compensate for the 10-15% layoffs with the merger. Ditto for the IT programmers who will face a 6-12 month new learning curve.

Most of the middle managers will be in ''gotta make my bones mode'' with the new company so THEY don't get sacked, and so the personnel under them will be made miserable with their fear driven efforts to look good.

Naturally, the real estate division is affected by reducing the office space footprint. Buildings will be closed, and the local economy immediately outside will be depressed, less gas sales, the local lunch joint, the bars after work, the other merchants will feel that result.

When you have two hurting companies grabbing for the same life preserver (merger), more than likely you just slow the drowning process down a bit. The Carpathia never arrives in time in this scenario.

That is not to say the scenarios above are not going to happen if the merger is rejected, but less people will be hurt in the process without dragging in the financial ghouls and consultants.

The other thing is to ask the philosophical questions: ''is eBay maxed out?''; Can, or should it grow?; How can it grow?.  

Perminate Link for Company Calls on Yahoo to Acquire eBay   Company Calls on Yahoo to Acquire eBay

This user has validated their user name. by: toolguy

Sun Feb 7 11:11:02 2016

You guys crack me up!

You act like eBay is going out of business or not making money.

THEY MADE ALMOST $2 BILLION in profit for 2015 & those aren't peanuts. . .

Perminate Link for Company Calls on Yahoo to Acquire eBay   Company Calls on Yahoo to Acquire eBay

by: mcposty This user has validated their user name.

Sun Feb 7 12:26:46 2016

I think google would be the better buyer of ebay. With google pay, goofme ads and google presence, google could make ebay freaking awesome.

Perminate Link for Company Calls on Yahoo to Acquire eBay   Company Calls on Yahoo to Acquire eBay

This user has validated their user name. by: Rexford

Sun Feb 7 14:33:05 2016

Toolguy interpreting financial reports again?  Can you say fuzzy math?

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by: pace306 This user has validated their user name.

Sun Feb 7 14:44:17 2016

TOOLguy - what ever money they DID make - wasnt from 20 cent listing fees and FVFs on old books. That ship (since AL G is using nautical references) the Titanic/Britanic/Republic/Andrea Dorea sailed ALONG time ago.

I think an apt comparison though would be Studebaker and Packard - but Im open to suggestions.

TOOL - by the time all teh perks have been given out at the board meetings, the 30 THOUSAND plus salaries have been paid, the taxes, and everything else - theres little to NOTHING left.

eBay isnt going out of business ... YET.

But if you dont think that between Amazon, Jet and Walmart - that they arent hurting - you're crazier then a loon.

Why havent they advertised in AGES? Why are their sellers leaving? Why cant their stock ever crack $30 a share? Where were they at the last 4 CES shows? Why does the industry IGNORE them?

Its not about the $2 billion - not at all. If they would just actually listen to someone besides the old mutt GRIFF OR hire SOMEONE (anyone? my goldfish?) who has an ecommerce background - it would be $20 million.

As the "Anti-Amazon" (selling on Amazon is certainly no cakewalk) they could rule the industry, but they prefer to simply sit back and suck their sellers dry, have ZERO plans going forward except doom and gloom (read their 10k filing) and ride it out.

Ridding it out never gets you ANYWHERE.

At this point in time,  though eBay is an easy target, almost all of us "in the business" in one way or another have "moved on".

Whatever sales we get(or dont get), we get and thats it.

NO ONE here is posting with the hope that eBay will ACTUALLY change - it wont. They dont want to, and it shows. DW's talk about reconnecting with sellers was window dressing - food for the morons who actually buy eBay stock, nothing more.

Im still on eBay (and why shouldnt I be?). Ive been here since 1998, Ive weathered all their BS, and I still have %100 feedback - but its as worthless as a speech from Hillary Clinton.

In this case, 2 halves DO NOT make a whole.

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