Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Tue Jan 22 2019 11:25:52

Activist Investor Eviscerates eBay Management

By: Ina Steiner

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eBay has problems, and one of its largest shareholders outlined them in a scathing letter to eBay's Board today. Activist investor Elliott Management pulled no punches about what it thinks of eBay CEO Devin Wenig's team's performance. It outlined major shortcomings and crafted a plan to right the ship.

We outlined some of the highlights of the letter we felt would be of particular interest to sellers in today's Newsflash article (there's a lot more to digest in the letter linked to in the article). Elliott Management pointed to technical issues plaguing the eBay site, a lack of focus on the part of the company, and the "alarming" turnover among eBay's leadership team. 

eBay responded to the attack with the following statement:

"The eBay Board and leadership team regularly engage with our shareholders and value their input. We are focused on delivering value for our shareholders, customers and employees by driving the best choice, the most relevance and the most powerful selling platform to deliver growth. Accordingly, we appreciate Elliott's recognition of the strength and power of eBay's business and will carefully review and evaluate Elliott's proposals. We look forward to the opportunity to engage with Elliott, as we do with all shareholders."

As we noted in the article, even a former eBay senior executive acknowledged the plight of the company, calling eBay "the next AOL > Yahoo! of tech giants." Wow. 

The last time eBay was targeted by an activist investor, it didn't go well. Take a look at Elliott Management's proposals and let us know if you think this spells good news or bad news for sellers.



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Readers Comments

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by: sasikat9 This user has validated their user name.

Tue Jan 22 11:57:06 2019

So this so called activist company did an ebay core survey of 10000 buyers and 700 sellers over the world. HA HA HA out of how many millions use Greedbay. We these people hand picked. Just another useless survey that gives no real factual results. Seem thousands of them before. To be a true survey everyone should have the right to be part of it. Buyers think sellers are out to scam them all the time and sellers think buyers are whiners. So why only a few thousand were surveyed.

TOO MUCH HOT AIR FROM THIS ORGANIZATION.

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by: vintagegoodness This user has validated their user name.

Tue Jan 22 11:58:59 2019

I'm reading the entire letter they published and just came across this quote that seems especially telling - it sounds to me like they are making recommendations to make eBay more attractive to be SOLD OFF. "As e-commerce penetration accelerates, it is clear that eBay’s unique buyer, seller and geographic breadth make Marketplace a highly attractive acquisition target for both financial and strategic buyers. Particularly if separated from Classifieds and StubHub, a smaller, pure-play Marketplace would provide a unique and financially compelling opportunity for an acquirer to immediately establish a leading e-commerce foothold in many of the world’s largest markets."

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by: ebayout This user has validated their user name.

Tue Jan 22 12:27:49 2019

Stockholders at $44 got shafted. The $33 group is currently signing up.

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by: ebayout This user has validated their user name.

Tue Jan 22 13:37:42 2019

Is this the end of disruptive innovation? We hardly knew ye.

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by: maxmad This user has validated their user name.

Tue Jan 22 14:13:36 2019

Current management have Destroyed ebay, no one else

Ebay has been at war with their customers Since the Hoe, and has continued to this very day, survey the real customers (SELLERS) they are the ones who bring products to ebay, they are the ones who pay the bills, they are the ones who serve the buyers, and they are the future of ebay, not buyers,



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by: Michael in BC This user has validated their user name.

Tue Jan 22 14:18:00 2019

Read through the whole letter and found a few comments interesting...under "Effective Leadership and Oversight" ...'worth considering whether the Board as currently constituted is best equipped to maximize the probability of success'.  I read "worth considering" as a polite way of saying the current Board is not so "best equipped".  Also the comment "...opportunity to attract any necessary top-flight talent ...to ensure execution success and...instill confidence"..I read as "let's dump the current lot and take on folks who know what they're doing", which at least sounds good.

Under "Cost of Net Revenue", there's  a comment "...reducing layers within the customer and support divisions ...indexing more towards lower-cost locations ....to enhance customer experience"...which is a bit vague........does it mean that CSRs in "lower cost locations" (like the Philippines, India etc) will now all be untrained "supervisors" instead of just untrained "script readers", as a means of reducing layers ?  Can't see this enhancing the "customer experience".  Nothing in the letter about TRAINING the front line CSR levels, which would actually enhance the "customer experience".

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This user has validated their user name. by: NoMoreEbay

Tue Jan 22 14:21:22 2019

An excerpt from the letter. "...and move beyond it's history of "inefficient organizational structure, wasteful spending and a misallocation of resources.""

Wenig and his inexperienced band of buzz-word financial planners should have been fired years ago. Worst CEO to date.

The best thing that can happen now is a takeover by Alibaba or swallowed up by ebay's idol, Amazon.

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This user has validated their user name. by: Rexford

Tue Jan 22 14:32:03 2019

eBay's response "the most relevance"

Are you referring to Amazon eBay?

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by: abfab This user has validated their user name.

Tue Jan 22 14:56:08 2019

I read the letter 2x. This would have been a perfect opportunity for the board member to suggest a separate Arm be created for vintage, collectibles, etc. which to me has always been their CORE. Particularly when the author mentioned his mother selling jewelry on eBay (not sure if new or used, but he did mention it).

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This user has validated their user name. by: CanBrit

Tue Jan 22 15:04:35 2019

Holy smokes......45 Million shares moved so far today. Crickey

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This user has validated their user name. by: Number 6

Tue Jan 22 15:10:34 2019

..."the "alarming" turnover among eBay's leadership team."

The words

rats

sinking

&

ship

...spring to mind.

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This user has validated their user name. by: iheartjacksparrow

Tue Jan 22 15:24:03 2019

I wish this letter had done more to point the finger at Wenig, and JD before him, as the prime reasons eBay has been steadily going down the drain.  

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This user has validated their user name. by: NoMoreEbay

Tue Jan 22 15:51:06 2019

And yet...this caused ebay's stock to go up, currently up 6%. It was up 10% in pre.

Maybe investors think this is the beginning of a well-deserved takeover and that ebay will finally be run by competent people. Only 2.98% shorted. Strange. Personally, I wouldn't go near this dog.  

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

Tue Jan 22 15:56:25 2019

This is a very pro-seller set of suggested initiatives (demands).

Shy of a one-in-a-billion chance of Pierre pulling an ''Elon'' and trying to shore-up eBay to take private, Ebay sellers should be excited at the prospect of what this very effective hedge fund is attempting to do with eBay.

1. Focus on growing and strengthening the core business marketplace (eBay.com)

2. Divest Stubhub and other properties sucking time, personnel and spend from marketplace focus

3. Fix bloated organization starting with the board & C-team (calling Wenig out by name would only have reduced the damning assessment of his failed leadership)

4. Get the right leadership and business processes in to fix the execution missteps and glitchy, bug-ridden platform

5. Make sure eBay.com’s marketplace is reliable is paramount to success. Wenig has unfortunately shown that no matter how ''pissed off'' he is about incessant bugs and glitches, he's impotent to effect the desired changes (and swapping a CTO in and out of his job twice in the last year while shuffling other product and tech leaders is not a leading indicator of a strong strategic plan).

6. AI and machine learning is neato stuff, but lay off all the phony press releases over gimmicky useless crap to your core users.

7. Shore up the BOD to ensure there exists C-suite accountability to results!

It is time for Wenig to pack it up and leave on his jet-plane to sip mimosas in the Hamptons full-time.

The report could not have been more damning of Wenig's failed leadership as CEO if it *had* called him out by name.

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This user has validated their user name. by: Ric

Tue Jan 22 17:01:17 2019

There is enough technical financial speak in that letter to keep even the most informed financial wizards busy for longer than necessary.

IF eBay is to be fixed it needs to address the basics.  The last two CEO's and the majority of C Level management  had zero eCommerce experience and that goes a long way to explain the plethora of shortcomings that have stunted eBay's growth and eviscerated it's reputation.

eBay has led sellers with a carrot and stick approach,.  However, as management has continued to fail, they make the stick longer and the carrot smaller.

First and foremost, search must be fixed:

  a) Best Match as the default search must be ended.  

  b) Relevancy algorithms must be fine tuned so that peripheral items that are not relevant to a buyers exact search term are totally eliminated so that....

  b) 100% of all currently active relevant items are returned in search, not just those cherry picked listings that eBay decides to surface for one reason or another. Buyers must be able to view the full range of choices available, and sellers must have confidence that the listings they pay for are being presented to buyers 24/7 for the duration of the listing time frame.

  c) This also means that eBay changes their user agreement to reflect a seller guarantee that 100% of listings will be seen in search results and that sellers will no longer be paying for listings that are rendered invisible at any time for any reason.

  d) eBay must return to being condition agnostic.   eBay used to be a marketplace known for it's antiques and collectibles availability before management became infatuated with emphasizing new merchandise.  Management needs to stop trying to drive the marketplace away from used goods and welcome all merchandise types in order to give buyers the most choices.  The company could even market the initiative as being environmentally conscious based on the increased availability of previously owned merchandise.

 e) Stop the catalog - it is not working for buyers, sellers or for eBay.  Sears used to have a catalog and look where they are now.

Second, eBay must eliminate it's obese and bloated management ranks.  Not every C Level executive needs to be a one per center.  They must also eliminate extremely generous and unnecessary perks such as the corporate jet and outrageously exorbitant housing allowances handed out to recruit executives etc...  which will save the company millions of dollars every year.  Satellite corporate offices should be closed and/or consolidated resulting in reduced redundancies and saving millions more.

Third, Restore value to sellers.  

  a) Fees are out of hand and must be significantly lowered.  The cost of doing business with eBay has turned selling into a zero sum game for many sellers which has in turn, driven sellers from the marketplace, and drastically reduced SKU diversity which in turn has alienated buyers.  eBay needs to accept the fact that sellers can live with being competitive, but should not be caught up in a corporate race to the bottom on pricing.  A healthy, thriving marketplace should be the only thing that serves to motivate sellers on pricing levels.

  b) With the cost efficiencies implemented, there needs to be a reduction in the sellers cost of doing business on eBay.  eBay collects a fee on listings, commissions on sales, shipping fees and soon payments as well. These seller facing costs must be significantly lowered in order to allow sellers to return to profitability.... Anything less will continue to drive sellers out of the marketplace.

  c) eBay must cease all advertising that takes potential buyers off the site. Why go to all the trouble to acquire buyers and then encourage them to purchase items off site.  Frankly, which ever idiot implemented this business model deserves to be terminated for cause.  The revenue generated by these ads does not replace the revenue lost when buyers leave eBay to make purchases.

  d) eBay must also stop placing ads on seller listings for items sold by other sellers on the site. Sellers are paying for the listing space, and any ads that distracts buyers from purchasing the item they clicked on is counter productive.

Simply put, there are three areas eBay desperately needs to address if they are to have any hope of generating growth consistent with the rest of the eCommerce industry.

While these are not all the steps that need to be implemented, they are three of the biggest meaningful steps.

It should also be considered that those sellers eBay has alienated are unlikely to return and are lost to eBay forever.  As I told eBay when they questioned why I closed my store and stopped selling entirely.... " Selling on eBay is like trying to build a skyscraper in a pool of quicksand."

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by: Travelogue This user has validated their user name.

Tue Jan 22 17:04:04 2019

...whether or not anything changes at eBay, it was kind of nice to hear that someone noticed and detailed all the many problems.  Hasn't eBay noticed how many of their sellers have been bankrupt by their constant lunacy???

Most interesting to me is the letter's focus on going back to Ebay's CORE...the Sellers and the Buyers which doesn't take a genius to know are mostly one and the same!

My message to the eBay's top brass is simple...
WAKE UP!

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by: Travelogue This user has validated their user name.

Tue Jan 22 17:08:43 2019

RIC,
BRAVO!

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This user has validated their user name. by: Number 6

Tue Jan 22 17:32:14 2019

What's really funny is eBay's stock price has risen $2.00 as a result of this one incisive document.

Elliott Management, a mere 'shareholder', has added more value to eBay's stock in one go than anything Wenig and his way-overpaid cronies have managed to do after years of clueless changes in search of something that works.

Perhaps they should all just honourably leave now, whilst there's still time, and hand the management over to someone who knows how to manage - I should imagine the folks at Elliott Management would be a good place to start looking for new employees.

But we know the truth - they'll hang onto their sinecures as long as they can whilst enriching themselves.

I suspect that share price will take a tumble though when the 2018 Q4 results ae announced.  Unless they've cooked the books again...


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by: ebayout This user has validated their user name.

Tue Jan 22 17:43:49 2019

ebay continues to espouse...to itself...the dichotomous business philosophy of "9 for me and 1 for thee".
Yes, they have to assuage their shareholders, but their "philosophy"...takeover rumors notwithstanding...has plunged their stock value by 25%.
They can't see the forest for the trees, especially the ones in the Hamptons.
Wenig will soon write his memoir...
"How to Succeed in Business without Really Trying...a Personal Account".

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by: Mark4 This user has validated their user name.

Tue Jan 22 18:47:39 2019

Ebay = Dead Man Walking

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