E-commerce giant, EBay, implements job cuts, impacting approximately 1,000 of its employees.
Chopping the Deck: eBay's Workforce Reduction and Restructuring
Let's get down to it: eBay, the popular online marketplace, announced plans to trim its full-time workforce by around 1,000 employees—roughly a 9% reduction—according to a Jan. 23 internal memo from CEO Jamie Iannone. This detail was shared publicly on Feb. 1. Alongside this, EBay also aims to scale back its contract workforce in the coming months.
Why the cut? Well, eBay is feeling the crunch from a "tough macroeconomic environment" and compared its headcount growth to the growth of its business: they've grown out of proportion. In other words, expenses have been racing ahead of revenue. This news will cost eBay an estimated $90 million to $110 million, primarily on severance payments and post-employment benefits, with most of the expenses hitting in Q4 20231.
EBay's been tightening its purse strings for quite some time now. Last year, the marketplace shed around 500 employees, and it's been looking at ways to trim its cost structure2. In fact, back in November, CFO Steve Priest noted they were "looking at every area of our cost structure," with a focus on managing costs to ensure their growth will slow down even as revenue surges in 20242.
Things like belt-tightening and streamlining operations are nothing new for eBay. Analysts like Ken Gawrelski of Wells Fargo see this focus on cost containment as a shift from the company's past general trend, where it had been investing in tech and product development4.
In 2021, eBay launched the 'Certified by Brand' luxury resale program, invested in sports trading card company COMC, and introduced a trading card submission service. It also acquired collectibles tech platform TCGplayer for $295 million the same year4. Collectibles have been a strong performer for eBay, driving more than $10 billion in gross merchandise volume over the previous 12 months and bringing over one in four buyers to the platform4. Collectors are valuable: they boast the highest conversion, repurchase, and retention rates, dwelling enthusiastically across multiple categories on the platform5.
"Our aim is to remain the world’s most treasured destination for passionate collectibles enthusiasts, delivering the widest assortment of sought-after inventory across various categories in a high-trust environment," Iannone told analysts in November5.
In its latest quarter, eBay reported revenue that rose 11% to $2.5 billion, and gross merchandise volume that dropped 10% to $19.5 billion. The number of annual active buyers slipped 5% to 154 million worldwide, while the number of annual active sellers remained stable at 19 million5.
- In a shift from previous trends, eBay is focusing on cost containment, scaling back its workforce by 9%, and aiming to trim its contract workforce as well, to adapt to the heavy financial strain from the tough macroeconomic environment.
- The cuts, estimated to cost eBay $90 million to $110 million, mainly on severance payments and post-employment benefits, are part of eBay's ongoing efforts to tighten its purse strings, following a similar reduction of around 500 employees last year.
- Despite the workforce reductions, eBay remains dedicated to its growth areas, such as collectibles, evident in its acquisitions and investments, like the launch of the 'Certified by Brand' luxury resale program, the purchase of collectibles tech platform TCGplayer, and the strategic move into sports trading cards.
- Analysts see eBay's focus on cost containment as a new direction for the company, potentially diverting resources from areas like technology and product development.
- EBay's collectibles segment has proven to be a significant contributor to its success, generating more than $10 billion in gross merchandise volume in the past year and attracting over one in four buyers to the platform, known for their high conversion, repurchase, and retention rates.
- eBay's CEO Jamie Iannone wants the company to remain the world's most treasured destination for collectibles enthusiasts, delivering a wide assortment of sought-after inventory across various categories in a high-trust environment.
