Ebay is having an identity crisis.
As it splits off the far stronger side of its business—PayPal—on July 17, eBay’s new leaders are faced with the daunting task of figuring out how the company fits in with the way people shop these days.
A true e-commerce pioneer, the online retailer ushered in the marketplace model, bringing buyers and sellers together around the world. But the growth in new, active buyers continues to slow quarter after quarter as shoppers turn to other marketplace sellers on Amazon and Etsy.
Meanwhile, sales at eBay have dipped considerably, a big problem eBay president Devin Wenig recognized on the company’s quarterly earnings conference call with analysts on Thursday. Ebay’s second-quarter net profit dropped nearly 90% from the year before to $83 million.
“We have a lot of work ahead of us to recognize eBay’s significant potential,” he said, promising to “make the hard decisions along the way that will enable us to more clearly define our space as a leader.”
The thing is, eBay doesn’t seem to have a very good answer for how it plans to turn the flagging business around.
The eBay side of the business got a pretty raw deal in the PayPal split: It lost the fast-growing payments business and was saddled with the company’s $7.6 billion in debt. It’s still dealing with reverberations from a painful data breach and changes to Google’s algorithm (paywall), which buried its listings from search results.
Add to that the sale of eBay’s $1 billion enterprise business, which runs e-commerce operations for brick and mortar retailers, and the divestiture of its stake in listings website Craigslist, and there is not a whole lot left beyond the flailing auction business.
So far, its turnaround plan amounts to little more than a website revamp and social media marketing efforts wrapped up in a healthy dose of cheerleading. Wenig’s plan, outlined on the analyst call, sounded a bit like this: We launched thousands of new product web pages. We’re playing with the cool kids on Snapchat, Instagram, and even Periscope. We’re using mobile re-targeting to get customers to come back to buy stuff. People are buying classified ads again. We’re going to launch a new mobile app.
Unfortunately for eBay, this isn’t 1999. Website redesigns, a better user experience, and the ability to shop on mobile devices are now status quo. Today’s online retail landscape is cutthroat and highly saturated. Ebay is going to have to show a bit more leg if it’s going to give customers a real reason to shop there.