The first thing sold on eBay was a broken laser pointer. In 1995 founder Pierre Omidyar listed the item to test the idea of an online auction. A bidding war ensued and the pointer was sold for the original amount of $14.83. From those humble beginnings eBay grew into a massive marketplace. By 2005 it was valued at approximately $80 billion, almost four times the value of rival Amazon. That shine gradually faded as its customers moved to larger rivals and niche markets. But eBay has made a surprising comeback in the last few years.
The Internet flea market is back—and GameStop wants to buy it (Getty Images)
Consider its results for the first quarter. Sales increased 17% year-over-year, the fastest rate since 2012, excluding the pandemic-era e-commerce frenzy. The number of buyers on eBay, which had been falling, has now stabilized at about 135 million. Investors are impressed. eBay’s share price has increased by more than 130% since the beginning of 2024. It’s become such a hot topic that retail investors’ favorite video-game retailer GameStop, which has recently been expanding into collectibles, is now plotting an acquisition. How did eBay change things?
Its comeback started with new management. Six years ago Jamie Iannone, a former eBay manager who went to work at Walmart, took over. It was clear that eBay was in trouble. Market share was being lost to rivals including Amazon and Walmart, which offered countless products and used their logistics networks to deliver them quickly, as well as niche second-hand markets, such as The RealReal, a fashion-resale platform, and StockX, a marketplace for trainers.
Mr. Iannone’s solution was to focus on what he calls “eBay’s heritage”, such as used, refurbished and out-of-season goods. This means prioritizing a small number of “focus categories” including collectibles, fashion and car parts, which account for a third of the total value of goods sold on the platform. Management worked to improve customer confidence in these areas. Learning from rivals like RealReal, it introduced ways to authenticate valuable items. A set of Pokemon cards or a Gucci handbag may first be sent to one of eBay’s experts to verify that it is genuine. Another example is a plan that ensures that certain auto parts will fit the buyer’s car. Some refurbished goods now come with a warranty.
eBay plans to boost its focus categories with acquisitions. In 2024, it purchased collectibles marketplace Goldin. The following year it broke up Caramel, a car-selling platform. In February it acquired second-hand marketplace Depop from Etsy.
Another improvement is to make buying and selling easier. Fees paid by sellers to individuals have been removed in the UK and Germany. Sellers praise eBay’s international shipping services, which allows them to send foreign-bound packages to the marketplace, which takes care of the rest, including customs forms and tariffs. (The buyer usually picks up the tab.) Artificial-intelligence tools help sellers quickly list half-forgotten items pulled from the back of the closet. In the world of trading cards, eBay has made transactions even simpler. Expensive cards can be stored in a climate-controlled vault operated by eBay in Delaware, so buyers can exchange them without taking physical delivery.
To help fund all this, Mr. Iannone is cutting costs across the business. In February eBay said it would lay off 800 employees, equivalent to 6% of its workforce.
The change has benefited from factors outside the company’s control. The trading-card market continues to boom, fueled in part by pandemic-era stimulus checks. The demand for second-hand clothing is also increasing rapidly, especially among Gen Z. Geopolitical uncertainty has pushed up gold and silver prices, helping boost sales of bullion and collectible coins.
Still, eBay’s revival is impressive. Michael Morton of MoffettNathanson, a research firm, says online marketplaces are particularly difficult to turn around: “When you start losing buyers, sellers look for other places to sell.” So-called “network effects” tend to be negative.
GameStop boss Ryan Cohen faced a lot of difficulties in turning around the fortunes of his company. Its revenue declined 14% year over year in its most recent quarter, as its business continues to decline due to the rise of e-commerce. Mr Cohen may hope that bringing the businesses together will give GameStop a quick way to expand its online presence, while giving eBay a retail footprint to lure passersby and act as a distribution network. But making such a deal would be difficult: eBay is now valued at $46 billion, nearly four times more than GameStop, meaning it would have to take on a lot of debt. If Mr. Cohen is looking for a bargain, he may have to look elsewhere.
