EBay, once Silicon Valley’s face of the e-commerce revolution, has found itself at a bizarre and unexpected crossroads.
The company that pioneered the online marketplace has weathered highs and lows since the 1990s, and in recent years has managed to find its footing again. Sales are up, profits have improved, and its stock price has doubled over the past two years.
But suddenly, eBay may have a hostile takeover to navigate.
Last week GameStop, the video game retailer, made an unsolicited offer to acquire eBay for $55 billion. EBay formally rejected the proposal on Tuesday, calling it “neither credible nor attractive.”
It is a wild gamble by Ryan Cohen, GameStop’s chief executive, who said he wanted to lead both businesses and transform the combined group into a “legit competitor” to Amazon. He warned eBay’s board of directors that if they were unreceptive he was prepared to go straight to shareholders in a hostile bid.
The proposal added a jolt of volatility to eBay, just as it seemed to have found its groove again.
Although it remains a bazaar for people to hawk anything from chipped dinner plates to weathered lawn mowers, the San Jose, Calif., company has been transformed under Jamie Iannone, its latest chief executive. Over the past several years, the company refocused on power buyers in product categories with especially high resale demand, such as trading cards, sneakers, handbags, car accessories and electronics.
“It’s a bit of a dark horse,” said Sky Canaves, a principal analyst of retail and e-commerce at eMarketer, a research firm. “It exists as a retailer of last resort: the discontinued, sold-out refurbished, open-boxed and resold.”
EBay was founded in 1995 by Pierre Omidyar, as AuctionWeb, and was one of the tech companies that helped make buying and selling online mainstream. Meg Whitman joined as chief executive in 1998 — when the company had 30 employees — and stayed on for a decade.
Integrating auction and payment systems was appealing in the industry’s early days, when there was little trust in online transactions. The model has influenced many digital platforms since, according to Ziwei Cong, a business professor at Georgetown University.
In 2014, eBay announced the spinout of PayPal into a separate public company, under pressure from the activist investor Carl Icahn. PayPal made up about half the company’s business at the time.
As Amazon became the internet’s chief purveyor of virtually everything, eBay took a different route that helped it grow. Amazon handled all things duplicable; eBay traded in the one-of-a-kind.
“EBay survived by focusing on areas where uniqueness matters more than speed or convenience,” Ms. Cong said. “Its strength today comes from connecting niche buyers and sellers rather than competing with mainstream e-commerce giants such as Amazon.”
Mr. Iannone, the former chief operating officer of Walmart’s e-commerce unit, took the top job at eBay in 2020 as the company struggled to rebound from years of stagnant sales. His predecessor, Devin Wenig, was ousted in 2019 as activist investors, including Elliott Management and Starboard Value, clashed with eBay’s management.
At the time, eBay’s core business — buying and selling items on its marketplace — was in dire condition. Efforts to lure younger shoppers interested in used goods were not taking hold, and the volume of all goods sold on its platform had fallen for several straight quarters.
Under Mr. Iannone, renewed attention on products such as collectibles and car parts has shifted the makeup of what’s sold on eBay. Those sorts of products account for about 70 percent of the volume of all merchandise sold on its marketplace.
“We’re going to continue to invest in the areas that are really driving kind of healthy growth across the business,” Mr. Iannone told investors on a conference call in April.
EBay has also aggressively invested in authentication services — used to spot fakes — in an effort to build trust with shoppers worried about buying counterfeit items in the peer-to-peer marketplace.
In 2021, eBay acquired Sneaker Con’s authentication business to boost its offering for streetwear enthusiasts. It also began guaranteeing the authenticity of handbags from designer brands such as Louis Vuitton, Chanel and Hermès.
The next year, it debuted a service to verify trading cards, working with Certified Collectibles Group and Professional Sports Authenticator. Then it added jewelry verification through a partnership with the Gemological Institute of America. This month, eBay announced that it would integrate a global database of stolen watches into its services.
Such services are critical because eBay competes with specialized resale marketplaces in each of those sectors, such as StockX in sneakers, the RealReal in fashion and Chrono24 in watches. Those businesses have spent years developing systems to verify the authenticity of products on their platforms and build confidence with their customer bases.
Mr. Iannone has also pushed to attract younger shoppers who eluded his predecessors. In February, eBay said it had reached an agreement to acquire Depop, a fashion resale site with a strong Gen Z and millennial customer base, from Etsy for $1.2 billion in cash. (Etsy has since said the deal has been delayed by a few months amid regulatory reviews.)
The turnaround at eBay has also included restructuring efforts. In February, the company said it would eliminate about 800 roles, or 6 percent of its work force. The layoffs were spread across the company as management looked to reallocate resources.
The company recently reported strong results: Revenue in the first quarter rose 19 percent, to $3.1 billion, compared with the same period the previous year, and eBay said it expected revenue to rise as much as 10 percent in the current quarter.
Yet as eBay looks to the future, the GameStop offer looms. In interviews with media outlets, Mr. Cohen said he would make sweeping changes to reduce costs and remake the company’s corporate culture.
Paul S. Pressler, eBay’s chairman, rejected GameStop’s bid in a letter addressed to Mr. Cohen on Tuesday, describing the online marketplace, under its current management, as “a strong, resilient business that has delivered meaningful results over the past several years.”
