Globally, the e-commerce is growing at 20 per cent per year. The upstarts like Etsy and Wayfair started as niche businesses but are expanding outside their niche.
Ebay has had a head start. It has 177 million active buyers. But it is growing at just 5 per cent.
177 million buyers may sound like a lot but they are just a fraction of total online buyers around the world. There is room for growth. The overall market is growing. Why not eBay?
They are probably trying but growing online is not as easy as some experts make it look. Or perhaps, Ebay has missed a trick. Whatever the reason, investors aren’t feeling confident. Ebay lost its enterprise value by 15 per cent over last year.
Besides, Ebay owns online properties like StubHub, which re-sells tickets online. It also owns classified ads companies like Gumtree and Rent.com. Ebay’s enterprise value is close to $100 billion. But without the subsidiaries, it is worth just $34 billion.
Ebay also used to own Paypal which was sold off for a hefty sum. One could be forgiven for thinking that Ebay’s core strength is in identifying investment opportunities than growing its e-commerce business.
Will Ebay see its fortunes turned? Who knows, but probably not till it sells or spins off its valuable subsidiaries first.
Here is the learning part – when a business loses focus on its core strengths, the only way to avoid pain is by being lucky. Ebay’s lucky mascots are its secondary investments. Yahoo’s lucky stars appeared in the form of Alibaba.
