How eBay Became Relevant Again

When a website goes into tailspin common wisdom dictates that there's no way it can make a comeback. But in recent time eBay has done just that, transforming its dismal financial state into successes resembling its glory days. How the hell did it do it?

Back in 2004, eBay shares hit a peak of $58. It was an internet sensation, which revolutionized online retail. But by 2007, decline had set in: growth slowed and sellers began to grumble that the site was increasingly expensive and less supportive. By early 2009, its stock has sunk over 80 percent to barely $10.

But something's changed. In mid-July, eBay announced that its profit had doubled and its revenue increased by 23 percent. Last week, eBay stock hit a six-year high. So what happened at eBay that suddenly changed its fortunes? The New York Times offers some insight:

Excitement about eBay's prospects has little to do with its traditional auction business, or even its core e-commerce operations, although its marketplace division posted solid results and had its best quarter since 2006, the company said. Most of its growth came from mobile retailing and its PayPal online payments division, a business it acquired in 2002 for what now looks like a bargain $1.5 billion.

As consumers embrace shopping on their smartphones, "mobile continues to be a game-changer," Mr. Donahoe said. He noted that 90 million users had downloaded eBay's mobile app and that 600,000 customers made their first mobile purchase during the most recent quarter. "A woman's handbag is purchased on eBay mobile every 30 seconds," he said. "Mobile is revolutionizing how people shop and pay."

Speaking to the Times, current eBay CEO John Donahoe explains that smartphones have "blurred the line between e-commerce and off-line retail. Four years ago, you had to be in front of a laptop or desktop to shop online. Now you can do it seven days, 24 hours. We're going to have to drop the ‘e' from e-commerce."

And he's right. Somehow, eBay has held on to enough of a reputation to ensure its mobile apps perform well, and its used that to great advtange. During its slump, you might have expected Amazon to take it down entirely, but instead eBay has shifted its focus, embraced mobile, and succeeded. It's bid for success seems to have paid off. [New York Times]

Image by brianc under Creative Commons license