eBay & NYSE - An insight 1 1

[Aweandlorder]

Earlier this week Intercontinental Exchange boss Jeffrey Sprecher reached out to eBay to possibly buy the company, This is the second time in a period of 10 years that ICE (Which also owns the New York Stock Exchange) has reached out for this buyout. It kinda got me to wonder what does mr Sprecher finds so interesting about eBay that makes him pursue it for so long. Well, today we heard a possible reason

https://www.cnbc.com/2020/02/07/ebay-is-more-like-the-nyse-than-amazon-says-intercontinental-exchange-ceo-jeffrey-sprecher.html

Spoiler

 

The e-commerce giant eBay more closely resembles the New York Stock Exchange than it does Amazon, at least in the eyes of Intercontinental Exchange CEO Jeffrey Sprecher.

“I’m not sure that it’s been fair for the market to hold eBay accountable as an e-commerce company and compare it to the likes of Amazon,” Sprecher said on an analyst call Thursday. He suggested instead that eBay “be viewed as a 25-year-old cash market for collectible goods, which looks a lot more like the New York Stock Exchange than Amazon.”

The comments came as Sprecher sought to clarify ICE’s discussions with eBay. Initial reports of ICE’s inquiry sent shares of eBay sharply higher on Tuesday, and Sprecher’s remarks on Thursday morning added to those gains. But late Thursday, ICE released a statement saying it had ceased exploring strategic opportunities with eBay, sending shares of eBay lower in extended trading.

On the call, Sprecher said the market’s reaction to the inquiry had surprised him. “The idea that we would reach out to people who I know … to talk about whether or not there are parallels between their business and our business, I didn’t think was particularly shocking and outrageous.”

Sprecher said that ICE’s board and senior management routinely brainstorm new ideas to engage with outside parties and that the company’s disciplined but proactive approach to acquisitions “encourages exploratory conversations.”

With eBay in particular, it was the apparent business model similarities that piqued ICE’s interest. ICE operates exchanges for commodity and financial markets, including the New York Stock Exchange.

At their most basic, the two firms match buyers and sellers, Sprecher argued. But he also drew parallels between their data collection and organization, partnerships with third parties on distribution, and transaction-related analytics. “While our respective marketplaces serve different customer bases, they’re still marketplaces, and there is much to be gleaned from similar businesses that operate in different industries, different regions, and different customer verticals.”

Sprecher saw similarities between the companies’ business models in ICE’s early days, saying he sought then-eBay CEO Meg Whitman’s advice as ICE was looking to build its online energy power marketplace. In those days, he said, “there were clear parallels between new ideas in the market for centralized clearing.”

Long after Whitman’s departure, Sprecher said he still believes the business models are comparable and that for more than a decade eBay’s own board has viewed the company as having “more synergies and characteristics” of an exchange than an e-commerce platform.

The news of ICE’s approach on Tuesday came just a few hours after activist investor Starboard Value sent a letter to eBay’s management, renewing pressure to spin-off its classifieds segment. Sprecher acknowledged that pressure but stopped short of asserting that it prevented talks between ICE and eBay. He said earlier, “for reasons of its own, [eBay] was not interested in delving into the range of ideas that we hoped to engage with them on.”

While the potential for a deal with eBay took some Wall Street onlookers by surprise, Sprecher reiterated his confidence in ICE’s open-minded approach to potential combinations.

“When we think about is there a marketplace for airline miles or swords and sickles that are on a video game, we’re not crazy. We didn’t lose our minds. We know what our platform does and we know how to lever it.”

 

He brings about many interesting things with this perspective, some which I never thought about before, and to be honest I think that the fact that he sees eBay as a dominant collectible market aligns well with the state of all markets that exchange there as a whole, including the comic book market. 

I doubt that mr Sprecher's vision is shared with eBay though, it seems like they are more interested in competing with Amazon, Ali-Baba and the likes. Furthermore eBay's higher focus is on selling listings to sellers and packaging stores and advertising options to them instead of enhancing the collectible market that holds a high share of their platform. 

What are your thoughts?

[MGsimba77]

1 hour ago, Aweandlorder said:

“I’m not sure that it’s been fair for the market to hold eBay accountable as an e-commerce company and compare it to the likes of Amazon,” Sprecher said on an analyst call Thursday. He suggested instead that eBay “be viewed as a 25-year-old cash market for collectible goods, which looks a lot more like the New York Stock Exchange than Amazon.”

The two are growing further and further apart with their business models. Amazon is beginning to resemble an online version of Walmart. I wouldn't buy snack items on Ebay unless it's a discount like protein cookies or something similar with a short expiration date. I go to Amazon and the options for the same item are limitless. On other hand I bought just one slab from Amazon and it was a *shot in the dark* lucky find just out of the blue one day. Incidentally I've since sold it. Ebay should play up who they are and embrace its strengths! Amazon is a runaway train that's not going to be cought by anyone!

[Aweandlorder]

12 minutes ago, MGsimba77 said:

The two are growing further and further apart with their business models. Amazon is beginning to resemble an online version of Walmart. I wouldn't buy snack items on Ebay unless it's a discount like protein cookies or something similar with a short expiration date. I go to Amazon and the options for the same item are limitless. On other hand I bought just one slab from Amazon and it was a *shot in the dark* lucky find just out of the blue one day. Incidentally I've since sold it. Ebay should play up who they are and embrace its strengths! Amazon is a runaway train that's not going to be cought by anyone!

The only problem here is that eBay doesn’t understand its strength. It keeps wanting to be like Amazon and that’s the reason why it’s crawling on shaky grounds. It’s ipo is lower than it was 2 years ago, it lays off more and more workers, it broke its ties with PayPal since PayPal clearly didn’t need them anymore and its platform has many issues. And instead of concentrating on all those shortcomings they dedicate as much, if not more effort into their classified division. 
I would totally welcome a buyout from ICE. Especially now, knowing what their chairman vision is of the platform 

[mycomicshop]

Good thread, thanks for posting. I agree that eBay ought to be working on playing to its strengths in collectibles, and not trying to out-Amazon Amazon. A network of individual sellers will never be able to compete with Amazon on speed and efficiency. But eBay should do its best to remain a more hospitable marketplace for collectibles and non-commodity items.

I think the challenge in the past for eBay has been that the market for commodity goods is much bigger than the market for collectibles, so if a company as big as eBay is driven by shareholders to pursue growth, they're forced into imitate Amazon mode. Don't think that's been very successful, so hopefully their next strategic roadmap puts more emphasis on supporting collectibles.

[MGsimba77]

1 hour ago, Aweandlorder said:

The only problem here is that eBay doesn’t understand its strength. It keeps wanting to be like Amazon and that’s the reason why it’s crawling on shaky grounds. It’s ipo is lower than it was 2 years ago, it lays off more and more workers, it broke its ties with PayPal since PayPal clearly didn’t need them anymore and its platform has many issues. And instead of concentrating on all those shortcomings they dedicate as much, if not more effort into their classified division. 
I would totally welcome a buyout from ICE. Especially now, knowing what their chairman vision is of the platform 

What do you think of the selling off of StubHub? You think it'll result in them pouring more into classified division? 

I don't know that Ebay's image has ever been that of a superstore. I could be mistaken but I think they've always been thought of primarily as a source of interesting souvenirs memorabilia etc 

[Aweandlorder]

21 minutes ago, mycomicshop said:

Good thread, thanks for posting. I agree that eBay ought to be working on playing to its strengths in collectibles, and not trying to out-Amazon Amazon. A network of individual sellers will never be able to compete with Amazon on speed and efficiency. But eBay should do its best to remain a more hospitable marketplace for collectibles and non-commodity items.

I think the challenge in the past for eBay has been that the market for commodity goods is much bigger than the market for collectibles, so if a company as big as eBay is driven by shareholders to pursue growth, they're forced into imitate Amazon mode. Don't think that's been very successful, so hopefully their next strategic roadmap puts more emphasis on supporting collectibles.

True. Couple that with hard data accumulated over two decades and analytics of all those sub markets that transact on eBay and you can see why Mr Sprecher is VERY interested in taking the helm over at the bay. 
 

[Aweandlorder]

the other thing that almost certainly interests ICE with this purchase will be the implementation of cryptocurrency within ebay 

There are many ways this can play out

[Aweandlorder]

7 minutes ago, MGsimba77 said:

What do you think of the selling off of StubHub? You think it'll result in them pouring more into classified division? 

I don't know that Ebay's image has ever been that of a superstore. I could be mistaken but I think they've always been thought of primarily as a source of interesting souvenirs memorabilia etc 

eBay likely sold stubhub because of pressure from investors. The company isn’t getting support from many of them and they needed to show them that they are responsible with their budgets