July 23, 2015
eBay, the online e-commerce conglomerate, seems to be cleaning house lately. Earlier this year, we learned that the company cut down on 7% of its workforce by paring over 2,400 jobs, and in April, the news was delivered that eBay would be performing a complete spinoff of its PayPal payments. Now, the company has confirmed rumors that it is selling its enterprise services business, eBay Enterprise for an estimated $925 million, as reported by The Wall Street Journal.
eBay acquired e-commerce technology company GSI Commerce in 2012 for $2.4 billion as a way to compete with its biggest competitor, Amazon. The Enterprise unit, which helps power online retail sites such as IKEA create real-world business, took a few blows this past year, one being when one of its largest customer, Toys “R” Us Inc., said it would take its U.S. business in-house by mid-2016.
The company announced last week that the sale would be made to a consortium including the U.S-based private-equity firm, Sterling Partners for $925 million – 61% less than what it paid for GSI Commerce in 2012.
The deal will leave eBay’s already slow-growing marketplace business up against tough competition, especially from Amazon; however some analysts are bullish on eBay as a standalone company.
“eBay is a very profitable business that generates tremendous amount of cash – some of which they will be able to return to shareholders,” Wedbush Securities analyst Gil Luria stated.
As eBay gets ready to celebrate its 20th anniversary this year, the company reveals it will unfold rapid changes to position itself for the future. But with today’s cutthroat online retail landscape, eBay is going to have to show some major advancements it it’s going to give customers a real reason to shop there.