EBay to Experiment With Selling Mechanics’ ServicesSerena Saitto and Brian Womack
EBay Inc. plans to experiment with selling auto mechanics’ services alongside car parts, said Devin Wenig, president of the marketplaces business, in an expansion of the e-commerce company’s offerings.
“EBay will start a small test this fall in a couple of U.S. cities” for providing mechanics’ services, Wenig said in an interview today at Bloomberg’s headquarters in New York. He declined to be specific.
The plans indicate that EBay is seeking to capitalize on the boom in online services and sharing applications. Companies such as Uber Technologies Inc. and Airbnb Inc. have created online marketplaces for car rides and room rentals and shown that Web companies can sell services as well as hard goods.
The trend started by sharing economy apps such as Uber and Airbnb “is in the very early beginning; we tackled ride-sharing and house-sharing but there are so many other possibilities,” Wenig said in the interview. “The ones that get us excited are those where we can add value.”
EBay, based in San Jose, California, has recently faced some setbacks in attracting customers. In May, the company asked users to change passwords after hackers gained access to login information. Google Inc. also changed its search software earlier this year, curbing some of the traffic to EBay’s website and preventing potential shoppers from searching for items online.
“No doubt it was a challenging summer and I put, at least for our business, the privacy breach at the top of the list,” said Wenig, who added that he couldn’t rule out breaches happening again.
To remedy the breach, EBay decided to do a “dramatic password reset,” he said. More than half of EBay’s 149 million customers have since returned to the e-commerce site, he said.
“It was probably the largest password reset in history of any business,” Wenig said. “I wouldn’t recommend that as a frictionless process for an e-commerce business, but we did it because what’s most important to us is our brand and that customers feel secure inside EBay.”
The events have impacted the company’s outlook for the third quarter. EBay said on July 16 that revenue for the current period will be $4.3 billion to $4.4 billion, lower than the $4.42 billion projected by analysts polled by Bloomberg. Profit before certain items will be 65 cents to 67 cents a share, lower than the 70 cents estimated by analysts.
EBay still grew its consumer base more than 14 percent after the privacy breach, Wenig said. He added that Google’s changed search engine algorithm was “nothing unusual.”
In the interview, Wenig also predicted a significant consolidation in the e-commerce market and said EBay will be opportunistic in pursuing acquisitions.
In the U.S., “it’s easier to start an e-commerce company than scale it,” he said. “We’re committed to creating value for our shareholders, but the landscape is changing so quickly in our space that I hope our shareholders will trust that we will adjust depending on what the opportunities are.”
EBay’s core marketplace business has trailed its faster-growing PayPal payments unit. PayPal’s sales expanded by 20 percent in the latest quarter, compared with a 19 percent pace in the first quarter. Growth in the marketplaces business slowed to 9 percent from 10 percent in the prior period.
EBay rose less than 1 percent to $52.93 at the close in New York.
The company faces competition from existing e-commerce providers as well as newcomers. Sales by retailers on EBay grew 12 percent in June, while those at Amazon.com Inc. climbed 34 percent, according to researcher ChannelAdvisor Corp. Amazon has shown a willingness to forego profits to pursue revenue growth.
At the same time, the owner of the largest e-commerce company in China, Alibaba Group Holding Ltd., is nearing an initial public offering -- and may use proceeds to move its business model into the U.S. market, Scot Wingo, co-founder and CEO of ChannelAdvisor, has said.
Alibaba founder Jack Ma has been buying or investing in smaller U.S. companies that may lay the groundwork for a bigger push into the U.S. In 2010, Alibaba agreed to buy online marketplace companies Vendio Services Inc. and Auctiva. More recently, it has invested in companies including delivery service ShopRunner, mobile-application search engine Quixey and messaging app TangoMe Inc.
Wenig said EBay is the largest export business to China, while Alibaba has the biggest domestic business in China. Its expansion in the U.S. should have “big implications” from a “fair-trade” point of view, he said.
“I don’t have any problem with Alibaba coming in the U.S. or Western Europe, as long as we have an equal chance in China,” Wenig said.