eBay Strategy Faces Uncertain Future, As Chief Business Strategy Officer Stefanie Jay Steps Down
UPDATE 3-18-24
eBay has still not responded to any requests for comment about the status of Stefanie Jay's employment with the company, however they did quietly remove her from the Our Leaders page today, March 18, 2024.
While eBay has not yet named a replacement, other recent shakeups in the General Manager ranks could point to the possibility of previous VP GM US Adam Ireland stepping in to a strategy position
Liz Morton
Ireland's background at Mckinsey and previous positions in strategy and customer experience could potentially be an interesting fit with a possible shift back to a consumer-seller focused strategy - and don't forget that Chief Legal Officer Marie Oh Huber will be dropping off the leaderboard soon too.
Stay tuned for updates!
UPDATE 2-21-24
As questions linger about what the future holds for eBay, open job listings hint at search fresh ideas and new strategies, with a possible pivot back to a wider consumer-seller focus.
Liz Morton
eBay's future strategy may be up in the air as Chief Business and Strategy Officer Stefanie Jay has reportedly resigned following mass layoffs, cost cutting pressure and uncertain Q4 2023 financial results, according to NFTgators.
Nicholas Kitonyi
In June 2022, eBay acquired Manchester-based NFT Marketplace KnownOrigin. However, a source close to the project says the company has changed its Web3 strategy with Stef Jay, the business and strategy officer resigning. The relationship between eBay and KnownOrigin has allegedly soured.
Value Added Resource also received a tip alleging the resignation occurred during an all hands meeting on January 29th, but neither Jay nor eBay have responded to repeated requests for comment over the last two weeks and, so far, Jay remains on eBay's corporate leadership page.
Jay joined eBay in May 2021 in the newly created role, following CEO Jamie Iannone over from Walmart.
eBay Inc. (NASDAQ: EBAY) today announced the appointment of Stefanie (Stef) Jay as Chief Business and Strategy Officer. In this newly created role, Stefanie will lead an organization that combines Strategy, Business Operations, Analytics and Communications.
Together these teams will have a powerful combination of assets leveraging data and insights for day-to-day operations along with tightly connected long-term strategy and compelling story-telling. Stefanie will report directly to Jamie Iannone, eBay’s Chief Executive Officer, and will join the company on May 10, 2021.
Stefanie possesses more than two decades of experience in global strategy, corporate development and general management. She joins eBay from Walmart where she was most recently VP & GM of Walmart Connect, the in-store and digital advertising business. Prior to that, she led Corporate Development and Strategy for Walmart ecommerce including its investment in China’s JD.com, and strategic partnerships with Google, Uber and Lyft.
Previously, Stef spent 14 years with Goldman Sachs in the consumer retail and healthcare investment banking group focused on M&A and corporate finance. She also led client strategy for the CEO and executive office. Stefanie holds a bachelor’s degree in Economics from Columbia University.
In addition to her role leading strategy and operations, she also sat on the advisory panel of eBay's venture capital investing arm, eBay Ventures.
Stef kicked off day 2 of eBay's annual seller conference in September with a keynote on "reinventing the future of ecommerce for enthusiasts", touting eBay's 132 Million Active Buyers and laying out her strategic vision for the marketplace.
A big reason you all partner with eBay is because of our massive buyer base, our mutual customers.
We have a community of 132 million active buyers worldwide and today, we'll talk about our enthusiast buyers, their buying behaviours, and how we'll attract them and we'll preview our newest innovations that will enhance their shopping experience.
But first I wanted to expand a little bit on what Jamie shared about where we're going and how we're getting there...
...Three years ago, we shared our ambition to become the best global marketplace for our customers. We saw the enormous untapped potential of this company. Our teams rallied around the tech-led reimagination and we executed on the foundational platform upgrades and key technology advances necessary to move closer to that aspiration...
...To achieve our vision to reinvent the future of ecommerce, we need to accelerate relevant experiences, leverage our scale to deliver value added solutions for buyers and sellers, and build magical innovations that keep eBay at the forefront of ecommerce.
One thing she forgot to mention about that "massive" buyer base is that for six quarters in a row, it has been smaller than it was at the beginning of 2018.
That's right - not only has eBay lost any buyer growth from the pandemic boom, they've also squandered any gains that had been made for 2+ years prior.
Unfortunately, mere aspirations and ambition have not been enough to pull off a magical reinvention of the business and ~1,000 jobs were cut on January 23, as "headcount and expenses outpaced growth."
Liz Morton
In his memo to employees about the layoffs, Iannone took very little responsibility for the situation eBay currently finds itself in, while expressing that he remains steadfastly committed to the "high value enthusiast buyer focus vertical" strategy he says is working - a strategy being led and implemented by Stefanie Jay.
We are on a path to building a stronger eBay for the future — one that is growing, and resilient in the face of any challenge. Over the past three years, we made fundamental changes in our experiences across categories and accelerated the pace of innovation at eBay. In areas where we’re investing, we are seeing consistent increases in customer satisfaction and a meaningful improvement in our growth relative to the market.
Our strategy is the right one, but there is more we can do to ensure our success. We need to better organize our teams for speed — allowing us to be more nimble, bring like-work together, and help us make decisions more quickly. Today, I am sharing news about changes we are implementing to better position eBay for long-term, sustainable growth.
The most significant and toughest of these decisions is to reduce our current workforce by approximately 1,000 roles or an estimated 9% of full-time employees. Additionally, we plan to scale back the number of contracts we have within our alternate workforce over the coming months. These are not actions we take lightly — and we recognize the impact they will have on all eBayers. We have to say goodbye to people who have made so many important contributions to the eBay community and culture, and this isn’t easy.
The Need for Change
Despite facing external pressures, like the challenging macroeconomic environment, we know we can be better with the factors we control. While we are making progress against our strategy, our overall headcount and expenses have outpaced the growth of our business. To address this, we're implementing organizational changes that align and consolidate certain teams to improve the end-to-end experience, and better meet the needs of our customers around the world.
But is there solid evidence the strategy is really working and is it worth the costs and risks involved?
While eBay does not break down their "enthusiast buyer growth" by category, CFO Steve Priest's comments across multiple earnings calls show results over the last year have remained relatively flat, at best.
Liz Morton
Q2 2022 - "Enthusiast buyers made up approximately 17 million of our active buyers in Q2...average spend among enthusiast buyers grew sequentially and remains over $3,000 annually."
Q3 2022 - "Enthusiast buyers accounted for approximately 17 million of our active buyers in Q3...average spend per user grew sequentially and continues to be healthy at over $3,000 per year."
Q4 2022 - "Enthusiast buyers accounted for over 16 million of our active buyers in Q4...average spend per enthusiast rose again sequentially and continues to be healthy at above $3,000 annually."
Q1 2023 - "Enthusiast buyers remained relatively stable sequentially at 16 million in Q1...and on average, spend approximately $3,000 annually."
Q2 2023 - "Enthusiast buyers was stable at 16 million in Q2...spend per enthusiast grew modestly year-over-year, averaging roughly $3,000 annually."
Q3 2023 - "Enthusiast buyers were also flat sequentially at 16 million. Spend per enthusiast was stable quarter-over-quarter at around $3,000 annually, but modestly year over year."
Given Jamie's stated commitment to stay the course, it's important to understand the role that labor-centric warehouse and authentication operations play in this strategy and the implications of continuing down a path that is increasingly dependent on a large hourly workforce.
Liz Morton
eBay originally partnered with Sneaker Con to provide authenticate sneakers in late 2020 before eventually acquiring the authentication business in November 2021 and taking on their US facilities in Nevada and New York as well as operations in the U.K., Canada, Australia and Germany.
They've since added a third US location in New Jersey for in-house luxury handbag and fashion authentication, while authentication programs for watches, jewelry and trading cards are still handled by third party partners.
eBay massively increased their investment in these services throughout 2023, disclosing millions of dollars in additional expenses related to authentication every quarter.
Q1 2023: $14 million increase related to the expansion of authentication services compared to 2022.
Q2 2023: $15 million increase related to the expansion of authentication services compared to 2022.
Q3 2023: $9 million increase related to the expansion of authentication services compared to 2022 for the quarter.
That comes to a total of a $38 Million increase in authentication service costs just for the first 9 months of 2023, and we have not yet seen Q4/full year reports.
Despite pouring money into expanding authentication, eBay has struggled to gain traction with newly introduced categories like streetwear and to keep the momentum going with sneakers, while trying to find ways to monetize the service to cover some of the ever increasing costs.
Sneaker sales slowed when eBay ended fee free selling, with fees currently sitting at ~8% for sneakers over $150 and 13.25% if they are under $150, and buyers are increasingly unhappy with the program since eBay instituted a mandatory $14.99 shipping fee for all shoes sent to the authenticator.
eBay made another big acquisition when they purchased collectible card game marketplace TCGPlayer in October 2022 for $295 Million.
Liz Morton
TCGPlayer had over 600 employees at the time of acquisition, along with a massive headquarters and processing facility in Syracuse, NY where workers receive, authenticate, bundle, pick, pack and ship tens of thousands of trading cards a day.
The acquisition has subsequently mired eBay in a protracted, expensive and bad-pr inducing labor battle as authentication workers at TCGPlayer fought for and won their bid to become the first US union in eBay history.
eBay has continued to drag out the bargaining process, even though the National Labor Relations Board has found merit in multiple complaints filed by TCGUnion-CWA, all while paying notorious anti-union law firm Littler Mendelson big bucks to represent eBay's interests in the process.
Liz Morton
When eBay first embarked on this grand plan to bring authentication in-house, very little attention was given to the significant change in strategy it represented or the risks this strategy could pose to the company (and investors).
As savvy scrutineer, unsuckEBAY, noted at the time, it was a "significant step-change" for the company as it departed from the asset light, "just a venue" model that had previously protected it from unionization efforts which have targeted competitors like Amazon.
TCGPlayer employees had previously attempted to unionize in 2020, with concerns and demands about working conditions, pay, and management transparency similar to those cited in their ultimately successful organizing actions in 2023.
eBay should have been able to anticipate and prepare for the possibility of facing unionization efforts following the acquisition, given that the agreement allowed Founder Chedy Hampson and other management personnel to remain in an environment with a documented history of "strained" labor relations.
Interestingly, eBay chose not to reveal the potential risks that unionization efforts could bring to investors until February 23, 2023 in a 10-K filing with the SEC.
However, even after this disclosure, the company downplayed the potential impact.
Our business is primarily nonunionized, but we have some works councils outside the U.S. There has been a general increase in workers organizing to form or join a union in the U.S.
While we have not seen a material increase in such efforts among our employees, the unionization or related activism of significant employee populations could result in higher costs and other operational changes necessary to respond to changing conditions and to establish new relationships with worker representatives.
That statement was made one month after TCGPlayer employees filed their union petition and multiple unfair labor practices complaints with the National Labor Relations Board.
While eBay may not consider 272 employees "significant" within the total global headcount, any unionization efforts in the US were arguably a "material increase" from 0 and now that one authentication facility has successfully voted to unionize, others may follow suit.
eBay's apparent due diligence and disclosure failures in the TCGPlayer acquisition raised questions and concerns among investors, which were amplified even further when Chief Accounting Officer Brian Doerger abruptly exited the company in March 2023.
Liz Morton
In addition to ongoing labor troubles, eBay has agreed to a historic $59 Million settlement with the DEA to resolve allegations involving pill presses being sold on the site in violation of the Controlled Substances Act and is involved in ongoing litigation brought by the EPA due to sales of certain pesticides, chemicals, and emissions-control cheat devices.
eBay also entered into a deferred prosecution agreement with the Department of Justice last month after being found criminally liable in connection to the 2019 cyberstalking of journalists Ina and David Steiner of EcommerceBytes.
The deal hit the company with the maximum fine of $3 Million dollars and will require enhanced compliance monitoring for 3 years, including a specific focus on Mergers and Acquisitions due diligence, disclosure and risk management.
Liz Morton
Mergers and Acquisitions
The Company will develop and implement policies and procedures for mergers and acquisitions requiring that the Company conducts appropriate risk-based due diligence on potential new business entities, including appropriate due diligence by legal, accounting, and compliance personnel.
The Company will ensure that the Company's compliance codes, policies, and procedures apply as quickly as is practicable to newly acquired businesses or entities merged with the Company and will promptly:
train the directors, officers, employees, agents, and business partners consistent with Paragraphs 8 and 9 above on the criminal laws and the Company's compliance codes, policies, and procedures regarding criminal laws; andwhere warranted, conduct a review of all newly acquired or merged businesses as quickly as practicable.
The broad scope of the compliance monitoring suggests the Department of Justice and other Federal regulatory bodies may be concerned about a wide variety of business practices, opening eBay's entire operation up to additional scrutiny.
During Jay's tenure, eBay ramped up M&A activity considerably to power the "enthusiast buyer vertical focus" strategy, buying MyFitment for car parts guaranteed fit in 2022, as well as Certilogo for digital authentication of fashion and luxury brands and 3PM Shield for AI-powered compliance and anti-counterfeiting tech in 2023.
While those acquisitions did not come along with the large physical warehouse operations of in-house authentication efforts, they did contribute to eBay's already bloated headcount and expenses.
Other questionable acquisitions and investments include NFT marketplace KnownOrigin, millions in funding via eBay Ventures down the drain when luxury fashion resale outlet Cudoni went out of business, and joining a consortium to take a 25% stake in Funko Pop, paying ~$21 a share for stock that now trades ~$7.30/share.
According to NFTGator, ~30% of the KnownOrigin team was let go in the recent round of layoffs, leaving the future of cryptoart on the platform uncertain.
Liz Morton
While Iannone and the rest of the leadership team like to talk about a singular, unified "strategy", the truth is they have embarked on multiple strategies to bring enthusiast buyers to the marketplace - some with perhaps more success than others.
At Investor Day in 2022, CFO Steve Priest laid out what he calls eBay's "Build / Buy / Partner Approach."
If you were to make this same slide today, TCGPlayer, KnownOrigin, 3PM Shield Certilogo, and MyFitment would all be added to the "buy" row.
Meanwhile, Stoll and Co, GIA, CGC and PSA would go in the "partner" row for their applicable 3rd party authentication programs for watches, jewelry and trading cards and EasyShip would also be a "partner" for eBay International Shipping.
Given Q3 2023's disappointing report and uncertain results for Q4 2023 and beyond, it's time for stakeholders to start demanding concrete details about eBay's business strategies, results, and plans for the future, including questions like:
- What was the decision-making process that led to build vs buy vs partner for authentication and other enthusiast buyer, vertical focus initiatives?
- What have been the results of those decisions in terms of costs/risk vs growth, profit, etc.?
- What are the strengths and weaknesses in these strategies and what's working/not working?
- What should be done about what's not working and where do we go from here?
In light of chronic leadership misexecution and growing concerns about M&A, due diligence and disclosure, we have to wonder - if Stefanie Jay has resigned, was she chosen to be the sacrificial lamb in an attempt to appease stockholders and minimize pr fallout ahead of earnings?
We'll find out if it works when eBay reports Q4 and full year 2023 results on February 27 - stay tuned for updates in this developing story!
