After announcing selling fee increases last week, eBay revealed plans to cut approximately 500 jobs over the next 24 hours, becoming yet another tech firm to undergo staff downsizing.
So far in 2023, the tech industry has laid off over 97,000 employees across 312 companies, according to Layoffs.fyi, a site that has been tracking tech layoffs since 2020.
At the current rate, job cuts could hit a million by the end of the year. By comparison, last year the site tracked nearly 160,000 tech layoffs for the entire year.
By comparison, eBay’s approximately 500 staff reduction is on the lower end, even within its industry, as it represents about 4% of its total global workforce.
Amazon, Shopify, StockX, Wayfair, and others in the ecommerce industry have announced layoffs impacting a far higher percentage of its total workforce.
Still, eBay’s announcement is worrisome for a company that is trying to transform itself again and whose bottom-line financials have been pretty decent, even as its General Merchandise Volume (GMV) has been steadily dropping.
In a message to employees, eBay President and CEO Jamie Iannone said, “[O]ver the past few months, we’ve taken a thoughtful look at where we are as a company with considerations of the macroeconomic situation around the world and how to best invest and operate so that we can continue to be successful.
“Over the next 24 hours, we’ll be letting approximately 500 employees globally know that their jobs will be eliminated. This number represents about 4% of our total employee base.”
Iannone further explained that these job cuts will enable eBay to “strengthen our ability to deliver better end-to-end experiences for our customers” and help the marketplace expand “Focus Categories, creating trusted experiences and investing in new technologies.”
In addition, he said, “this shift gives us additional space to invest and create new roles in high-potential areas — new technologies, customer innovations and key markets — and to continue to adapt and flex with the changing macro, ecommerce and technology landscape.”
eBay did not reveal where it plans to cut staff, but there may be one hint in Iannone’s message to employees; middle management. He said, “[w]e’re also simplifying our structure to make decisions more effectively and with more speed.”
eBay sellers and buyers will probably hope these cuts will not affect the already perceived as weak customer service department.
One only has to go on the eBay Community Forums or social media channels to find many complaints from users about eBay’s poor customer service experiences.
The timing of this staff cut and the apparent swiftness may also suggest eBay’s 2022 holiday season sales were lower than expected.
This would be a continuation of eBay’s failure to capitalize on its Covid bump in 2020 as in 2021 the company started to lose active buyers and sellers on a sequential quarterly basis.
Mostly eBay has excused these drops by claiming it’s due to their change in strategy to focus on specific categories such as sneakers, collectibles, watches, jewelry, and vehicle parts & accessories as well as high-value or enthusiast buyers.
Over the past year, eBay has claimed this strategy adjustment has brought a greater number of enthusiast buyers to the platform that supposedly spend more money per user on the marketplace, replacing lower spending buyers, especially those gained during the height of the Covid pandemic.
Unfortunately, it’s been challenging to determine the effectiveness of this strategy because eBay has muddied the definition of an enthusiastic buyer, making it almost impossible to evaluate progress with the limited information presented during earnings calls.
eBay Weak Earnings Report Coming Up?
As much as Iannone claims in his message to employees that this rightsizing will help the company grow its business, coming after the busy holiday season, it seems that it could signal a poor earnings report later this month.
eBay is scheduled to announce its fourth quarter and full year 2022 financials on February 22, 2023.
Until then, we won’t know if eBay is just the latest tech company taking a closer look at some roles and redundancies or if this is a reaction to continuing falling GMV and active user numbers.
eBay employees that are affected by this layoff will be provided comprehensive transition packages with severance and employee incentive payments.
“While today’s actions are not easy, I know this team will come together to support each other as eBayers always do.
“The dedication and commitment that you all bring every day on behalf of our customers — and each other — inspires me every day. I look forward to the opportunities for growth and innovation in our future,” concluded Iannone in his message to employees.
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