eBay to Lay Off 2400 staffs ahead of PayPal Split
eBay PayPal Split
As eBay gets ready to separate from its payment service unit, PayPal, it is set to cut about 7 percent of its workforce this quarter, the company said Wednesday as it delivered its fourth-quarter earnings report.
About 2,400 jobs will be eliminated in the first quarter from its e-commerce units, eBay Marketplaces and eBay Enterprise, and PayPal. eBay is also consider selling eBay Enterprise or taking the business unit public. The enterprise group provides e-commerce services for retailers and brands, including RadioShack, Sony and iRobot.
“It has become clear that eBay Enterprise has limited synergies with either business and a separation will allow both to focus exclusively on their core markets, as we create two independent world class companies,” eBay said in a statement. “Looking forward to 2015, we will be simplifying organizational structures to focus the businesses and ensure that we are set up to compete and win.”
eBay, which bought PayPal for $1.5 billion in 2002, announced in September that it’s spinning off PayPal so the two units can run as individual companies. The split is planned for the second half of the year. The move is meant to give both more flexibility to focus on their respective businesses. For eBay, that means increased attention on its retail and marketplace services since PayPal has been the fastest-growing part of its business.
PayPal’s revenue rose 18 percent to $2.16 billion in the fourth quarter. eBay’s marketplace unit increased just 1 percent to $2.33 billion.
eBay is spreading the job cuts among all its departments, Chief Financial Officer Bob Swan said during the company’s earnings call.
“They’ll be a little higher on the eBay marketplace side and a little bit lower on the PayPal side,” he said, depending on what each company plans to focus on.
CEO John Donahoe said that PayPal will be more focused on innovation, while eBay will focus on its core business by shutting down some initiatives.
He said eBay will focus on pleasing “the avid shopper” instead of the “convenience consumer.” This means more focus on free shipping and in-store pick up, but less on same-day delivery.
eBay experimented with its eBay Now same-day delivery service for roughly two years before integrating the features into its site. The service let customers order from a pool of eBay brick-and-mortar partners.
Advice to eBay
eBay should also consider the African marketplace especially Nigeria. Statistics from Alexa shows that a good number of Nigerians visit eBay marketplace and most of the visits are converted to sales, keeping it among the top 100 most visited site in Nigeria. Few people like me started using eBay when they approved PayPal usage for Nigerian and few other countries previously barred from using the payment system. But we follow a long process to shop on its marketplace, sending to friends address in the UK or USA before it is sent down. This is because of the affordability and genuineness of the products in their marketplace.