eBay layoff - impact on sellers?
This weekend, a Barrons article cited a report by an investment research firm, Wedge Partners (Brian Blair and Ryan Hunter) that says eBay is planning a 1500 person layoff.
Reuters has re-reported the story as well here. The big question I'm hearing from ChannelAdvisor customers and readers is: What will eBay layoffs mean for sellers?
Where are the people?
With 16,000 people in the company this would be a < 10% reduction. Given that eBay hasn't really gone through this before, I'd guess this can be done with little to no impact on operations.
To understand the impact on sellers, we need to think about where the cuts will/would come from. While eBay doesn't report a break down of the 16k, we can guess where the pockets of people are. If you peel the onion on eBay you have:
- Paypal - Paypal is the crown jewel of eBay and has grown substantially head-count wise over the last years. Here's where the people are:
- Paypal has the business people in San Jose at their own campus (view on gmaps)
- Paypal has tons of customer service/fraud prevention people in Omaha/Salt lake. I don't think it would be prudent to do anything here given the busiest season starts now.
- I'm going to guess Paypal has limited business people internationally, but probably big fraud prevention teams in their customer service center.
- Skype - Skype is probably a 1000 person company at this point and given that it's the fastest growing part of eBay.
- eBay marketplaces -
- I'd guess that 8k of the 16k people are at eBay marketplaces and housed at the 'mother ship'.
- 2125 Hamilton is the home of eBay Park which you can tour on gmaps with their cool 'Street View' (click here, zoom in and select street view - look to your left for the 4 buildings by starbucks and to your right for the other 4.)
- With 8 very large building's I'd say there are a good 4-6k people in that park. This report from 2003 cites 1500 out of eBay's total of 4200 at the time, so I'd imagine that number has more than doubled in the last 5 yrs (wow - eBay's headcount has gone up 4X since then!). So let's say 5k in eBay Park
- That leaves 3k that I' would say are about 1000 international and 2000 in Salt Lake.
- The international offices are run pretty lean with most functions being supported out of the US (engineering and admin for example).
- There are small offices in LA, SFO and a variety of other places from acquisitions (StubHub, rent.com, etc.)
Where are layoffs likely?
This is all speculation on my part, but logically it seems like it wouldn't be prudent to do anything at Skype, Paypal or places like Stubhub that are big growth drivers. Thus you're left with eBay marketplaces which is the anchor to the conlomerate and should bear the weight of any downsizing.
Within eBay marketplaces, I don't think International has room for much change, therefore you're left with the 2k people in SLC and the 5k people in SJC.
This is where it gets tough. Ebay has talked up the benefits of increasing customer service and TnS staff in SLC with Wall St. That could make it hard PR-wise to cut there.
That leaves 5k in SJC at the most risk IMO. If the 1500 were localized to that group, what looked like 10% now becomes 30% which is pretty deep and risky. In eBay Park you have:
- Lots of 'admin' - finance, hr, legal. I think one whole building floor is just legal. With eBay's legal issues though, this could be an area that's hard to reduce.
- Seller experience - possibly impacted
- Buyer experience - probably not impacted as eBay doesn't want to be seen underinvested in such a strategic area.
- Marketing - probably impacted. With eBay spending less and less on marketing, there are probably big reductions that could be made here
- Engineering - most of eBay's R+D is done in SJC with some pockets outsourced to India and other places.
- eBay Motors - Motors seems to replicate lots of the functions at other parts of eBay. I'd guess lots of synergies could be found by undoing all of this duplication of effort.
- CS+TnS - eBay has some functions like community, customer service and trust and safety with some headcount in SJC that largely creates policies for folks in SLC. There maybe room there to trim as well
- Middle management - eBay has lots of VP, Manager, Director level people that JD may look at eliminating as a way to streamline decision making. Most eBay employees are at least 5+ layers away from JD which seems ripe for bureaucracy.
What's all this mean for sellers?
If I'm wrong here and SLC is hit with the bulk of the layoffs, that's where 90+ eBay TSAMs are (Top Seller Account Managers). That would be bad for sellers as that group is the lifeline a seller has into eBay. However, if customer service or trust and safety in SLC are decreased that wouldn't directly impact sellers, but it could hurt the buyer experience (which is why I don't think it will be an area that is touched).
Seller development is at risk, but I think it's a smaller group so probably not something that would be cut deeply. Any admin, marketing or other cuts are likely to not
All in, I'd say there's a low (10-20%) that any reductions would impact sellers, but until we see what eBay does, it's all a guessing game.
SeekingAlpha Disclosure: I am long Google and eBay