By Tim Conneally, Betanews
Earlier this month, eBay began to jettison its mismatched properties, such as content location service StumbleUpon, and VoIP messenger software Skype to concentrate on its original strength, the online marketplace.
In the current economy however, those marketplace properties -- which include eBay, StubHub, and Shopping.com -- are actually creating significant drag on the company's revenue. EBay's first quarter earnings report yesterday showed that while the company's overall revenue dropped about 8%, revenue from its marketplace segment dropped nearly 18%. This was attributed to the strengthened US dollar devaluing overseas transactions, which account for more than half of eBay's business.
"Yes, internationally the business is growing faster than it is here domestically", said eBay CFO Bob Swan.
Shortly after it announced its divestitures, eBay made a public tender offer of $1.2 billion to gain a controlling stake in Korean auction site Gmarket.
CEO John Donahoe said yesterday, "We are focusing our portfolio by divesting assets that are not closely aligned with our two core growth businesses...And we are strengthening our core eBay business by signing an agreement to acquire Gmarket, Korea's largest marketplace." (Our thanks to Seeking Alpha for the transcript.)
South Korea's antitrust watchdog group, the Korea Fair Trade Commission, issued a statement today that conditionally approved eBay's acquisition of Gmarket, provided that eBay does not raise sales commissions for at least three years, and that measures are taken to protect independent sellers.
EBay's current Korean marketplace is called Internet Auction Co. (IAC), and it will be combined with Gmarket, ensuring a foothold for growth not only in Korea, but in the broad Asia/Pacific region.
This move looks like an attempt to further entrench eBay in the fixed-price secondary market, dealing in closeouts and out-of-season goods. Donahoe said, "North Asia, Korea, and China have always been primarily fixed-price markets, so IAC has been a truthfully fixed-price market. Gmarket in essence is fixed-price."
Copyright Betanews, Inc. 2009