eBay Hopes AI Can Help It Get Ahead of The Competiton, But Competitors Have The Same Plans – The Average Joe
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    eBay Hopes AI Can Help It Get Ahead of The Competiton, But Competitors Have The Same Plans

    Rhea Lobo

    May 6, 2024

    From PR nightmares involving its former communications chief allegedly harassing writers to its consistent delivery of underwhelming quarters (including its most recent last week), eBay ($EBAY), the floundering e-commerce company just can’t get things right. Now, it’s pinning its hopes on artificial intelligence (AI) to turn things around… well, them and every other company.

    Expectation vs. reality: Last month, Morgan Stanley dramatically shifted from being eBay’s harshest critic to its biggest supporter, thanks to a strategic shift towards AI. Morgan Stanley’s Nathan Feather believes “eBay is best-positioned to capture upside from generative AI in 2024” (BBG) — setting a target of $62 (~25% upside). eBay isn’t the only player leveraging AI features to woo investors — the industry is increasingly embracing AI for browsing, buying, and preventing fraud.

    • In recent months, eBay and Etsy ($ETSY) introduced AI-powered personalization and recommendation features and tools to help sellers auto-generate captions.
    • Shopify ($SHOP) and Amazon ($AMZN) are also rolling out AI features to assist sellers in quickly creating listings, although these features have yet to significantly impact sales.

    Does AI dream of online shopping?

    Probably not, but investors certainly dream of how AI can revolutionize online shopping — specifically, how much more sales it can help bring in. But eBay’s sales have been steadily declining since 2019 and its struggles can be summed in one question: When was the last time you started a purchase on eBay? Despite being founded within 14 months of each other in the ‘90s,  Amazon has far outpaced eBay:

    • Amazon’s US retail e-commerce market share is expected to surpass 40% this year (far above eBay’s 3%), while Walmart ($WMT) continues to ramp up its e-commerce presence (and just about every other company).
    • Over the past five years, $EBAY’s ~32% return has lagged behind Amazon and even the S&P 500, which rose 100% and 80%, respectively.

    Can AI save eBay? As with other AI transformations, success is far from guaranteed. High initial investments and the challenge of monetizing AI features remain significant hurdles — but companies continue to push out AI features anyway, which often aren’t well thought out and are quickly deprioritized. It’s clear that AI alone won’t save eBay — or any other struggling company hoping to slap on some AI features and watch its stock soar.

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