Staff Reduction at eBay: The Interview with SWR

The trading platform eBay is cutting a thousand jobs – the explanation is that the workforce and expenses have grown faster than the business. And there have been many layoffs at other online retailers recently. What’s going on? According to Richard C. Geibel, Managing Director of the eCommerce Institute Cologne, this is clearly a consequence of the waning boom of the COVID era. Read the interview below. You can find the audio conversation on SWR.de.

SWR, Christian Rönspies: Is this due to new cheap online providers like Temu or Shein, or is there something else behind it?

Richard C. Geibel: Indeed, we are now seeing two corrections. First, you have to imagine that during the COVID era, the entire e-commerce sector grew enormously. By 33% in 2020 and another 16% in 2021. And now, thankfully, we see people returning to stores, to shops, and there is a slight correction downward. At the same time, the trend in e-commerce growth, especially in the tech sector, remains unbroken. The second effect you just mentioned is indeed that the large Chinese providers are aggressively flooding the market with their – one can simply say – cheap products, leading to corrections for other providers.

Christian Rönspies: How does it currently stand in comparison with other online shopping providers from your perspective?

Richard Geibel: Well, the big hype around eBay might be a bit over, but they have actually stabilized at a good level. It fluctuates a bit up and down. There is indeed a slight downward movement now, but in my opinion, this will be balanced out in the medium and long term.

Christian Rönspies: As you hinted earlier, many tech companies hired massively during the pandemic, and now there are layoffs everywhere. Did they miscalculate in their personnel policies, or do you see this as something normal, that people now have to leave?

Richard Geibel: One must differentiate between the American and German markets. Americans are less social in this regard. They quickly hire people and unfortunately lay them off quickly as well. We do not have this strong correction. There is a certain continuity here. We also see annual growth of 5 to 9 percent in e-commerce for the next few years, so quite positive. It will continue to develop well.

Christian Rönspies: Nevertheless, people are being laid off, especially there. How do you assess the development in the online retail sector? Is there possibly a concentration happening? And as you mentioned, the hype around eBay is somewhat over. Will there soon be only Amazon and maybe a big Chinese provider, more or less dominating the market?

Richard Geibel: You’re addressing a very interesting trend. We describe it with the term Social Commerce. Since the beginning, for over 25 years, social media and e-commerce have been separate, and now they are merging. Social Commerce refers to the direct sale of products through social media platforms. And just at the end of last year, we read an announcement from Meta – Instagram, Facebook – they have made a deal with Amazon that defines the delivery of goods and the payment of products through the Meta platform.

So, indeed, a significant concentration of major players. At the same time, we observe, in the spirit of “the empire strikes back,” that Amazon doesn’t want to let others take the cake unshared. Because now, with Amazon Live, they have the opposite effect. They bring influencers, social media experts, chatting, recommendation marketing to their platform, where you can even admire Paris Hilton in a video.

Christian Rönspies: Okay, so something fundamental is indeed happening, but if we come back briefly to eBay, there may be more layoffs there soon, right?

Richard Geibel: We see that in the USA. In Germany and Europe, it’s very restrained. It has stabilized at a very good level. But, of course, the market is in flux. New providers are always coming in. You just mentioned the big Chinese ones. After such a hype phase, I am relatively confident that people will understand that buying cheap can lead to problems, like buying twice. So, that is also a challenge for the consumer.