eBay stock surges 75% thanks to clever AI moves

eBay is experiencing an unexpected renaissance, transforming itself from a fading internet pioneer into a tech-forward shopping platform through aggressive investments in artificial intelligence that have sent its stock soaring.

The 30-year-old online marketplace has introduced five new AI features this year alone, including automated shipping estimates, a shopping chatbot and a partnership with ChatGPT creator OpenAI. The strategy appears to be working, with eBay’s stock surging 75% since 2020 and outpacing tech heavyweights like Microsoft, Meta and Amazon this year.

Rising from challenging times

When Jamie Iannone became chief executive in early 2020, eBay faced significant headwinds. The company had undergone leadership turmoil and was shedding businesses under pressure from activist investors. It had just lost its position as the second-largest e-commerce platform to Walmart as relevance declined.

The Covid-19 pandemic unexpectedly provided relief, creating what Iannone calls accidental entrepreneurs who discovered they had valuable items to sell while spending more time at home. Now the company wants to build on that momentum through technology that makes buying and selling dramatically easier.

eBay remains among top U.S. retail sites, but its market share has shrunk from over 7% in 2016 to less than 3% this year as competitors like Amazon, Shein, Etsy and Poshmark multiplied.

Turning age into advantage

Rather than viewing its history as a liability, Iannone argues eBay’s longevity provides unique advantages in the AI era. The platform has accumulated decades of product listings and customer interactions for training AI models, plus 2.4 billion active listings and 134 million buyers generating invaluable data.

This treasure trove of historical information allows eBay to develop AI tools specifically tailored to its marketplace ecosystem. The depth of product knowledge across 134 categories gives eBay’s AI systems context that newer platforms cannot match.

AI tools for amateur sellers

eBay’s magical listing tool represents perhaps its most innovative seller feature. When users photograph an item they want to sell, AI automatically fills out product descriptions and details, eliminating tedious data entry that discouraged casual sellers.

The technology can also enhance listing photos, making that dusty garage shelf doll appear as if it sits on a pristine table. An AI assistant launched in August for U.S. and UK sellers can respond to common buyer questions about shipping destinations and other details.

eBay estimates the average American household contains $3,000 to $4,000 worth of unused products that could be sold. Getting people to monetize those idle goods instead of donating or discarding them could significantly boost the company’s gross merchandise volume.

Making buying easier too

Finding specific items on eBay has historically required expertise that only enthusiasts possess. Approximately 70% of transactions come from power users who understand how to search and navigate the platform effectively.

The new eBay.ai shopping tool aims to democratize that expertise by allowing customers to describe desired items in natural language. The chatbot recommends products based on conversational exchanges rather than requiring precise search terms and filters.

The shopping tool currently reaches only a small percentage of customers, with no announced timeline for wider availability. It competes against offerings from Google, OpenAI and upstarts like Daydream. Amazon’s shopping chatbot is projected to contribute $10 billion in additional annual sales.

Early results show promise

eBay’s AI investments appear to be gaining traction. The company reported 10% year-over-year growth in gross merchandise volume during the most recent quarter. Revenue grew 9% to $2.8 billion in the September quarter, exceeding Walmart and Etsy’s growth rates and matching Amazon’s North America sales growth.

Barclays analysts noted that AI product investments look to be gaining real traction with buyers and sellers. The stock performance suggests investors believe the AI strategy positions eBay for sustained growth rather than representing a temporary boost.

Balancing technology and humanity

Despite embracing AI, eBay wants to preserve human connections that differentiate it from impersonal big-box retailers. The company acquired Norway-based Tise in September, a social marketplace for secondhand goods where users follow and interact with sellers like Instagram influencers.

Iannone emphasized that human-to-human interaction remains important and AI should not eliminate opportunities to discover unique products from interesting sellers. The company is also open to making its listings searchable through third-party AI agents, recognizing that customers may discover eBay products through various AI interfaces.

While early results encourage optimism, eBay faces significant obstacles maintaining its comeback. Every major retailer is deploying AI, creating pressure to differentiate through execution. The 30-year-old platform has found new energy through AI, but sustaining momentum demands ongoing investment and adaptation as technology and consumer preferences evolve.

Story credit: CNN

Disclaimer: This article is for informational purposes only and does not constitute financial advice. The author and publication are not registered investment advisors and do not provide personalized investment recommendations.