Shipping and Speculation: eBay’s three tiered approach to logistics

okay, I know—at this point I should just rename the blog to the eBay Fan Club, but I promised a larger more inclusive DD of eBay and I’m actually convinced that $eBay could be a solid under-the-radar opportunity. Large firms aren’t taking eBay serious enough because they're writing eBay off as some antique from the dot-com era that hasn’t done enough to stay relevant. I get the sentiment, but it’s wrong.

For eBay to compete in the e-commerce sector against major players like Amazon, they need to continue their focus on logistics, which is what they're doing. They're avoiding serious overhead and focusing on the strategy of moving product instead of storing it, which would be costly and would cut into their capex budgets.

Consider this, tech companies like $NVDA and $META have a bizarre trait that when they spend money, their stock goes up. That capex is seen as an investment that would generate returns, but we haven't been seeing any returns and therefore these companies with sky high valuations and insane capex are reporting earnings that aren't inline with reasonable returns. But eBay is different, a defining factor of their logistics strategy is control, with out (heavy) capex.

We can break down eBay’s logistics strategy into three layers; carrier and fulfillment (physical), orchestration (software), circular (strategy). I’ll break down what those mean, and how eBay may be looking to improve on their already great infrastructure.

The Carrier and fulfillment portion of this stack is the backbone, it’s the moving of the actual physical goods.

• Orange Connex: for all intents and purposes this is already a joint venture; manages fulfillment in the eu/uk and speedPak in china.
• EIS: eBay international shipping is the internalized version of the old Pitney Bowes GSP, eBay is now the carrier of record
• Goal: rebrand delivery, control cost, ensure reliability
• Speculation: a formalization or increased stake with Orange Connex is practically certain. An outright acquisition is unlikely due to valuation and overlap

The orchestration layer is the automation and visibility For carriers, labeling, and tracking systems, joining them together a singular platform.

• Sendcloud (eu) and ShipBob (U.S.): these are high probability integrations or acquisition eBay could target to consolidate seller shipping and cross border labeling
• Shipping/EasyPost: these dudes have the APIs that price, label and track parcels across various carriers, this could be the software version of “own the rails”
• Goal: one seller dashboard, instant label, automatically tracked, shipped domestically/internationally
• Speculation: I don’t have any at the moment

The Circular layer is where eBay's connects the dots between logistics and margin growth. eBay’s recommerce engine turns trade ins, refurbs, and partner storefronts (Lenovo, Dyson, etc) into repeatable revenue.

Recommerce engine: 40%+ GMV from used/refurbished items

• partnerships: Logitech, Dyson, Lenovo storefronts under “eBay Refurbished.” with eBay’s strict refurbished criteria we could see more/premium brands jumping on this.
• Goal: make returns and refurbs a profit opportunity for sellers rather than a loss
• Already happening: No need for speculation here, eBay’s in the execution phase, now they just need to expand coverage to multiple categories (tools, appliances, luxury).

Back in June, eBay opened a new "global capability center" in India hiring for 190+ positions to ramp up operations including generative AI, also relocating some R&D/operations from Israel.  The new hub is 65,000 sq ft, so pretty safe to say they're expecting a decent sized operation over there.

A relocation of operations, a new hub, and mass hiring; certainly signals an expansion and focus on international logistics. I thought this would be an outsourcing operation but I can’t find anything to confirm that they’re replacing any warehouse (authentication) centers. in fact quite the opposite. Job listings for (among other positions) “Warehouse Operations Managers” for eBay’s facility in Kentucky, focused tells me they're increasing or expecting growth in domestic operations as well. 

Oh and a side note - SCOTUS is looking at whether the tarrifs imposed by administration are legal - if they over turn the tarrifs then we should see an increase in eBays overall volume. The de minimis exception was revoked which caused a drop in their margins, so expecting a leap if tarrifs are overturned isn't a stretch.