eBay Bets Big on AI for a Modern Comeback

A New Chapter for an Ecommerce Pioneer

When Jamie Iannone became eBay's chief executive in early 2020, the company was at a crossroads. Following a major leadership shakeup and pressure from activist investors, the original internet marketplace was shedding businesses and had recently lost its spot as the second-largest ecommerce platform to Walmart. The company's relevance seemed to be on the decline.

However, a boost from the Covid-19 pandemic provided fresh momentum. Now, eBay is determined to build on that resurgence by making a significant investment in artificial intelligence. This year alone, the company has rolled out five new AI-powered features, from intelligent shipping estimates to a shopping chatbot, and has even partnered with OpenAI. Investors are taking notice, with eBay's stock surging 75% since 2020, outperforming even giants like Microsoft, Meta, and Amazon this year. Still, reinventing a 30-year-old marketplace is a massive undertaking, especially with competition from every corner, including Amazon, Shein, Etsy, and Poshmark. Despite remaining a top retailer, eBay's market share has fallen from over 7% in 2016 to under 3% today as the field grows more crowded and virtually every competitor races to deploy their own AI tools.

Leveraging a 30 Year Data Advantage

In the competitive race for AI supremacy, CEO Jamie Iannone believes eBay’s long history is its greatest strength. The platform possesses decades of invaluable data on product listings and customer interactions, creating a rich foundation for training highly effective AI models. This unique dataset is drawn from its 134 million buyers and an incredible 2.4 billion active listings.

“We have really unique data, if you think about all the categories that we transact in,” Iannone explained in an interview with CNN. This historical information gives eBay a distinct edge in understanding the nuances of buying and selling a vast and diverse range of products.

Making Selling Easier Than Ever with AI

The pandemic created a wave of “accidental entrepreneurs” who began selling unused items from their homes. eBay is now using AI to make this process seamless for amateur sellers. A new “magical listing” tool can automatically generate product descriptions and details from a simple photo. AI image technology can also enhance listing photos, for instance, by replacing a cluttered garage background with a clean, professional-looking surface.

In August, eBay also launched an AI assistant for sellers in the US and UK. This tool can automatically answer common buyer questions about things like shipping, based on the information already in the product listing. These features aim to unlock the value hidden in homes, which eBay estimates is between $3,000 to $4,000 worth of unused products per American household. By making it easier for people to sell these items, eBay hopes to significantly boost its gross merchandise volume, a key metric that grew 10% year-on-year in the last quarter.

A Smarter Way to Shop on eBay

Traditionally, finding highly specific items on eBay has been a skill mastered by enthusiasts, who, according to Iannone, account for about 70% of all transactions. To make the platform more accessible to new and casual customers, eBay is developing a new AI shopping agent.

With the “eBay.ai” tool, shoppers can describe what they are looking for in natural, conversational language, and the bot will provide tailored recommendations. Analysts believe tools like this could be a game-changer. “Their product mix is very distinct and unique and that creates challenges for them… and it also creates opportunities for AI tools to help improve their business,” said Emarketer analyst Sky Canaves. This technology could give eBay a crucial advantage by simplifying the discovery of its unique and collectible items.

Navigating a Crowded AI Powered Market

The shopping tool is still in limited release, and in the meantime, eBay faces a market filled with powerful AI offerings. Competitors include established players like Google and OpenAI, as well as AI-native startups like Daydream. Amazon's own shopping chatbot is already on track to generate an additional $10 billion in annual sales, according to CEO Andy Jassy.

However, eBay sees these third-party agents as a potential opportunity. Iannone has expressed interest in making eBay's listings searchable everywhere, “both on eBay and off of eBay.” This could involve joining programs like OpenAI’s initiative for instant checkout in ChatGPT, which would allow external AI agents to drive sales directly to eBay.

The Future is Both AI and Human Connection

While eBay is heavily focused on its AI-driven future, it hasn’t forgotten the importance of human connection. In a move to bolster its community feel, the company recently acquired Tise, a Norway-based social marketplace where users can follow and interact with sellers much like they do with influencers on Instagram.

Iannone emphasizes that this balance is critical. “The human-to-human interaction is very important,” he said. “We don’t want AI to take away the fact that you’re able to go find that great, unique product from this awesome seller on the platform and you build a connection because of that.”