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How eBay Will Use AI to Drive Marketplace Sales

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Apr. 8 2019, Published 3:06 p.m. ET

eBay wants to help customers discover favorite products

eBay (EBAY) wants to stimulate growth in its most important division, its marketplace. In addition to discontinuing its third-party advertising program in order to strengthen the marketplace business, eBay is also leveraging the power of artificial intelligence to drive gains in the business.

The company has built an AI-powered feature that makes it easier for customers to browse its marketplace to discover items they may find difficult to describe in words. With eBay’s new AI-driven shopping feature, a person can easily browse eBay’s marketplace to discover similar items to what they have spotted on the platform. Additionally, the feature can help eBay customers find alternatives to sold-out items on the marketplace, ensuring that people can still complete a purchase even if the product that brought them to the site is out of stock.

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eBay’s revenue rose 6.0%

eBay’s marketplace revenue rose 7.0% YoY to $2.3 billion in the fourth quarter, lifting the company’s overall revenue 6.0% YoY to $2.9 billion. Etsy (ETSY), Alibaba (BABA), and Amazon (AMZN) recorded revenue growth of 46.8%, 41%, and 20% YoY, respectively, in the fourth quarter. Revenue rose 22.4% YoY at JD.com (JD) but fell 8.0% YoY at Groupon (GRPN) in the fourth quarter.

The effort to strengthen the marketplace business comes at a time when eBay is under pressure from hedge fund Elliott Management to improve its performance and generate more value for shareholders. Elliott proposed that eBay sell its other businesses to focus on developing its core marketplace division. eBay last month announced a plan to carry out a strategic review of its StubHub and Classifieds units, a process that could result in those businesses being sold.

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