TameBay have confirmed what’s been rumoured for some time: eBay offices across Europe will close, teams are merging, jobs will be lost and operations are being streamlined and centralised in London and Switzerland. eBay Inc. announced in October that circa 10% of jobs would be cut from a marketplaces workforce of approx 10k. The good news? Reportedly, none of these job cuts are hitting European Customer Support staff. Skype and PayPal are also unaffected.
There is obvious logic to these cuts. Any business should keep a sober eye on staffing and, in an eBay Europe context, it’s obvious that some countries haven’t delivered results that justify the staffing they’ve enjoyed. Judicious staff cuts can be part of the sensible strategy any company pursues. Not least in times of recession.
But even in these straightened times, the significance of these job losses and the related restructuring shouldn’t be lost. Ever since eBay landed in Europe in 1999 (with the purchase of alando.de and the establishment of ebay.co.uk), it has pursued a ‘local’ strategy: teams in-country utilising local talent and knowledge to translate the eBay playbook into a language the native population will embrace. It has been a phenomenally successful approach. eBay marketplaces in Britain and Germany are massively profitable and represent eBay’s second and third biggest marketplaces respectively (after the USA). eBay is now decreasing its staffing in Europe for the first time.
There is flab at eBay. But is it in Europe? The European operation is lean in comparison to the much larger organisation at eBay HQ in San Jose. There multiple campuses are occupied by many thousands of employees. Cuts are being made stateside, but if estimates that the eBay Europe changes represent a net loss of 300 jobs (and I reckon that’s a reasonable, even slightly conservative, estimate) then proportionally the knife is cutting deeper on this side of the Atlantic.
One thing that concerns me enormously is the loss of expertise. The calibre of eBay staff is very high. And it seems obvious to suggest that the needs of eBay buyers and sellers in Main Street USA are different enough from those in Munich, Manchester, Marseille, Madrid and Milan to justify a team that reflects that diversity as closely as is profitable. The restructuring will mean that great experience and knowledge will be lost.
Restructuring is a tonic that eBay management turn to with the ease and enthusiasm of a drunk who thinks that just one drink first thing in the morning will solve the problems of the day. The ‘re-org’ is god. Constant structural change revered. Looking back at my seven years with eBay, I can’t even count the different teams, divisions and managers I served under.
But a ‘re-org’ (restructuring, streamlining, rationalising, retrenchment, whatever you want to call it) is only ever that. It’s not a substitute for the right strategy. Come January, a new, probably somewhat disorientated, and slimmed-down team in Zurich and London will have to work out what’s next. There is huge profit and growth to be found in Europe. The essential health of the marketplace is sound but the challenges facing eBay in Europe are huge. I’m concerned that these changes will diminish eBay’s ability to prosper in these difficult economic times.
Can a reduced, pan-European team chart the course to the reinvigorated growth that Wall St. and shareholders demand? I’m not sure. But once the short-term savings of job cuts have passed, it’s certain that analysts will still want eBay to find its old magic. So, what’s the next trick?