[danvayn]

The TD Bank securities commitment of 20B to finance the deal and GameStop having a market cap far below the acquisition cost suggests that buying eBay would’ve been very problematic and risky for investors. But comparing it to K mart buying sears isn’t really accurate to me.

Like yeah, GameStop clearly fits into the death of retail, and acquiring eBay does increase their market visibility or presence. Beyond that, what ebay/GS could’ve gained is way different and arguably more substantial than what acquiring Sears did for either company involved. Atleast here, one operates storefronts for second hand transactions and the other expressly doesn’t. There is definitely money in that.

[jerf]

If eBay thought having storefronts would be advantageous, they would have them. It doesn't make a lot of sense for eBay to merge with Gamestop only for the combined entity to decide that the most sensible first thing to do is close all the Gamestop locations.

The physical Gamestop locations are also horrifically overprovisioned to be an eBay storefront. Many companies have already experimented with things like "lockers" which seem to be successful enough to hang around, probably because the costs are low enough they don't need to do much to justify themselves and they don't need dedicated store fronts. If they want better assurance that the things being shipped are what the sellers claim they are a partnership with UPS or Fedex and their wide variety of existing storefronts that are already provisioned with everything you need to ship almost anything makes orders of magnitude more sense, and nobody has to "acquire" the other to make that work, without the square footage of a Gamestop location.

[semanticist]

GameStop's idea behind using their physical locations isn't for ease of shipping so much as ease of verification. People buying brand-name stuff off eBay (and Vinted, etc) pay for verification services to make sure that it's real. The idea - which is the only good/sane part of this entire takeover proposal - is to have retail locations that do the verification in person instead of shipping items to a central location for verification on sale.

But if eBay thought that would bring in more sales, I doubt it would be hard to find empty retail outlets in every city/town in the US and Europe since high street retail has been on a death spiral for years.

You can already use lockers for delivery/drop off with eBay through their courier company partners, at least in the UK.

[WJW]

Wouldn't verification for almost anything beyond the extremely basic need specialized people? I don't think it's reasonable to train every Gamestop employee to be able to verify everything from fancy Swiss watches to brand name clothing to playing cards. At least if you do it in a central location you can have actual experts do the verification.

[sanswork]

Yup, you save a few dollars per verification on shipping in exchange for spending tens of thousands on training each employee to verify items. Mind you these are retail employees so turnover is going to be high. Also since they need to be able to verify everything they won't have time to be in store since they'll constantly need to be studying new products. That or you just have them work off checklists for each product in which case the value of the verification isn't great since counterfeiters will just buy those check lists and manufacture to them.

The end result is much much higher cost per verification, and a less trusted quality of verification. But you save a few bucks on shipping.

[eszed]

The verification I'd be looking for immediately in-store would be "is this [product] or is this a brick?" - that once happened to me, with (for all I see sellers complain about excessively buyer-friendly policies) no recourse or compensation. If there's a more-complicated verification needed, the buyer could request that it be held onto until that's performed (elsewhere, if necessary). Verifiable chain of custody protects both buyers and sellers.

Not that a dodgy Gamestop merger is necessary for this, but I'd be (much) more likely to both buy and sell on eBay if it existed.

[jader201]

I'm not sure I follow/buy the premise of moving second-hand sales to a physical building as beneficial to eBay.

If I'm looking for X, I'd much rather go to an online store, where I have access to several listings of X at varying prices and condition, vs. make a trip to a physical store, see if they have X, and hope that the condition and price matches my expectations.

Maybe if I'm not looking for X, and just want to browse a bunch of stuff (e.g. yardsale/flea market style), then a physical store could make sense.

But, to me, having this middle-man physical presence was already a problem, and eBay solved this.

I just don't feel like eBay needs GameStop.

Now, whether GameStop needs eBay is a different story. But GameStop is in trouble for two reasons:

1. Video games -- and therefore video game sales -- are moving to digital.

2. Physical stores are becoming a thing of the past for retail transactions.

eBay doesn't need GameStop's troubles.

[tombert]

I could see it potentially be something like the Walmart pickup service? Last mile delivery is pretty expensive, so conceivably they could offer faster and/or cheaper shipping if you picked it up at a physical store.

I don't know. I don't think this acquisition would be a good idea.

[xp84]

^This. The crazy part is that in today’s PE-style system of things, the incentives…

- GameStop shareholders

- GameStop the company - e.g. employees

- eBay shareholders

- eBay the company - for example its employees

…aren’t necessarily aligned.

If GAME buys EBAY - it’s an exit for the EBAY shareholders, which is easy for them to evaluate as it’s presumably a $ premium over the share price today. If GAME then runs the company into the ground trying to free up the cash to pay off the acquisition debt, as most leveraged buyouts do (especially where retail is involved), that’s not a problem for those already-exited shareholders, though it is probably a problem for employees of either company.

[dagenix]

My understanding is that existing Ebay shareholders would get half cash and half stock. In order to actually profit, those shareholders would need to believe that the combined company's stock could be sold off without taking a significant loss.

[xp84]

Yeah. On the individual level you can plan to sell immediately, but it sure wouldn't be pretty if a lot of the shareholders decided to do the same!

[tombert]

If this deal does eventually go through, then it might be a good time for someone to start working on a competitor to take over the online auction space.

[rtkwe]

The biggest headache has always been fraud, eBay gets if from both sides and it's a pretty intractable problem to solve as the middle man.

[xp84]

That's what those huge ~10% final value fees they charge are for. And other revenue such as sponsored listings (pay to boost your item in search results).

As long as they keep the fraud volume below like 5% of sales, I feel like it's just a numbers game, where they just need to get as much sales onto their platform as possible to give them enough operating margin to cover their costs (including fraud) and provide profit.

Admittely, I have no idea how well they're doing at that, I haven't looked at their financial statements or anything.

[rtkwe]

Yeah my main point was it's a complete pain in the ass to deal with if you want to do it properly in a way that actually prevents fraud on either side. eBay has kind of just erred one side or the other for most of it's existence and right now the complaints are mostly from the seller side that I see.

[rtkwe]

TD didn't commit to $20B their letter only says they're "highly confident" they could raise that much. Very important distinction between the two.

[papercrane]

The letter also said it was conditional on the combined entity maintaining investment-grade credit rating, which seems unlikely if the combined entity was saddled with $20B in debt.