eBay has announced a new commercial agreement and investment in collectible trading card marketplace COMC with the goal of "accelerating the growth of the trading card hobby."
eBay Inc. (Nasdaq: EBAY), a global commerce leader that connects millions of sellers and buyers around the world, and COMC, an innovator in the sports trading cards space, today announced that the companies have entered a commercial agreement to accelerate the growth of the trading card hobby.
The deal also includes an eBay investment in COMC. This partnership reinforces eBay’s deep commitment to supporting sellers and collectors across The Hobby, delivering innovative experiences to help them thrive and fuel their passions.
With nearly 300 employees and 200,000 square feet of distribution space, COMC’s unique model offers buyers and sellers an expert partner with a deep catalog and sophisticated fulfillment capabilities. COMC has a demonstrated ability to effectively manage a high volume of trading cards at multiple price points. eBay’s investment will help unlock access to new services for eBay customers, including making listing easier and more efficient.
"eBay’s investment will help unlock access to new services for eBay customers, including making listing easier and more efficient" - that statement gives an interesting glimpse into what eBay ostensibly hopes to get out of this deal.
eBay has been promising sellers (and investors) that magical AI and image recognition powered listing capabilities are "coming soon", but has struggled with execution, especially in the trading card categories.
eBay built a "scan to list" tool in 2021 for collectible trading card games like Pokémon, Yu-Gi-Oh!, and Magic The Gathering but for some reason they've been unable to expand the tool to include sports trading cards or other collectible card games in the 2.5 years since the initial roll out.
Given the current state of eBay's image recognition technology, it would appear they may have run into some technical roadblocks preventing expansion of this feature.
eBay has also struggled with the Collection & Price Guide features for trading cards introduced in 2021 as well.
Is eBay hoping COMC's patented system for high-resolution scanning, inventory management systems, and historical pricing data can help fill in the gaps where they've been unable to make progress in-house?
At Investor Day in 2022, CFO Steve Priest laid out what he calls eBay's "build, buy, or partner" strategy.
Notably later that year, eBay added collectible card game marketplace TCGPlayer to that "buy" column - including TCGPlayer Roca Sorter machines that can help stores scan and sort large numbers of cards quickly and efficiently.
Spend less time organizing inventory and more time selling it with Roca by TCGplayer, a technology solution that quickly sorts and alphabetizes your Magic: The Gathering, Pokémon, or Yu-Gi-Oh! cards.
Roca allows you to:
- Save time and money. Autonomously sort and index 1,000 cards in just two hours, with labor cost savings of up to 80%.
- Customize how you sort your inventory. Sift for valuable cards, sort to fully alphabetize, or organize your inventory specific to your store’s needs.
- Easily digitize and import your inventory. Digitize your inventory with easy data imports into TCGplayer or other e-commerce platforms.
- Access insights to make smarter decisions. Get quick and deep visibility into your inventory so you can intelligently bulk pick and price your inventory across all channels.
Roca by TCGplayer offers two models depending on your store’s needs. The Roca Sorter and Roca Sorter Max both use cutting-edge image recognition technology that quickly sorts and alphabetizes your Magic: The Gathering, Pokémon, or Yu-Gi-Oh! cards and then compiles a spreadsheet for an easy data import.
Unfortunately, the TCGPlayer acquisition doesn't help with sports trading cards, but there could be some interesting crossover in the underlying tech used by both companies.
It will be interesting to see if COMC eventually becomes an acquisition target for eBay.
Priest faced questions about acquisitions during the Q2 2023 earnings call, which he answered with a vague statement about being "thoughtful" in their approach.
So we've been very thoughtful and considerate as we've looked to M&A, it's really to structurally improve the core marketplace...
...we've been very, very thoughtful about the entities that we lean into and partner with or we ultimately buy to really support the long-term sustainable growth of the platform, and we'll continue to be thoughtful. And as a group, we look at each potential acquisition on its merits and make the best decisions to drive long-term sustainable growth and shareholder value.
And after a lackluster Q3 report, weak guidance for Q4 and economic uncertainty heading into 2024, both Priest and CEO Jamie Iannone seem to have a newfound focus on "expense discipline", saying they are working to drive expenses out of the business.
In light of that, and a reported hiring freeze currently in effect across most of the company, it would be surprising for eBay to make any big acquisitions before the end of the year - so while I wouldn't rule out the possibility, my bet is they'll continue on the "partner" and invest track with COMC at least in the near-term.
If eBay does consider COMC as an acquisition target, hopefully they have learned many important lessons about due diligence and labor relations to avoid repeating mistakes that were made with TCGPlayer.