(EBAY - Get Report) should be trying to buy
(GMKT) -- that is, if it isn't already.
On Wednesday, the
Seoul Economic Daily reported that eBay was in talks to purchase the South Korean online marketplace operator, sending Gmarket's shares up more than 8%, and suggesting that the market believes there might be something to the speculation.
And there should be. An eBay bid makes a lot of sense, particularly right now. Rumors of a possible deal have surfaced before, but eBay needs to do whatever it can to reignite growth in its core marketplaces unit, which investors have focused on despite strong showings in the company's other divisions.
Will eBay Buy South Korea's Gmarket?
Snapping up a leading Asian e-commerce player -- given the region's strong growth in online marketplaces -- could be what it takes to get investors back behind the stock.
Gmarket would be a particularly attractive candidate for eBay, says Cowen analyst Jim Friedland. Gmarket essentially has came out of nowhere -- it was founded in 2000, and only went public in 2006 -- but already has a larger market share in South Korea in terms of Gross Merchandise Volume (GMV), the amount of goods shipped over its platform, than eBay, according to Friedland.
And Gmarket's volume is also growing at a higher clip, Friedland says. The key to Gmarket's success was lowering listings fees it charges sellers when compared to eBay and waiving processing costs. That forced eBay into a brutal price war, since listings fees are a source of revenue for the company.