EBay makes a bid to freshen its image
When Pierre Omidyar founded EBay 12 years ago, he wanted to build the world’s most efficient marketplace. At the very least, he launched the most comprehensive one.
Today San Jose-based EBay Inc. is a conglomeration of websites where people sell everything from car parts to carp arts. (What den couldn’t use a watercolor of a fish?)
But with $60 billion worth of goods changing hands on EBay’s worldwide sites this year, all that stuff has a downside: It can be a drag to pick something to buy. If you were browsing for a video game system, how would you begin to choose among the 1,342 Nintendo Wiis listed on EBay one day last week?
And so with EBay entering something resembling middle age, with growth slowing and the stock price in a funk, the company is undertaking a crucial overhaul. The goal is to make buying things easier, more entertaining and more like shopping in the physical world.
“Our user experience has always been fantastic, but it didn’t keep up, in my view, as well as it should have,” EBay Chief Executive Meg Whitman said during an interview Friday on the sidelines of the EBay Live sellers’ conference in Boston. “You will see more changes to EBay’s buyer experience in the next 12 months than you probably have seen in the past three or four years.”
For example, to reduce buyers’ skittishness about sellers they don’t know, EBay has broadened the feedback criteria that can be left for vendors, and it has tried new strategies for reducing fraud. The company also is trying to make vendors’ shipping costs more transparent, so fewer buyers feel sandbagged by hidden charges.
EBay recently added a “bid assistant” program that lets people put multiple items on a wish list. If shoppers fail to win an auction for one of the products, the software enters them in another. That tackles a longtime EBay bugaboo because it raises shoppers’ chances of winning an auction without increasing the prospect that they bust their budget winning more than one.
Other moves make EBay more like typical e-commerce sites, such as last year’s birth of EBay Express, where customers can load fixed-price merchandise from several sellers into one shopping cart and check out all at once.
Perhaps most dramatically, EBay is crafting a more social experience, so people browsing from isolated computers feel like they’re going to the mall with buddies. That’s why the company is extending its buying-and-selling platform to run on mobile devices, blogs, networking sites such as Facebook and “widgets” that live outside a browser on computer desktops.
The buying process could get even slicker in the next few years. EBay is exploring improvements to its search engine and might add product-recommendation systems that can analyze buyers’ preferences.
Although the new lures for buyers are designed to help vendors move more products, EBay has to be careful not to upset its community of sellers who earn serious bucks on the site and can be prickly about changes.
“The more buyers they can bring in, we’re going to cheer that,” said Linda Hartman, who offers dinnerware from Bristol, Wis. But she added that EBay might be banking too much on fancy Web adornments that will have little overall effect.
“The enhancements are great for techies,” she said. “But my average buyer is probably a little old lady in Des Moines.”
EBay has rarely required such strategic reformations. After Omidyar set EBay loose in 1995, it ballooned with relatively little corporate effort. Pretty much all that EBay executives had to do was make sure their servers could handle deluges of Web traffic, charge sales commissions and listing fees, and then get out of the way.
In 1999, EBay’s revenue was a tidy $225 million. By 2002 it had sprung to $1.2 billion. Last year it was $6 billion, with $1.1 billion in profit. But that trajectory can’t last forever.
The growth in U.S. revenue -- half of EBay’s business -- has slowed for four of the last five quarters. International growth is stronger, typically around 38%, but EBay has struggled in the exploding markets of China and South Korea.
“They’re not really screwing up, and it’s not that Meg Whitman needs to go or they’ve gone in the wrong direction,” said Martin Pyykkonen, an analyst with Global Crown Capital. “It’s just that there’s some finite limits to growth, and they’re reaching that.”
