eBay’s executives sold a new buyer-centric strategy to an audience of 10,000 eBay sellers and a smattering of buyers at the eBay Live conference held in Boston on June 14th through 16th.
Meg Whitman, eBay’s CEO, described the company’s strategy as “continuing to reignite the core auction experience….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,” Meg explained in an Associated Press interview on June 15th. The same Associated Press article went on to say, “Perhaps most dramatically, eBay is crafting a more social experience, so people browsing from isolated computers feel at least somewhat like they're going to the mall with a pack of buddies.” (One glimmer of where this strategy may lead appeared in May, when eBay purchased StumbleUpon.com for $75 million. StumbleUpon is a site that lets people rate and share favorite Web sites and information online.)
So eBay is going back to basics—re-focusing on its core auction business and on the vibrant user communities that were the hallmarks of the eBay experience that Pierre Omidyar brought to life in 1995.
Bill Cobb, President of eBay North America, described the “new” focus this way:
“We’re investing in the quintessential eBay experience of buying and selling—person to person—in an auction format. Today online shopping is mainstream—but it’s also becoming boring. We’re taking a stand for what we believe—that different is good—that people are more interesting than things—that eBay is still the place to go for the rockin’ deal—and that the combination of all these things is what has created eBay.com into a destination site like no other.”
Bill also described the moves as “a high stakes balancing act.” Why? Because eBay has a long history of trying to please its paying customers—its sellers—rather than focusing on the end-customers or consumers who purchase the sellers’ wares. eBay charges fees to the sellers, not the buyers. But, obviously, if buyers don’t continue to buy and bid at eBay and bring their friends, the company’s growth will slow. Bob Tedeschi reported that Meg Whitman said, “We're optimistic that these changes will translate to accelerated growth and help us change the trajectory of our two largest markets, U.S. and Germany.” Bob points out that, as of early June 2007, the volume of eBay’s U.S. listings was down by 3.8 percent, and “the listings on eBay’s German site had dropped by 16.5 percent earlier this month, compared with the similar time last year,” according to Citigroup. eBay’s revenues were $6 billion in 2006, with $1.1 billion of profit.
However, eBay has learned the hard way that making changes that adversely impact its 700,000 sellers is a risky proposition. So the trick is to convince the sellers that the changes eBay will be rolling out over the next few months will spawn more buying activity, attract more shoppers, and increase repeat shopping behavior.
Based on the early reports from eBayLive and on the relatively civil behavior of the vocal power-sellers at the eBay Live Town Meeting last Saturday, the early signs are that the renewed focus on the “buyer experience” appears to be working.
Addressing Buyers’ Showstoppers
eBay’s executives described several major areas of improvement at eBay Live that are designed to address buyers’ key pain points (what we call “moments of truth”).
Buyers’ Top Issues:
- The site is too confusing for many buyers, particularly those new to eBay.
- It’s too hard to find what you want; there are too many listings to sort through.
- There are too many auctions to monitor; it’s too time-consuming to engage and win, and, if you hedge your bets by bidding on several auctions for the same merchandise, you may wind up buying more than you planned.
- Some buyers have experienced unexpected high shipping charges from some sellers.
Improving the Buyer Experience
In order to address these buyer issues and to reignite the momentum of eBay’s core auction business, eBay’s executives have been talking up several key improvements to the buyer experience, all of which were featured in the keynotes at eBay Live:
- New Home Page. eBay is currently testing a new, cleaner home page design that will be launched in the fall.. Here’s one of examples of the home pages currently being tested. The new home page will have much more white space and be designed to ground and orient customers, rather than barrage them with a plethora of eye candy. Key central themes for the new home page design will be a prominent “My eBay at a Glance” section for returning customers, a focus on community and on “winning,” as well as personal pages (eBay MyWorld).
- More Specific Rating System. The new seller rating system includes specific ratings for things that buyers care about, such as “reasonable shipping charges, and speedy shipping.” (During the Town Hall meeting on the last day of the conference, sellers pointed out that giving a 5-star rating for “very reasonable” shipping charges vs. 3 or 4 stars for “reasonable” doesn’t make sense. “They’re either reasonable charges or they’re not,” one seller commented. The eBay execs urged sellers to be more transparent about shipping times and charges, since variations in shipping charges and delivery times are a big dissatisfier for eBay shoppers.
- Shipping Charges. At eBay Live, the company also announced that it had negotiated better discounts with UPS, resulting in lower shipping charges that could be passed onto buyers. The sellers greeted this news with cheers!
- Better Search and Navigation. Today, eBay’s auction listings are shown with the auctions that are about to close at the top. But buyers have made it clear that they have other criteria in mind when selecting which products and auctions to bid upon. So eBay is enhancing search and navigation in two ways: 1) to make it easier to search and find the specific items you’re seeking (e.g., Star Wars’ posters vs. Star Wars’ coasters); 2) to enable visual navigation that enables customers to sort and select based on the criteria they care most about (e.g., seller’s reputation, price, color, and so on).
- Adding a Product Recommendation Engine? eBay execs mentioned that the company is “exploring improvements to its search engine and might add product-recommendation systems that can analyze buyers' preferences.”
- Buying Tools and Widgets. eBay has been testing a number of new graphical wizards that give buyers more control over their bidding experiences. These include Bid Assistant. Phillip Justus, eBay’s Sr. VP of Auctions describes it this way:
- “Bid Assistant will place bids for you on a series of items from your Watch list—all in one simple step. For instance, let’s say you’re shopping for a new Canon digital camera, and you have five that you like on your Watch list. Using Bid Assistant, you simply create a bid group from your Watch list and enter the maximum amount you want to pay. This amount could be the same for all five—or you could specify different amounts for each listing based on, say, the varying item condition. It’s up to you. Once set up, our bidding system will automatically update your bid amount UP TO the maximum amount you gave to Bid Assistant, as necessary….If you lose, Bid Assistant will automatically bid on the auction ending next. And so on. The pattern continues until either you win one of the cameras (woo hoo!) or all five listings end.”
Another tool that is coming soon is eBay Countdown, a new tool that lets you monitor both the time and the price for multiple items on your watch or bid lists.
Earlier this Spring, eBay announced the eBay to Go interactive widget, which lets buyers (or sellers) create graphical widgets they can post on their own Web sites and blogs to feature and track the auctions for certain items.
New eBay Ad Campaign: Windorphins
You may recall eBay’s advertising campaign last year—the blocky letters, spelling “IT”—no matter what “it” is, you can find “it” on eBay. This year’s ad campaign is all about the high of winning an auction. Meg Whitman introduced the theme at the Morgan Stanley Technology Conference in March. According to Rick Aristotle Munarriz from the Motley Fool who attended the conference, Whitman “explained that one of the goals at eBay was to ‘continue to reignite the core auction experience, or what we call the windorphins business.’
“Windorphins?,” Rick wondered, is that a word?
“People have always come to eBay for the fun and the thrill of the hunt as opposed to just a more traditional clinical retail experience," Whitman clarified. She indicated that the word was the convergence of winning and endorphins.”
“I registered the domain on March 8, three days after Whitman spoke at the conference….. For months, the only Google reference to the term was from my article.…I had registered the domain in good faith, hoping that windorphins would catch on as an industry buzzword. No one from eBay had any interest in registering the name or filing for a trademark when I stepped up to claim it.”
But, a few weeks later, when eBay got serious about running a marketing campaign around “windorphins,” they filed a trademark on the term Windorphins and asked Rick to relinquish the domain name, which he was happy to do. He didn’t even ask for them to pay him the annual registration fee. (As a Motley Fool employee, he couldn’t accept payment from a company whose stock is actively recommended in the Motley Stock Advisor newsletter service anyway.) And, as he put it, “The last thing that I wanted to be was an enemy of one of the truly great online success stories of our generation.”
Windorphins Needed to Entice Buyers to Play?
As an active eBay member (having amassed a 100 percent perfect feedback ratings score of 172 over the years), Rick Munarriz “gets” the appeal of the new ad campaign:
“eBay’s killer advantage—a thicker moat than anyone realizes—is that it’s where serious bidders and sellers congregate. Getting the masses to come over involves painting a world of whimsy, where every listing is an adventure. Whether it’s channeling Sinatra, block letters, or now windorphins, it sets eBay apart from the fading competition.”
So I have no problem stepping back from the domain name fuss to accept that windorphins is just what eBay needs at a moment when its stateside listings can use a little chemical boost.”
eBay and Google Skirmish in Boston
The final side note to report on the recent eBay Live confab in Boston was the well-documented kerfluffle between Google and eBay. The product managers for Google’s automated Checkout facility (which competes with both Amazon.com’s “one-click?” and eBay’s PayPal payment systems) were planning to hold a big party to court eBay’s sellers during the eBayLive conference. eBay was not pleased. They told Google that they thought that poaching on their loyal eBay sellers was in bad taste. When Google didn’t budge, eBay pulled all of its advertising away from Google. That seems to have gotten the point across. Google canceled its party, reporting on its blog, “after speaking with officials at eBay, we at Google agreed it was better for us not to feature this event during the eBay Live conference.”