March 13, 2009
eBay Changes Plan to Compete with Amazon
It appeared as though eBay was all set to
go head-to-head with Amazon with fixed price offers selling new items directly
to consumers rather than following the auction model that made the company
an e-tailing giant. Now, it appears as though one holiday season along,
eBay has decided that maybe it doesn’t have what it takes to be the
next Amazon and instead it is focusing its efforts on becoming an online
source for consumers to buy used items, discontinued products and overstocks.
John Donahoe, chief executive at eBay, puts
the global value for these products at roughly $500 billion a year, according
to a Wall Street Journal report.
“We are aggressively remaking and transforming
our eBay Marketplace and diversifying the ways in which we compete in ecommerce,” Mr. Donahoe said
in a company press release. “We operate in what is still a young and
rapidly evolving ecommerce landscape, and as the pace of change in ecommerce
accelerates, we are not here to mimic or follow. We are here to lead and
innovate. We are positioning this company to compete and win across a range
of profitable ecommerce platforms focused on connecting buyers and sellers
across the platform of their choice.”
According to the same report, eBay’s traffic
fell 16 percent in the fourth quarter last year.
Mr. Donahoe, told
the Journal, “We aren’t
a retailer. We’re going to focus where we can win.”
Discussion Question: What do you think of
eBay’s latest change in strategy?
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eBay’s decision to return to their roots and concentrate more on one of a kind auctions and overstocks is the only thing they can do at this point. They once had a terrific business model which included an interesting international group of buyers and small merchant sellers, and a unique retail space that eBay was the king of. They could have prospered and grown slowly for years.
But then, like so many other companies in the early 2000s, they got greedy. They, like so many other companies before them, opted to deliver growth through quantity and sameness rather than quality and excitement. They started to treat their original group of collectors and antiquers and thrift-oriented shoppers with disrespect by letting in mass merchants (often with fake goods), and being unprepared to deal with the inevitable consequences of fraud and rip-offs. Many recent policy changes and commission increases further robbed them of good clients. Many people like me who were once avid eBayers with money to spend rarely go to the site anymore. A quick search there used to be a daily net stop for me.
eBay has permanently lost some space to Craigslist, but Craigslist is mostly for local transactions. This economy may be the perfect time for eBay to issue a big mea-culpa to its original fans and get things going again. If eBay is sincere in its efforts they may be able to pull it off.
eBay auctions were king a few years ago. They had world dominance on the internet and no one could touch them. Their stock was high and that signaled success. People loved eBay for the ebay experience.
Over the last few years, however, eBay has lost their luster as well as investors. People look at a company’s strength in their stock price when dealing with a company. Their continued weak and low stock price signals a weak company that could fold any day and drop off the NAS. Not a good outlook for eBay in spite of their predictions of world dominance down the road.
Words are cheap actions speak comes to mind. In my opinion–and others–eBay needs to put their money where their mouth is and that is to pay a dividend to their investors. This will boost their stock and morale.
Some people like the excitement of an auction and others don’t. eBay began as an auction site where someone’s junk was another person’s treasure. Then people started to set up businesses on eBay and consumers liked the certainty of getting what they want at a stated price, so eBay moved in that direction. Now they are trending back to auction.
eBay is fortunate in that it can have things both ways. If “buy it now” prices are low, consumers can make an immediate purchase. Otherwise they can bid for a bargain. Either way, eBay wins.
It sounds like a very wise decision. Mr. Donohue is making a thoughtful and valuable decision in leading eBay. Rarely does David get to slay Goliath. It is generally much wiser to find a different path.
eBay has a distinct position in e-commerce. They should continue to use that positioning and expertise to build their business, not try to be something else. The strategy of being the “go to” place for used items, discontinued products and overstocks fits so well into what eBay is. eBay also has a competitive advantage in this area that others would find hard to match.
In these tough economic times, what may be next for eBay to expand on? How about barter and exchange. Participants can use credits instead of dollars. It might be just the kick to turn around the traffic drop experienced in the 4th quarter.
And while you are at it you might want to try and clean up your act a little. The number of fraudulent sellers and the frequency of counterfeit merchandise sales is turning eBay into a bad experience for many users. That might explain the decline in volume at eBay.
Accuracy in product description doesn’t seem to be stressed very much when new sellers are initiated to eBay. Additionally, the inclusion of far east sellers has introduced a brand new chapter into the definition of bait and switch. eBay can’t compete with Amazon because Amazon enforces standards and supports buyers. eBay talks about support but obvious rip offs take weeks to settle and then you have to wait weeks to get a check from PayPal. You get a bad product from Amazon, you get your credit ASAP. eBay should focus on customer service and policing their site if they want to grow. People deal with each other because they have confidence in each other. eBay has lost the confidence of many in the the auction community.
It’s really no strategy change, but instead is a “hunker in the bunker.” Think of it as the Rhythm Of Retail. eBay is smart enough to return to its roots in times of trial. Would that other retailers had that much sense.
Editor’s note: Web analytics firm Compete.com did an analysis and posted some telling stats on its retail blog.
“The more eBay has tried to be a retailer, the more its customers have gravitated to sites offering better overall shopping experiences with lower total prices, better customer service, and predictable deliveries; not to mention the avoidance of the risk of fraud. The percentage of eBay’s visitors who shopped at Amazon jumped from 41% in February 2008 to 53% last month. Over the same period, Amazon visitors’ cross-shopping of eBay has remained unchanged at 58%, suggesting eBay’s fixed-price strategy has failed to attract significant numbers of new shoppers to the site.”
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eBay’s decision to return to their roots and concentrate more on one of a kind auctions and overstocks is the only thing they can do at this point. They once had a terrific business model which included an interesting international group of buyers and small merchant sellers, and a unique retail space that eBay was the king of. They could have prospered and grown slowly for years.
But then, like so many other companies in the early 2000s, they got greedy. They, like so many other companies before them, opted to deliver growth through quantity and sameness rather than quality and excitement. They started to treat their original group of collectors and antiquers and thrift-oriented shoppers with disrespect by letting in mass merchants (often with fake goods), and being unprepared to deal with the inevitable consequences of fraud and rip-offs. Many recent policy changes and commission increases further robbed them of good clients. Many people like me who were once avid eBayers with money to spend rarely go to the site anymore. A quick search there used to be a daily net stop for me.
eBay has permanently lost some space to Craigslist, but Craigslist is mostly for local transactions. This economy may be the perfect time for eBay to issue a big mea-culpa to its original fans and get things going again. If eBay is sincere in its efforts they may be able to pull it off.
eBay auctions were king a few years ago. They had world dominance on the internet and no one could touch them. Their stock was high and that signaled success. People loved eBay for the ebay experience.
Over the last few years, however, eBay has lost their luster as well as investors. People look at a company’s strength in their stock price when dealing with a company. Their continued weak and low stock price signals a weak company that could fold any day and drop off the NAS. Not a good outlook for eBay in spite of their predictions of world dominance down the road.
Words are cheap actions speak comes to mind. In my opinion–and others–eBay needs to put their money where their mouth is and that is to pay a dividend to their investors. This will boost their stock and morale.
Some people like the excitement of an auction and others don’t. eBay began as an auction site where someone’s junk was another person’s treasure. Then people started to set up businesses on eBay and consumers liked the certainty of getting what they want at a stated price, so eBay moved in that direction. Now they are trending back to auction.
eBay is fortunate in that it can have things both ways. If “buy it now” prices are low, consumers can make an immediate purchase. Otherwise they can bid for a bargain. Either way, eBay wins.
It sounds like a very wise decision. Mr. Donohue is making a thoughtful and valuable decision in leading eBay. Rarely does David get to slay Goliath. It is generally much wiser to find a different path.
eBay has a distinct position in e-commerce. They should continue to use that positioning and expertise to build their business, not try to be something else. The strategy of being the “go to” place for used items, discontinued products and overstocks fits so well into what eBay is. eBay also has a competitive advantage in this area that others would find hard to match.
In these tough economic times, what may be next for eBay to expand on? How about barter and exchange. Participants can use credits instead of dollars. It might be just the kick to turn around the traffic drop experienced in the 4th quarter.
And while you are at it you might want to try and clean up your act a little. The number of fraudulent sellers and the frequency of counterfeit merchandise sales is turning eBay into a bad experience for many users. That might explain the decline in volume at eBay.
Accuracy in product description doesn’t seem to be stressed very much when new sellers are initiated to eBay. Additionally, the inclusion of far east sellers has introduced a brand new chapter into the definition of bait and switch. eBay can’t compete with Amazon because Amazon enforces standards and supports buyers. eBay talks about support but obvious rip offs take weeks to settle and then you have to wait weeks to get a check from PayPal. You get a bad product from Amazon, you get your credit ASAP. eBay should focus on customer service and policing their site if they want to grow. People deal with each other because they have confidence in each other. eBay has lost the confidence of many in the the auction community.
It’s really no strategy change, but instead is a “hunker in the bunker.” Think of it as the Rhythm Of Retail. eBay is smart enough to return to its roots in times of trial. Would that other retailers had that much sense.
Editor’s note: Web analytics firm Compete.com did an analysis and posted some telling stats on its retail blog.
“The more eBay has tried to be a retailer, the more its customers have gravitated to sites offering better overall shopping experiences with lower total prices, better customer service, and predictable deliveries; not to mention the avoidance of the risk of fraud. The percentage of eBay’s visitors who shopped at Amazon jumped from 41% in February 2008 to 53% last month. Over the same period, Amazon visitors’ cross-shopping of eBay has remained unchanged at 58%, suggesting eBay’s fixed-price strategy has failed to attract significant numbers of new shoppers to the site.”