- Educate the thousands of eBay sellers out there to what’s going on with eBay, with real solid data and not speculation or mud-slinging.
- I’ve been part of the eBay world since 1997 or earlier -first as a buyer and then as an entrepreneur in the eBay ecosystem with two companies. For us ‘old timers’, we know that eBay had something special going and now its painful to watch it fall apart, slipping through everyone’s hands like sand. Some folks in the press have drawn the comparison of the relationship between complaining sellers and eBay to be like that of an abusive relationship. That may be a fair criticism, but the way I look at it is if you had some ideas to turn this thing around and it was important to you that eBay not crash and burn, you should do something about it. I’m as frustrated as everyone else, because I believe the strategy outlined here has been in front of them for 5yrs and they just don’t seem to either get it or be able to execute (or both). eBay was something special, and can be again.
- I have a personal policy to never criticize something unless I also have a viable solution. I am presenting here what I believe is a very viable solution for eBay to solve all of the problems that I harp on.
- Background – Some of the rationale for why we need eBay 2.0 and how I got to my approach. If I were pitching a venture capitalist on eBay 2.0, this would be the ‘market opportunity’ section.
- The Pitch – eBay 2.0 – Introducing eBay 2.0 – the New Hope. If I were to meet you for 5 minutes at a trade show, this is the quick ‘elevator pitch’ I would use to describe eBay 2.0. Some would call this the executive summary.
- eBay 2.0 – Foundational Changes – Some foundational things eBay would need to do ASAP to start down the path of eBay 2.0 and have a high probability of both doing it quickly and successfully.
- eBay 2.0 – Meat and Potatoes – The details of what eBay 2.0 would look like, fees, etc.
- eBay 2.0 Use Cases – In engineering we always act through a couple of ‘use cases’ to illustrate who our customer is and how our software will serve them.
- eBay 2.0 and the CEF – Here we run eBay 2.0 through the CEF quickly to see how it fares.
- Conclusion – it’s a wrap.
This is a long post. Fixing eBay won’t be easy and it’s worthy of some verbosity to make sure we get it right 😉
- eBay has large scale, but is declining substantially while ecommerce and competitors like Amazon are growing. This is due to Amazon’s out-execution on 5 important dimensions: selection, value, ease of use, trust and merchandising.
- eBay is in a dire situation. Choose your metaphor – Rome is burning, the Titanic is sinking, death spiral, wings are off the plane, etc. eBay must do something drastic within the next 6 months or as I showed in Episode I, they not only will be surpassed by Amazon, I believe their only option as a company will be to either split into pieces or sell to Microsoft or (long shot) google, Y!, etc. Billions of dollars of shareholder value have been lost, more could be on the way if something isn’t done. The time to act is now. Analysis paralysis is not an option. Mis-execution is not an option.
- Ecommerce is a huge market and there is room for a healthy eBay and Amazon.
- Amazon is on the precipice of becoming as powerful in ecommerce as Google is in search. It’s healthy for them to have strong competition and for sellers to have two healthy options. We are not on that path.
- eBay’s strategies of 2008 are not working and if they continue down the path of further ‘amazonification’, their problems will amplify vs. improving. In other words, eBay can not beat Amazon at their own game, they will lose this battle. I’m reminded of a quote from Jack Ma, CEO of TaoBao/Alibaba (eBay’s competitor in China who kicked their butt left and right and then kicked them completely out of the country) – “eBay is a shark in Pacific Ocean and Alibaba is a crocodile in the Yangtze River. Competition is not the same as a battle. In battles, one has to die, only must survive.” The eBay shark is heading to the Amazon piranha, and it ain’t gonna be pretty.
- Many insiders have told me off the record that eBay wants to fit a niche they see ‘in-between’ Amazon and Craigslist. There’s even a much talked about secret twitter post that I’ve gotten multiple verifications is really from a distraught eBay VP. I’m with this VP – this is a terrible strategy. Why would you ever want to fit ‘in between’ something. eBay should try to crush them?! WTH?! In my following eBay 2.0 strategy, eBay competes with Amazon by playing a bigger game, not a smaller game. This ‘in-between’ strategy freaks me out because it’s like Circuit City trying to fit ‘in-between’ Wal-mart on the low end of electronics and Bestbuy on the higher end. That worked really well for them, eh? This is like saying: “Hey my strategy is to fit between a rock and hard-place – sound good? “
Given these realities, what should the strategy be? Well, let me walk you through two opportunity areas that I think eBay has a closing window of opportunity to execute on as they are uniquely positioned to do so. The first is the product lifecycle.
Opportunity – Product Lifecycle
- Introduction/New – a product is new and just out. When this happens, it usually pushes the predecessor product into the end of life bucket.
- In-season – the product has been out for a while and is really hitting its stride. This is where most of the margins and sales come from.
- End of life – The product is being replaced by a new product and is not leaving the market for the most part.
- Liquidation/vintage – The product is liquidated or there are some left out there, but they are either kept in new condition, used or refurb because there is still demand for them.
- Introduction – When items are in short supply, auction is the best format to extract value from that inefficiency. Fixed price maybe the way to go later on with possibly offers.
- In-season – Very few people want to mess around with auction for in-season products. Fixed price is the way to go.
- End of life – Mostly fixed-price here, but potentially some auction if someone is liquidating and a value-consumer could find a good deal by investing some time.
- Liquidation – Mostly auction as you have no idea what this stuff is worth. Sometimes you do though, so maybe some fixed-price. As for local, fixed-price may work if you just want to get rid of something, but have you ever sold something on craigslist and 40 people call you? Hmmm, auctions would have been nice in that situation wouldn’t it?
- Auction – Auction buyers are driven by serendipity. Even when they are searching, it is to help them stumble up on something interesting, not because they are specifically looking for widgetX. They like to see what’s new, what’s hot, etc. But most importantly they want to see things in Time Ending Soonest (TES). Ah TES, how I miss you. I never thought your simple algorithm would be so sorely missed, but I find myself constantly fighting BestMatch, slogging through ads and featured crap to get you back to no avail. Auctions are not the same with the vintage 05 TES.
- Fixed-price – recent sales or popularity is important
- Local – Local shoppers like to see what’s new – so ‘recently listed’ is the way to shop. They also use serendipity, but are very sensitive about getting to the newest stuff before someone else has. Ever had a garage sale start at 8am and people are at your house at 6am?
Opportunity – the eBay Brand
With those opportunities in mind (and the New Coke case study), allow me to introduce you to….eBay 2.0
- eBay classic – Classic auctions that you know and love with some new enhancements and more trust via PayPal. We hear you loud and clear – we have taken out fixed-price and stores and given you pure auctions, just the way you want. The New Coke days are over and we’re back to Coke Classic.
- Shopping.com 2.0 – Our fixed-price, convenience brand, with buy-it-now items from many of the sellers you already know and love, with some interesting new offers from larger retailers. If you’ve ever used the old shopping.com, this is a much different site with an explosion of inventory at great values.
- eBay Local – The eBay experience you know and love, but with the local flavor of a craigslist.. PayPal makes it safe, so you don’t have to worry about all the dodgy characters hanging out on a site like craigslist.
- Culture change. eBay has to undertake a massive culture change that includes:
- Ditch the corporate jet(s) – In today’s world, executives look terrible drinking champagne on their corporate jets while their customers, employees and shareholders suffer. Ask the CEO of GM how well the corporate jet went over on his last trip to DC. Plus you always have pictures like this haunting you. Do you really want to be jetting to Davos while Rome is burning or right after a bad quarter? And yes sell it/them on eBay.
- ReOrg – Today eBay is organised around buyer and seller. That is really complicated to me because every buyer interaction touches a seller. If you want the search engine to do something with say, shoe size. Guess where that shoe size is going to come from? Yep, the seller. I don’t know enough about the internal org at eBay to hazard how to org this, but in eBay 2.0, I suspect you would pick out a foundation/core team to build things used by all three sites and then have a eBay classic team, a local team and a shopping.com team. These would look much different than the teams there are today and be lean and mean so they could execute rapidly.
- Treat sellers like customers – There’s been lots of lip service to this and not a lot of action. That needs to be swapped. Heck, I would ban the word seller and I would make everyone say customer or partner as a reminder of a new world order.
- Streamline – It takes forever for decisions to be made and executed on at eBay. I don’t know why, but it needs to be streamlined
- Agile – Parts of eBay’s engineering team are agile, others use a 1990’s waterfall development methodology with all kinds of old-school trains, train cars, seats and junk like that. All that needs to be ripped out and replaced with Agile/Scrum
- Variety in the workforce – eBay is a two class system. There are Harvard, Stanford, Yale, etc. MBAs that call all the shots and then there are worker bees. Many worker bees end up spending weeks on presentations that the MBAs slam and redo. Smart people in the ranks without ivy league MBA are passed over while wet-behind-the-ears MBAs that don’t know the business are hired and pass over non-MBAs quickly and then leave for VP/CEO gigs. There are also too many business consultant lineaged people at eBay. You can’t throw a stick without hitting a room full of McKinsey/Bain/Accenture consultants, they have lots of great ideas, but can’t seem to execute. eBay needs more Jeff Jordan, roll up their sleeves, and GSD, execute execute execute type of people right now.
- Mea culpa – Like New Coke, someone at eBay (JD would be first choice), needs to admit it was a mistake to change something everyone liked, and that we all miss eBay classic and are BRINGING IT BACK – HOORAY!
- No ads – period. eBay should focus on one thing – GMV. That’s the sole driver of revenue, margin and success for buyers and sellers customers. Ads are a distraction and not in line with that goal. I’m talking everything folks – the stupid mortgage banner ad, the irrelevant text links, the weird little things low on the page, the ads splatted in emails randomly – all of them need to go. They take valuable buyers off the site and compete with sellers partners and MOST importantly the erode trust and value of the site. The only time ads are acceptable are if they are for off-site products, like shopping.com’s CPC network or ProductAds from Amazon.
- Nuke or sell lots of stuff that doesn’t fit in – Skype, StumbleUpon, Prostores, Microplace and half.com. These are not a focus. Buy-bye.
- Fees – eBay doesn’t seem to ever understand that their fees are just crazy-high right now and cause the prices on the site to go up. Thus in eBay 2.0, fees come down substantially and many that are additive, have discounts – like PayPal. If I sell in the family of eBay 2.0 sites, I should get some benefit vs. someone not doing that. Lower fees will actually increase revenue (counter intuitive, but it works). Prices on the site will come down, GMV will accelerate, revenue will follow. Overall, eBay’s take rate of 12% needs to come down to about 8% – You’ll see where each sub-site needs to be IMO.
- Consolidate ticket category and make it 100% Stubhub – why haven’t they done this yet?!
- Nuke travel and real estate and partner with someone instead.
- Wall St – I’d do a speciall call and tell Wall St. they are hitting the reset button on the entire business. There’s risk in doing it, but the risk in not doing it is greater. I’d then outline the eBay 2.0 opportunity and a roadmap for how we’re going to deliver it quickly. Everyone knows this needs to be done, the stock would pop 20-40% on this news alone IMO.
- Become a platform and learn how to partner – A big win for eBay 2.0 needs to be an open platform. eBay has messed this up for the l