EBay Dials M for Makeover

How the company that pioneered online shopping, then lost its way, has become a surprisingly potent mobile-commerce power.

Robert Sirota and Bagath Pugazhendi are playing dress-up. "Is this the one?" Sirota asks, referencing a bright, flowery sundress that would undeniably clash with his current aesthetic: facial hair, blue jeans, rumpled beige button-down.

Not that Pugazhendi cares. "Yes!" he responds.

The two engineers are channeling their inner Carrie Bradshaw for my benefit, showing off the latest mobile-shopping app from eBay. Within seconds, the duo have synced their iPhone screens, WebEx-style, and placed the frock's image against a white backdrop. As they browse eBay's database of 200 million listings, they drop images of choice accessories into a shared online "closet." Then, they maneuver them around the dress in real time: a floppy hat near the collar, jet-black pumps below the hemline. Were one of the engineers game, he could have modeled the outfit virtually, by replacing the white background with his own full-body photo.

Just a few years ago, eBay had been pigeonholed as an auctions has-been, but the smartphone revolution has revitalized the e-commerce pioneer and inspired it to develop a new generation of mobile-shopping technology. This year alone, eBay expects to sell $1.5 billion in global goods via smartphones and tablets, more than double its total from 2009 and well above any other retailer's. (Amazon, a distant second, claims more than $1 billion, though that includes wireless Kindle book buys.) But with the mobile-commerce market projected to top $119 billion by 2015, merely offering search, buy, and sell features is "table stakes," says Steve Yankovich, eBay's VP of mobile platforms. "We want consumers to engage when they don't have a purchase in mind."

Such "situational shopping," as Yankovich calls it, has drawn interest from almost every major retailer—Best Buy, Old Navy, Walmart—all of which are eager to indulge spending impulses whenever and wherever they have potential customers. Imagine sitting in the stands of a baseball stadium and buying tickets for the next game as well as your favorite player's jersey. Or meeting a stylish friend for lunch and ordering her boots before dessert. "That's what we're enabling," Yankovich says, noting that shoppers on eBay mobile apps—including StubHub, Half.com, and Shopping.com—spend more per transaction than their online counterparts because they generally use smartphones and tablets during downtime, "when they're not in work mode." A cursory Twitter search supports the claim: Comments such as @lapurplepenguin's "Ebay app on new phone dangerous ~ buying vintage brooches while having hair done" are commonplace.

Now, in order to broaden its appeal among casual shoppers, eBay is rethinking its one-size-fits-all approach to mobile commerce with a series of niche apps that emphasize browsing over buying. EBay Fashion, for example, touts a lookbook-style inspiration guide; a clothing-centric search feature; and a virtual closet, where users can mix, match, and model different outfits. (The collaborative version Sirota and Pugazhendi demoed for me at eBay's San Jose headquarters is due out in early 2011.) "We wanted to attract people who care about style trends," says Mark Carges, eBay's CTO, "so we built an experience around them." The result: Users spend an average of 10 minutes browsing pages on the eBay Fashion app—40% longer than its primary release—and mobile fashion sales have tripled in the past year.

Carges and Yankovich hope to mimic that success by targeting gadget heads, car enthusiasts, and home-and-garden do-it-yourselfers, all of whom are already prime eBay shopping demographics. Those apps will launch or be updated in the next few months. "Casual shoppers don't have the time or screen real estate to browse eBay's depth, especially if they're looking for something specific," says Ben Bajarin, a consumer tech analyst at Creative Strategies. "Focusing on a genre allows eBay to optimize that experience." Among the features in development: a vehicle-identification-number scanner that lets car owners easily replace parts, software that can ID clothing brands from a photo, and augmented-reality tech that could show users exactly how that listed lamp would look on a real-life end table. "There's just so much you can do when you have a camera that faces both ways," Carges says. Shortly thereafter, Yankovich selects a pair of glasses on a demo version of eBay's augmented-reality app on his iPhone 4 and stares into its camera. "Pretty cool, huh?" he says, as his on-screen self stares back, modeling the specs he picked.

Augmented reality is just the beginning of eBay's foray into the physical world. The e-tailer has already integrated RedLaser's bar-code-scanning tech into several of its smartphone apps, giving more than 13 million users the ability to comparison shop—on all sites, not just on eBay—while they're in physical stores. Soon, every release will support it. "Mobile commerce is eBay's chance to become ubiquitous without brick-and-mortar outlets," says Mark Beccue, a mobile-commerce analyst at ABI Research. Sales via smartphones and tablets comprise only a small fraction of eBay's overall revenue. But Osama Bedier, VP of platform, mobile, and new ventures at PayPal (an eBay division), envisions a not-too-distant future in which those devices, and potentially, their eBay apps, are an essential part of an everyday trip to the mall. "When you've got unlimited inventory in the palm of your hand," he says, "stores aren't just a one-stop destination. They're a starting point for search."

Back in the demo room, as Sirota and Pugazhendi laugh off their digital dress-up, Yankovich reveals a favorite fashion-app use: finding fake moustaches for sale on eBay to put on photos of friends and colleagues. It's goofy, sure, but Yankovich expects many casual shoppers to follow suit. "And that's okay," he says. "Because ultimately, they're spending time with eBay. And that's what will make them convert."

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