How eBay Regained Its Edge By Predicting The Future

When the auction and marketplace that once led the online shopping charge started to fall behind, eBay started looking for the next big thing: including recording what you look at, touch, and take into a dressing room.

Nearly two decades ago, eBay changed the way America shopped.

Leveraging the newness of online shopping, the auction site was wildly successful until the mid 2000s when companies that had been Internet pioneers--think MySpace and eToys--started losing their appeal and cash flow. In 2007, posting losses for the first time in its history as a public company, the future of eBay was uncertain.

“It was clear the world had innovated around eBay and eBay had stayed with the same formula,” eBay CEO John Donahoe told the New York Times in 2012.

“Saying that was considered heresy. With any company that’s been this successful, there’s enormous momentum to keep doing what you’ve been doing and hope the world will go back to what it used to be,” he says.

What does a company do when the world has caught up to its level of innovation and suddenly it’s being left behind? It looks for the next big thing.

“The lesson we learned is that when a revolutionary technology comes along that will drastically change consumer experiences and expectations, innovate fiercely,” says Steve Yankovich, vice president of innovation and new ventures at eBay Inc.

Betting Early On Mobile

That technology was mobile, and Yankovich says the turnaround eBay has experienced over the past five years can be partially attributed to the company’s early bet on smartphones and tablets.

EBay started building its mobile business in 2009, when the iPhone was the marquee platform. Android was coming on the scene, Blackberry Rim was around as was Windows Phone. There were also rumors of new hardware, such as the iPad and smartwatches.

“Everybody was debating about these companies, trying to decide which platform to do--which would matter,” says Yankovich. His take was that he didn’t know which would survive. There would be winners and losers, but instead of betting the farm on one thing, you take chances.

Yankovich says Donahoe let him go after the mobile arena like a startup. “Mobile isn’t the same as desktop browser experience and this wasn’t a case where you could just build it on the side,” he says. “My team didn’t fit in the product group that eBay had been using. It came down to creating a new innovative aspect of the business as opposed to relying on the legacy of the past.”

In 2010, eBay acquired Critical Path Software, a mobile app developer, and RedLaser, a barcode-scanning app used for comparison shopping and product information. Yankovich also worked on perfecting eBay’s mobile site. For example, his team moved the “Buy It Now” button on mobile web and increased conversation by 30%.

Trying On Wearable Tech

And then Yankovich looked for the next big thing. The success of Fitbit, the super charged pedometer, was evidence that consumers were ready to invite wearable technology into their lives. So eBay created an app for the Samsung Galaxy Gear and for the Pebble smartwatch.

“Consumers want to use technology to monitor their lives and experience the world,” he says. “It’s in our cars, it’s how you order food, and it’s how you buy a pair of jeans. It’s our belief that the intersection of technology and how fast and willing consumers are to adopt it will change the physical retail environment, too.”

Yankovich’s team is working on technology that will take the best of e-commerce and introduce it in the offline world. For example, sensors will record what customers are looking at and touching, and what products they brought in a dressing room. Eventually, a brick-and-mortar store can become a personalized experience, with items that are available in your size and style identified for you, he says.

“It’s the kind of personalization we offer online, customizing a homepage based on things you’ve clicked on in the past,” he says. “In a physical store, in an anonymous way, can use sensors that gather information. When you stand in front of piece of glass, we can get an idea of what size you are. In the end, it’s about creating a magical way to shop, that’s quicker and more successful.”

Yankovich says eBay is productizing the technology in its lab, which is set up to mimic a retail store with mirrors, windows and walls. He anticipates elements to be available later this year.

In the meantime, the company is working with various retailers in mall properties, creating “shoppable windows.” For example, Kate Spade Saturdays have been held in New York, featuring an interactive storefront that allow shoppers to order merchandise on a touch screen, schedule a free one-hour delivery to anywhere in the city, and pay with PayPal.

“We’re using this technology to find the right sort of approaches we can scale,” Yankovich says. “When we know enough we can take it to a larger scale.”

Two things drive Yankovich: “Can I take existing eBay business and super charge it? And can I make money in a way we didn’t make money the day before?” he says. “Most of commerce happens in the offline world. It’s 10 to 12 trillion dollars versus hundreds of billions of dollars. There’s an ocean out there to play in versus the pond of e-commerce.”

And eBay intends on being a leader. “We can let somebody else pioneer what device or technology mean for commerce and be the follower,” says Yankovich. “Or we could be an innovator on the front edge. We’re big enough that we could help define the success of a new technology or device that will matter for commerce. And that’s what we plan to do.”

[Image: Flickr user Satish Krishnamurthy]

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3 Comments

  • Matt Henderson

    eBay's personalisation is poor. They have an amazing trove of data, yet still lag behind almost every major pure-play retailer when it comes to targeted emails, homepage merchandising and other recommendations.

    They deserve credit for being relatively early with a good mobile app, but still, were two years behind Amazon and haven't approached mobile fundamentally differently to others. High impact innovation isn't about recognising how the industry is changing and doing the same thing.

  • Philip Cohen

    The whole story sourced directly from the eBay Dept of Spin. If only any of it was true ...

  • Good article. I've been an eBay seller since it was called AuctionWeb. And they sure have evolved from those days. I have been following their ups and downs all these years. I remember contemplating, a few years ago, John Donahoe, saying that there is no more "e" in commerce, that online and offline are blending to become just commerce. It really sunk in for me. That was when they made the major shift to invest in mobile… before it was obvious. I respect that about their CEO. In my personal life, as an eBay Powerseller, I was feeling it as well. Suddenly, because of the smartphone, people were sending me pictures of things they wanted me to post for them (which sometimes I did). That's when I had my “ah ha” moment for my business, realizing that these people were just snapping a picture and getting their item posted. The mobile device was just another tool to help them sell something physical online (and offline). It’s commerce. Not “e”commerce. Good luck, eBay!