The Heir Apparent As president of eBay Marketplaces, John Donahoe is charged with reinvigorating the core business. “Our number-one strategic priority,” he says, “is improving the buyer experience—making it fun again.”
Related StoriesPlaying catch-up with other consumer-oriented sites, the company is now applying the "wisdom of crowds" to create a new feature called "best match." Every click on the site is measured; the outcome of every one of the 2,600 searches per second is tracked to determine what leads shoppers to bid or to buy. If you submit "John Deere" today, you'll see the John Deere products that most previous shoppers purchased. "We get flack that we're trying to control search, but we're letting the buyers vote with their clicks and say what's relevant," says search-meister King. "It's a big, big, big change for us."
Narrowing even the most relevant search by price or brand or size has been a particular problem for eBay. Unlike other retail sites that sell a set inventory, eBay has to index and classify a constantly changing universe of whatever people are selling. So where Apple.com or Bananarepublic.com has you pick from predetermined price options, for example, one new eBay feature lets you set your own price range. The site also steers buyers to those sellers with the most positive feedback.
EBay is launching a "snapshot view" in certain categories in time for the holidays; instead of the usual prominent text and thumbnail images, a larger image pops up as you scroll over the picture of a sweater or a vase. It's the sort of functionality online shoppers have come to expect. "If they're shopping for clothes," says King, "they're comparing us to Nordstrom now."
What about serendipity--that item you weren't looking for but are delighted to discover? EBay staffers talk about serendipity all the time. So at the bottom of the list of matches are a few outliers. "If we got rid of cheetah iPod covers, we'd lose a little of eBay," King says.
What does all this mean for the sellers? Chris Hinze, who turned to eBay when asthma made him abandon his auto-mechanic business, is enthusiastic. Working out of his home in Portland, Connecticut, the 46-year-old refurbishes fixtures bought wholesale into what he calls "power showerheads" with dramatically more water flow. He's an eBay PowerSeller, meaning his sales amount to at least $1,000 a month and buyers give him high feedback scores.
Hinze attended eBay Live, the annual gathering of thousands of sellers, for the first time this past summer. After one session, he approached King and mentioned that searches for "shower heads" and "showerheads" produced significantly different results. Back in San Jose, King had his team add the terms to their "stemming" project, which combines related words in the finding system. The result: a flood of customers for Hinze's Superpowershower. He sold three months' worth of merchandise in three weeks. "Crazy, huh?" he says.
It's a good example of the power of eBay's algorithms, both to steer shoppers toward what they're looking for and to boost a small business 3,000 miles away. In essence, that was Omidyar's original vision: linking strangers through a virtual transaction that served both parties well. An honest, efficient marketplace, he called it.
But tinkering with the search engine creates new winners and losers; some sellers bubble up, others disappear. No matter what, somebody's unhappy, suspicious of favoritism, accusing eBay of tilting its playing field. Even minor tweaks can disrupt business for sellers who rely on automated software to manage hundreds or thousands of auctions. It's all there in the often vitriolic discussion boards on the site.
The biggest question facing eBay today is whether the totality of the changes that Donahoe and Carey are implementing can do for eBay and its millions of sellers what the "showerhead"/"shower head" fix has done for Hinze.
Therein lies eBay's central conundrum. "We don't pretend to have all the answers," says Donahoe. "We're doing things that will upset some people. But we're not just listening to the average noise. We're sharply focused on what our buyers want and need." Ultimately, the new strategy is a risk, but it's one that eBay can't afford not to take. Faced with the classic growth-company problem, it's betting that it can regain momentum by becoming more like mainstream retailers while still offering stuff you can't find anywhere else (Michael Vick's purported handwritten notes for his televised apology in August: $10,200).
The buyers will decide if eBay made the right move. If they shop the site more regularly and purchase more Nintendo Wii consoles and Coach bags and iPhones and Elmer Fudd comics and antique glass, the sellers will applaud the changes. At eBay, there's little doubt what's at stake. "If we don't change, we get marginalized," says Carey. "We can't let that happen."
Employees, who seem to take pride in running a global democratic marketplace, profess a greater sense of mission. "We haven't even released an eighth of what we've done," says Billingsley. "That's what excites me. It hasn't even begun." Customized pages are in the works. More social-commerce features. An eBay to Go widget with your favorite auction listings to post on your Web site or your MySpace page, complete with a clock to remind you to bid before it's too late. It all sounds good.
But is it enough? Even eBay's revamped search engine can't find the answer.
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