- Brandon Checketts
- On October 2, 2014
- 0 Comments
It looks like Carl Icahn was right all along; eBay and PayPal will be splitting into two separate companies. What is most interesting is that John Donahoe will not be retaining his current role of CEO at either company. The current president of eBay marketplaces, Devin Wenig, will become the new CEO of eBay and the President of the Enterprise Growth Group at American Express, Dan Schulman, has been hired to head up the new stand-alone Paypal.
Danahoe has been at the helm of eBay since March of 2005, which was shortly before I started my first business on eBay. During this time I have seen a lot of changes, both on eBay and in E-Commerce as a whole. eBay’s changes have been received with mixed reviews from both buyers and sellers. I personally know several sellers, including myself, that left eBay for marketplaces like Amazon because of all the changes. Even worse, there were many sellers who had their accounts suspended and lost hundreds of thousands or even millions of dollars. Typically these were not bad sellers, but they could not comply with the ever-changing rules on eBay. In eBay’s defense, they were able to continue to grow the marketplace and establish eBay as a safe place to shop for buyers.
To Danahoe’s credit, eBay’s revenue has climbed from $4.55 billion in 2005 to over $16 billion in 2013. During that same time, Amazon has climbed from $8.49 billion in 2005 to $74.75 billion in 2013. Granted, Amazon’s revenue includes physical product sales whereas eBay is mainly fees collected from sellers. Still, Amazon’s revenues have increased nearly 10 times while eBay is only 4 times larger. It is clear that Amazon has been gaining more and more market shares. In recent years, Danahoe has introduced a number of changes to make the eBay customer experience more like Amazon. Their search and catalog experience is more closely resembling Amazon’s. Additionally, they have pushed more seller requirements in an attempt to have their sellers offer an Amazon level of service.
The problem with eBay’s attempt to become more like Amazon is the fundamental difference in the eBay and Amazon marketplace culture. eBay is typically the place you go to find unique items or look for bargain “like new” items. eBay shoppers are a little more forgiving if an item is not perfect. They understand that they may be buying from another individual or small company. eBay is really a trading site. Amazon, on the other hand, is the place you go to buy brand new items or media. You expect extremely fast shipping, great service and you might even be willing to pay a premium for it. Amazon is like going to the department store; eBay is like going to the swap meet.
eBay has attempted to be both the department store and the swap meet, and in my opinion this is the main source of their troubles. If eBay wants to compete with Amazon, they need to do it on another marketplace. The marketplace should have a catalog like Amazon with one product page for each item, not hundreds of listings for the same product. They should promote reviews like Amazon does. To keep the quality high, they should focus on new items and recruit more high quality sellers. They should also offer fulfillment services for their sellers like Amazon’s FBA. Having separate marketplaces would allow them to tailor each to the proper audience and expectations. One community trading site that eBay was always meant to be and one for the direct Amazon competitor.
It should be interesting to see what the next 10 years holds for eBay and ecommerce as a whole. It will be exciting to see if anyone can catch up to Amazon. Perhaps eBay, with new leadership, will be able to offer some real competition or maybe a new start up will come along and change everything.