Ebay made its debut in the late 90’s positioning itself to satisfy a consumer trend. Like many successful businesses, they focused heavily on the interests of their consumers. In the mid 90’s there was a stuffed animal called Beanie Babies, each had a cute name and biographical tags, telling you everything you needed to know about that inanimate stuffy. Up until this point there was only a website called “Ty”, which contained an online trading post where people could trade Beanie Babies, but the site was unorganized and unsecure for collectors. Can you guess where I’m going? Insert Ebay, Ebay facilitated and connected buyers and sellers, allowing the safe transaction of all types of collectables, including Beanie Babies.
Ebay was one of the first of its kind immerging out of the dot com bubble, a now multinational e-commerce company based in San Jose, California, facilitates the sale of consumer and business goods. Ebay’s growth numbers were organically forming, but eventually topped out because of customer purchasing processes, policies, security, and the lack intuitive navigation on their site. Firstly, their platform isn’t aesthetically, cohesive or fluid, and in turn doesn’t appeal to many people. This could be why their activity has been decreasing year over year. “During its most recent quarter, Ebay’s gross merchandise volume (GMV) decreased 4% YoY, making it the fourth consecutive quarter of negative growth” (Keyes). Ebay’s auction style platform, is currently showing its age, and has been for quite some time. This caused loss of consumer appeal and tarnished their image, which they need to start showing growth. “Ebay's unique auction style platform is less preferable as 70% of items sold are through fixed sale prices”(Devin). Fast-forward a few years, and this puts Ebay in a tough spot, either compete with other online retailers directly or continue their old business model in a much smaller marketplace. Neither are preferable but I think the latter is more realistic, as Ebay doesn’t have the leverage it once did.
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Ebay is looking for growth, but I think it’s time for them to slow their roll and focus on their core competencies and what makes them unique. Regardless Ebay needs to do something because they have great tailwinds, with e-commerce sales rising 12% YoY in 2018, there is no excuse for under performance. Although not everyone is a collector, or bargain shopper, Ebay is a far way away from being able to compete with other e-commerce sites such as Amazon. I also understand Ebay needs to post growth for investors, but what ends up happening is Ebay speaks empty words, where they over promise and under deliver. Ebay needs to change their consumers’ minds first, and up until this point hasn’t been able to.
Ebay’s policies weren’t helping put people’s minds to ease, they hemorrhaged their sellers, and created a lot of negative publicity. Ebay’s policy had become such that, sellers couldn’t make money on their site anymore, at least not small individual sellers. This was detrimental to Ebay because that’s how they differentiated themselves, catering towards individual sellers. Ebays policies have left many sellers frustrated. “I have decided to stop selling on Ebay completely. I am dealing with a deceptive buyer and have a feeling that Ebay is going to decide in their favor (as usual)” (Tims). This quote depicts one of many frustrated customers, who feel their best interest aren’t top priority. You can’t have a platform based on buying and selling and not support both sides of the transaction.
The second fault of Ebay is to focus on fixed sales, with staticpricing, this is the exact opposite direction, and against what differentiated them in the first place. Instead of playing to their strengths, which is bargain seekers, collectors, and items you can’t find on other sites. 'We're testing a new user to Ebay when they show up, we only show them fixed price, brand new items from top-rated sellers. It's a more familiar commerce experience” (Donahoe). As evidence by the above quote, Ebay plans its growth through at least partially conformity and homogenous design to other e-commerce sites. Ebay seems aware of their duties and what must be done to win back their customer base: “We are fiercely loyal in protecting Ebay’s unique advantage as a true marketplace in service of small independent businesses, consumer sellers, and buyers, and working to dramatically simplify the buyer and seller experience” (Wenig). The problem with this statement is that their actions aren’t reflecting what they’re saying, none of these problems have been addressed adequately. The aesthetics and design of their website is bland and convoluted, and not cohesive in Ebay’s mission statement. Ebay isn’t doomed and was never doomed, but they must play to their strengths, and provide supportive policies to incentivize and give security to their customers.
Security is a huge problem when you look at Ebay, yes, they acquired PayPal, which had a tagline “The Safer, Easier Way to Pay.” Which validates speculation that security is a huge deal to the image of Ebay and ultimately their customers. With PayPal they have tried to alleviate the image and market the company as a “safe” place to shop. But once again Ebay falls short, and as the expression goes, “actions speak louder than words”, and negativity bias comes in strongly online.
Amazon is a great example of company policy that supports the consumer, albeit still a little buyer biased. Amazon swept in with superior delivery, a simplified transaction process, and better customer support systems, which allowed them to take advantage of Ebay’s mishaps. Amazon created a platform that listened to all the customers’ needs from Ebay, and in general online purchases and revolved a business around that. When Ebay was complacent, it gave enough space for other companies to remedy these problems. The space Amazon took from Ebay was the demographic Ebay had been targeting and projecting most of its growth from. Amazon and other retailers did exactly what was needed to obtain the market Ebay was after. Another aspect that helped Amazon is their distribution channels, they built distribution centers, partnered with FedEx and UPS, in order to fulfill orders. They created a much larger demand for online purchases because of their ease of use and customer service. Amazon has become the Ebay and Ebay has become the “Ty” network for beanie babies. Amazon has rectified all the problems average shoppers have with Ebay. Ebay on the other hand, has stood still and is now retroactively trying to play catch up with big companies who have much more leverage.
When comparing Amazon to Ebay on aesthetics and design of their websites, what is immediately clear is Ebay’s “colorful” image is not being represented. The website doesn’t draw me in and doesn’t capture my attention, in other words it isn’t very engaging. Amazon on the other hand has color and soft edged images, with a plethora of interesting items and services all accessible from the home page.
Amazon has created a reputation best expressed by “the customer is always right”, this is evident on every facet of communication to the consumer. For example, having a problem with an order on Amazon is a completely different issue than one on Ebay. Ebay people wait months for refunds if they ever come, with little to no support, Amazon purchases are a no brainer. People will pay the extra dollars to buy on Amazon, just because of their customer service, remember Costco? They too benefited from consumer policies that support the customer, and with that un hindering support the customer will make more purchases and loyalty, trust and security will be built.
Amazons extensive investment toward faster shipping has created an almost addicting instantaneous item arriving at your door. If you can wait one day for an item, Amazon provides a convenience unrivaled. Amazon realized shipping times were one reason consumers wouldn’t order online, and invested heavily, creating a surplus of value to their customers. This is just another way Amazon has invested heavily in a customer supported plan, where Ebay hasn’t, this is the differentiator. Set up your credit card and click purchase, Amazon has perfected their purchasing process, and created one of the best purchasing processes. Ebay on the other hand suffers from “pending purchases” which means people “cart” items but don’t follow through with the purchase. There is something to be said about taking as much of the monotony out of purchasing and letting there be as little resistance as possible in the decision-making process. With so much competition the bar has been raised so high for quality service, even with decent service it doesn’t convince the average person to use Ebay, over Amazon, at least for everyday purchases.
Ebay cannot focus on the everyday person, until they address their policies, processes, and renew their image. If Ebay wanted to stay on top they would have had to actively listened to their customers, had more vision, and positioned themselves in their customers eyes as the desired set.
Works Cited
- “Ebay Is Dead and Failing Miserably According to Business Week.” Registered Nurse RN, Business Week, 15 Mar. 2017, www.registerednursern.com/Ebay-is-dead-no-longer-good-for-selling-nursing-items/.
- Keyes, Daniel. “Ebay's Marketplace Growth Plunged into the Negatives in Q1.” Business Insider, Business Insider, 25 Apr. 2019, www.businessinsider.com/Ebay-q1-marketplace-growth-plunged-2019-4.
- Motley Fool Transcribers. “Ebay Inc (EBAY) Q2 2019 Earnings Call Transcript.” The Motley Fool, The Motley Fool, 18 July 2019, www.fool.com/earnings/call-transcripts/2019/07/17/Ebay-inc-Ebay-q2-2019-earnings-call-transcript.aspx.
- Purdy, Chase. “How Amazon Is Secretly Building Its Superfast Delivery Empire.” Quartz, Quartz, 11 Mar. 2016, qz.com/636404/how-Amazon-is-secretly-building-its-superfast-delivery-empire/.
- Steiner, Ina. “Who Is Ebay's Target Customer?” EcommerceBytes, www.ecommercebytes.com/C/blog/blog.pl%2Fpl%2F2014%2F10%2F1414010502.htm
- “Sucess Story: PayPal - Customer Experience.” Genesys, www.genesys.com/customer-stories/paypal.
- Tims, Anna. “Ebay Accused of Failing Its Sellers as Fraudulent Buyers Manipulate the System.” The Guardian, Guardian News and Media, 21 May 2017, www.theguardian.com/money/2017/may/21/Ebay-accused-failing-sellers-buyers-manipulate-system-protection.
- Wenig, Donahoe, Devin N. “Financials 2018 Annual Report.” Ebay Annual Report 2018, Ebay, 2018,Ebay.q4cdn.com/610426115/files/doc_financials/financials/2018/annual/2018_Ebay_Annual_Report.pdf.
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