A few years ago, eBay was getting battered by the likes of Amazon.com and was dismissed as an auctions has-been. Its technology was long in the tooth. And it was losing its iconic CEO, Meg Whitman, whose political ambitions led to a run for California governor in 2010.
Now eBay is betting its future on whipping its technology into shape as it navigates the limp recovery and red-hot competition from rival Amazon and hundreds of smaller, specialized retail sites.
The biggest marketplace on the Web — eBay has 93 million active users — is going all in on mobile shopping, a booming market that is projected to top $119 billion by 2015.
“I look through the eyes of the customer,” says the affable, 6-foot-5 CEO, John Donahoe, a New Trier grad whose father was an accountant at Price Waterhouse in Chicago.
“As a company, we needed to be more customer-driven and technology-driven.”
The four-year eBay veteran, named to succeed Whitman as chief executive in early 2008, has been on a nearly three-year quest to infuse the Silicon Valley icon with new technology, including:
† Buffing up the site’s e-commerce technology.
† Expanding eBay’s mobile capability.
† Opening up PayPal, eBay’s online payment service, to developers for new applications, which has helped continue its dominance.
† Orchestrating a series of acquisitions that reinvigorated the online auction pioneer.
“EBay had enjoyed enormous success, but the environment around us was changing, and buyers and sellers have higher expectations,” says Donahoe, 50, an ardent eBay shopper who typically is first to sign up for beta tests of new eBay products and services.
Billions of dollars are at stake: Americans snapped up $23.8 billion in goods online from Nov. 1 to Dec. 13, up 12 percent from the period a year ago, according to market researcher ComScore.
But old technology put eBay at a competitive disadvantage when Amazon “stepped on eBay’s turf with auctions and used products,” says Karsten Weide, an analyst at market researcher IDC.
Some of the fruits of Donahoe’s efforts were on display when eBay recently finished the third quarter with a 4 percent jump to 93 million active users who sold items.
EBay expects to sell $1.5 billion in goods via mobile devices this year, compared with $600 million last year.
The eBay that Donahoe took over as CEO in early 2008 had become creatively stagnant, and its top-heavy bureaucracy made it difficult to acquire small, hot start-ups.
Donahoe brought on veteran e-commerce experts and overhauled eBay’s search, catalog and user experience, and opened the PayPal platform to developers.
The results of Donahoe’s stewardship:
† PayPal expects to handle more than $700 million in mobile transactions this year compared with just $30 million two years ago — though that still is less than 1 percent of the money processed through PayPal.
PayPal accounts for more than a third of eBay’s global revenue, raking in $838 million in the third quarter, and at its current growth rate would pass parent eBay in revenue around 2014.
† The company this month introduced Deal Finder, an online tool that lets shoppers compare eBay listings with the same products on Amazon.com, BestBuy.com and other sites. The tool lets shoppers scan more than 50,000 deals for savings on movies, video games, electronics, music and books.
Big eBay sellers such as Jack Sheng say they have benefitted from the recent changes.
“I have seen more dramatic changes in the last three years at eBay than in the previous 10 years,” says Sheng, who launched the electronics seller eForCity out of his garage 10 years ago and now employs nearly 200.
Sheng was the first eBay seller to hit 1 million, then 2 million, in user feedback comments.
“I am proud of our progress, but that only makes me more hungry to get better,” said Donahoe. “I will never be satisfied.”
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