EBay spruces up its marketplace in a bid to win back users

Published 4:00 am Monday, February 7, 2011

John Donahoe, CEO of eBay, says the company can now “go on the offensive” after years of losing market share to its rivals.

SAN FRANCISCO — EBay was growing so fast early in its history that Meg Whitman, its former chief executive, liked to joke that “a monkey could drive this train.”

John Donahoe, her successor, still has the company on the track, but eBay’s competitors are moving a whole lot faster.

Three years into the job, Donahoe has made only modest progress in improving growth at the online retailer. He has given the website a cosmetic makeover and recast it as an outlet mall where retailers can unload last season’s merchandise, instead of being an all-encompassing auction house.

“I think we’re turning a corner,” he said last week.

But while eBay’s marketplace revenue grew 8 percent to $5.7 billion last year, eBay is still losing market share to its rivals, as global e-commerce sales increased 18.9 percent in 2010. Amazon.com widened its lead last year while Groupon, the daily deal service, and a number of specialty retailing sites like Etsy began nipping at eBay’s heels.

‘On the offensive’

Donahoe said he plans to tell Wall Street securities analysts Thursday at the company’s analyst day that eBay can now “go on the offensive” by building on its early momentum with mobile shoppers and that it will better integrate sister products like PayPal.

EBay’s troubles were a long time coming. The company managed to annoy many of the people who sold goods on eBay and those who bought them. Buyers complained of clutter, irrelevant search results and fraud. Sellers grumbled about what they saw as excessive fees and eBay’s favoritism of big retailers over small merchants.

Growth in sales volume, the value of merchandise that changed hands on the site, started to flatten in 2006. After the recession began, the volume declined — even though eBay used to brag that it thrived in tough times because users emptied their closets and attics for extra cash.

A custom look

After countless tweaks, eBay’s marketplace website now has a noticeably cleaner design to keep buyers focused on the merchandise. Donahoe also invested in improving eBay’s search engine so users can better sort through its more than 200 million products.

Giving various product categories a custom look, rather than a generic design, is another way eBay is trying to compete. EBay thinks users shop differently depending on the kind of product they are looking for, and catering to that translates into more sales.

Despite all the effort going into sprucing up eBay’s marketplace, half a dozen buyers and sellers interviewed recently did not notice any cosmetic changes. But they cited a few other upgrades that they said made buying and selling easier.

James Chen, owner of Audio Images, an audio equipment store in San Francisco, said he stopped selling on eBay because of excessive fees around three years ago.

But in December, he returned to selling on eBay and discovered that it automatically suggested product descriptions — a feature introduced last year — so that he did not have to write them himself.

“I’m very happy with things,” Chen said. “Buyers are just buying.”

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