EBay's Bid to Win Back Buyers

The online auctioneer aims to regain seller—and investor—confidence with a site overhaul that's more than screen-deep

by Catherine Holahan

Window shopping on the Web: eBay revamps

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Time was, small-business owner Evan Prytherch considered eBay (EBAY) capable of performing e-commerce magic. Prytherch would list his entire music-accessory inventory on the auction Web site and within days it all seemed to disappear. Sold.

But in recent years, much of that magic is gone, Prytherch says. Shoppers are simply not buying all the inventory anymore. Some items languish without a single bidder. Many shoppers opt for other sites including Amazon.com (AMZN), use sophisticated search engines such as Google (GOOG) and Yahoo! (YHOO), or head to store sites directly.

Now eBay is making the biggest effort in its 12-year history to recapture the magic—and bring back the buyers. The company is completely revamping its flagship site, making it easier for shoppers to find and purchase items and discover goods they never knew they had to have. "We are more focused on buyers than we have ever been before," says John Donahoe, president of eBay's Marketplaces, the division that oversees eBay's core shopping business. "What do they really want and need?" eBay Chief Executive Meg Whitman alluded to the changes during a June conference, but company executives outlined specifics in interviews with BusinessWeek this month.

Shopping Logistics

For starters, the site has a new photocentric view that recreates the feel of window shopping, but on the Web. A search for, say, a pair of needle-nose pliers returns a wall of thumbnail-size images of said tool for sale. Scrolling over the photos calls up larger images, complete with brief captions featuring the current price and minutes left in the auction. The new feature is being introduced on a category-by-category basis for existing users and all at once for many new registrants. The aim is for most changes to be available to the majority of users by the yearend shopping season.

EBay has also taken steps to better understand user intent. Depending on the shopping category, users will be able to search by item color, related brands, and relevant sizes. The new system recognizes more common user mistakes, such as brand-name misspellings, and seller shorthands, such as "sz" for size. It also returns results according to relevance—ensuring that, say, a search for Apple (AAPL) iPods yields actual Apple music players, and not pages of related accessories.

Another upgrade: eBay streamlined the checkout process so users see fewer pages before reaching order confirmation. Buyers can also use a small program, known as a bid assistant, to keep bidding on items up to a certain amount—eliminating the need to regularly monitor an auction for days, if not weeks. "Most consumers are just getting less patient to wait for things," says Jamie Iannone, vice-president of eBay's Marketplace Buyer Experience team. "We are trying to make it simpler, more personalized, and more relevant."

Fun and Easy

The company also wants to make shopping more fun. The site is launching a "Neighborhoods" feature that lets users join groups around particular interests. For example, there could be a Red Sox group on the site where users can chat about their favorite sports team and related Red Sox merchandise. Though no concrete plans have been announced, the company may also integrate technology from recent acquisition, StumbleUpon, to recommend items to users based on their shopping history and the shopping histories of other people like them.

In short, the company is leaving behind old eBay, where tiny pictures sit beside text descriptions often linking to even longer, wordier descriptions. EBay's old search system encouraged verbosity, and even misspellings, because item searches were matched to words in the abstracts. Now, sellers can tag items behind the scenes with all the words they think users may employ when looking for an item, without having to cram them all into the listing that the user sees. "We had never rearchitected the whole thing," says Iannone. "Now we have rebuilt our whole finding infrastructure."