Lessons from eBay Live

Posted by: Rob Hof on June 27

After spending three days up close and personal with 11,600 of eBay’s members, I’m beginning to think the conventional wisdom about its recent decline is wrong—or at least behind the times.

Don't get me wrong. eBay faces plenty of challenges, probably more than it ever has. And it could take awhile to address them, at a time when rivals are increasingly aggressive in targeting eBay's best merchants. Despite the rah-rah atmosphere of eBay Live!, the member confab held last week in San Jose, it was easy to find an unlimited number of merchants with complaints about the site.

Here's where it gets more complicated. Story after story in the media notes how--gasp!--sellers are complaining (in loud voices!) about eBay's shortcomings. You get the impression that eBay's toast. The stories aren't wrong as far as they go. But they're far from the whole story.

What they miss is that eBay spends big bucks every year precisely to solicit these complaints. That was the express purpose, in fact, of about a dozen roundtable sessions, town hall meetings, and executive panels. These bitch sessions, in other words, are a priceless (if sometimes embarrassingly public) way for eBay to figure out what it needs to do better.

The trick is to parse what these merchants, many of whom make their living on eBay, are really saying. And in my conversations with several of the very largest sellers on eBay, I was surprised to find most of them actually are happier with eBay than they have been in years. Oh, they had plenty to say about how eBay could improve customer support, antifraud measures, and countless arcane site frustrations, and of course they want all that without those fee hikes. But while some are looking at other sites, even opening their own, few have any intention of leaving eBay.

No wonder: David Steel, CEO of the marketplace services firm Zoovy, noted that his clients' sell-through rate on eBay remains about 20 times higher than on rival sites. Moreover, eBay clearly has heard the critics and has made nice with many of them, such as onetime critic Jay Senese of Jayandmarie, one of the highest-volume merchants on the site. "I see a big swing" in attitudes toward eBay, he says, noting that eBay has assigned personal account representatives to the largest sellers. "I'm not unhappy at all." Some analysts such as Safa Rashtchy of Piper Jaffray, who surveyed large sellers, also found the overwhelming majority pretty satisfied.

For pete's sake, eBay merchants even lined up, on two separate days, to get CEO Meg Whitman's autograph and get photographed with her. Said one: "You changed my life, my socioeconomic status, my tax bracket!" This is not a picture of mass discontent.

So eBay's real challenge is more complicated than unhappy merchants. It's that merchants increasingly have more alternatives, and as they grow, they're finding--as traditional merchants already know--that it makes sense not to sell all your eggs out of one basket.

eBay's showing some signs of responding, with new venues such as its ProStores offering for merchants who want to sell off-eBay and its Shopping.com acquisition for attracting buyers who like to find products via search. Can eBay pull all that together before rivals such as Google and Amazon.com steal away its best merchants? It won't be an easy task. But neither will it be an impossible one.