Can eBay rebrand itself as the Web’s Wal-Mart?

May 26, 2009 | Paul Boutin | Comments |

Ebay has a problem: It’s viewed as a quirky second-hand bazaar. That has stunted the company’s growth, as shoppers in search of instant bargains bypass eBay in favor of Amazon or Google.

eBay’s Buy It Now button, in theory, lets shoppers instantly consummate a purchase. In practice, the Buy It Now button often looks like Click Here to Pay Too Much.

That’s important, because CEO John Donahoe aims to revive the pioneer auction firm’s stalled growth by shoving auctions out of the way in favor of fixed-price listings. The Wall Street Journal reports that Donohoe is pushing eBay’s 25 million sellers to create “mini Wal-Marts” where online buyers can order items bought in bulk by a seller, then resold at a markup. No bidding involved. Instant gratification on both sides, plus one or two-day shipping for a small surcharge.

In an interview with the Journal, Donahoe simplified his vision:

Asked about eBay’s identity, Mr. Donahoe said he wants shopping on the site to offer the same sort of low-price experience as buying at bulk retailer Costco Wholesale Corp. There, “the inventory is somewhat fluid, but everything they’ve got is a great deal,” he says in an interview.

eBay’s change of course has chased off two different kinds of sellers: Those who wanted to remain in a boutique business, such as antique sellers, and those who wanted to sell mass-market goods but felt eBay made it too easy for bigger retailers to come in and steal their customers. Best stat in the Journal story: 16 of the top 100 eBay sellers in January 2008 no longer do business on the site.

With 25 million sellers and hundreds of millions of buyers, there’s no one right answer to what eBay will be. But the brand conflict is simple: Is eBay an auction house, or is it Wal-Mart?

Before you answer, remember that Wal-mart is on of the few companies holding out against the current recession. The Financial Times says part of Wal-Mart’s success is that the store’s brand has attracted “new, more prosperous customers” in search of recession pricing. It comes down to this: Did those same customers think to shop for toothpaste on eBay?

[Photo from Consumerist]

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About the Author, Paul Boutin

Paul (paul@venturebeat.com) covers Apple & the iPhone, social networks & social media, digital music & video, and any crazy Internet story. Paul wrote and edited for Valleywag from 2006-2008, after several years with Wired magazine and Slate. He writes regularly for The New York Times' technology section and sometimes for Wired and The Wall Street Journal. He studied computer science at MIT in the early 1980s, and worked as a software developer and network administrator for 15 years before becoming a professional writer. Follow him on Twitter at @paulboutin, and follow VentureBeat on Twitter at @venturebeat.

  • Subway Sally
    "Ebay has a problem: It’s viewed as a quirky second-hand bazaar. That has stunted the company’s growth, as shoppers in search of instant bargains bypass eBay in favor of Amazon or Google."

    HUH???? Wow are you ever misinformed or else drinking Ebay's special Kool Aid for the media. Ebay is dying due to the stupid policies, rules and regulations it is strangling its sellers with. Sellers have been leaving all year and taking their buyers with them! Top that off with high fees and the chance a seller can easily lose his item and his money to unscrupulous buyers and you have the rot that is growing at the center of Ebay's core! Since John Donahoe took over in January 2008 he turned Ebay's business model upside down - first wanting to emulate Amazon and now looking to sell left over lots of stuff that's been sitting in warehouses. At this point I doubt Donahoe knows which end is up! This man broke the monopoly Ebay held over online sales sites for the past 10+ years! Tell me, if you needed some vintage globes for your chandelier would you go to Amazon? Walmart? K-Mart? Target? NO YOU"D GO TO EBAY!!!!! Get it? They destroyed the goose that laid all those golden eggs - and THEY don't get it! They want to be yet another dull, boring catalog site...and no way can they do it as well as Amazon! EBAY IS KILLING EBAY - nothing else - not the economy - not fraud - not impatient buyers - no other excuse they can come up with is the truth. I just told you the truth!

    10+ year constant Ebay seller
  • Queen
    Yes - What she said! I agree 125% and I've sold on ebay for 12+years. I love auctions.

    Please - if you want new stuff? Cheap chinese junk? Clothes made in VIETNAM?? (why?) but go to buy.com directly or amazon. PLEASE!

    and leave my ebay alone - I like auctions, I like antiques and Out of Print books that Amazon and Google don't have, don't appreciate and don't want (no isbn? no place for you!)

    Please - go there, shop happy....and leave antiques, collectibles and all things "re-purposed" to us "old-style" ebayers.

    Oh and some one please get John a job with Buy.com...so he stops ruining the one "unique" experience in buying that exists on the internet...oh wait TOO LATE - see you on Bonanzle
  • Peter Antypas
    As a former eBay user (buyer and occasional seller), with no vested interest or axe to grind, and who also happened to spend 3 months in the Hamilton Avenue campus, I can tell you that there are lots of smart people there who understand what is really killing eBay and it's not the seller or PayPal fees (at least not entirely): The auction model is dead indeed. It was a novelty that wore out.

    Here's where I see opportunity for them: When I was there, I heard (but couldn't verify) that 50% of eBay's business was API-driven. This means that eBay could morph into a platform for creating marketplaces without actually managing them.
  • Why would the web need another WalMart? A faux WalMart when we already have plenty of real WalMart. I can order on WalMart online and pick up at my Local store, no shipping. Don't like it instant return while I am there.

    As a former eBay user, buyer and seller both, eBay needs to get a grip. eBay HAD a marketplace and it was the place where you could find anything legal. Good luck with finding anything now.

    Now I shop using Google to find what I want, no more browsing and seeing neat stuff on eBay. A lot of the fun stuff has gone to Bonanzle.

    Full disclosure ex-eBay now selling on Bonanzle and my own website. Hear me roar on Red Ink Diary.
  • WhatHappened2Ebay?
    Since eBay's new CEO joined the company, eBay tried Diamond sellers and failed. Then they tired to be Amazon lite and failed. Now they want to attract surplus sellers and become Walmart lite.

    What ever happened to the good old eBay which before all the changes brought by Donahoe and company was the singular leader in Internet retail?

    Seems like the more Mr Donahoe has done to reinvent eBay, the lower eBay sinks.

    If Mr Donahoe had a shred of vision, he would realize that buyers are leaving eBay because it keeps getting further and further away from waht they once flocked to the site for.
  • People used to waste time on eBay for fun: searching to buy stuff and actually taking a gamble by bidding for a product.
    With the event of social media websites a large part of the time wasted is now on Facebook, Twitter, and even LinkedIn.
    Change is the only constant in time.
  • Doc
    An article in BusinessWeek recently BLAMED the social media websites for ebay's demise. The media still doesn't seem to get it. WSJ finally did a front page article on the ebay mess this week. Where was all the media last year when TENS OF THOUSANDS of complaints and concerns by ebay customers - buyers and sellers were being splashed all over forums, blogs and even ebay's own message boards? The media, including this article, relies on the uninformed notion that the "social media websites" have something to do with the death of ebay. And that change is happening. NO Listen up, those who haven't paid attention. Ebay has been destroyed by its own management and greed. The influx onto the social media sites from ebay is MISINTERPRETED. Ebay has driven tens of thousands (if not hundreds of thousands) of its PAYING customers away, and many go to the social websites. Let's get real here and tell the truth about ebay - it's was a complete failure a year ago when it wanted to be Amazon, it was a complete failure 6 months ago when Dohanoe modeled the new ebay on Overstock.com. Now he (and ebay) thinks its going to be Costco. Fat chance. Think about it: 70 % of ebays upper management has left in the past year. Ebay stock is now down about 60% from 18 months ago (it was down over 75%) Amazon stock is down about 7 % for the same period.
  • I always maintained that eBay's strength was in the variety of items NOT available at Walmart. Subway Sally's correct: I thought Donahoe's target was AMZN, but now it's WMT? The attention deficit disorder that plagues upper mgmt at Ebay needs to be sedated, asap.
  • bluepuma
    For a very different view on the eBay problem read:

    TechCrunch: How Facebook, MySpace and YouTube Killed eBay

    [...] As early as 2006, several executives championed an internal effort dubbed “eBay 3.0.” The new vision for eBay was to resurrect the “fun” of auctions. [...] By the time John Donahoe took the helm of eBay in Q1 2008, he opted to “aggressively change our product, our customer approach and our business model.” In a futile effort to compete with Amazon and Google, eBay leadership essentially stripped whatever remaining fun existed out of its marketplace. [...]

    http://www.techcrunch.com/2009/05/23/how-facebo...
  • Subway Sally
    First I hear - its the economy - next I hear people are tired of auctions they want to buy instantly (even though auctions have buy it now) - now I'm hearing that facebook, youtube and myspace are taking traffic from Ebay!!! One just has to wonder what the next ridiculous excuse will be. Online sales companies are not suffering the same fate and they aren't hiding behind the economy or any other weak excuse...only Ebay and only Ebay has so screwed up and fouled up what used to be a good, strong working business model...only Ebay has broken its own monopoly! So, we have these articles - grasping at straws as to the reason Ebay is failing - and make no mistake it IS failing! Probably few of these writers know much about Ebay or ever sold an item there and many never even bought an item there ....but they KNOW what's wrong with Ebay! What a supreme joke! Ebay is killing Ebay just as stated in my first post! NOTHING ELSE is killing Ebay! Ask any veteran seller who has been in the trenches dealing with this hapless company for years now and they'll tell you much the same thing.
  • Doc
    Perfect Sally Subway. At least some of us get it. I was a buyer and a seller on ebay for eight years. Paid thousands of dollars in fees each year (not to mention Paypal fees) I, like many thousands of others wouldn't spend a nickle on ebay now (or is it Amazon, or Overstock, or Costco or Walmart) Ebay is truly lost!!
  • Marc
    Subway Sally is so right. People are fed up with the b.s. both sellers and buyers. Bottom line is that ebay has a very bad reputation problem. People are just plain sick of the b.s. and ebay keeps feeding it. Ebay needs to understand the word on the street is not good. If they can ever grasp this reality, and stop blaming the seller, it would be a step in the right direction. The majority of the public doesn't know (or care) about the changes that Mr. Donahoe has instituted that supposedly make buying on ebay so much better. Ebay needs to step up their game and start treating the marketplace and the public with respect!
  • capriracer351
    I used to buy and sell for many years on ebay. I made some pretty decent money to the point that I was able to finance my racing operation with it. Not anymore, between the high fees and the fact that anything that I list doesn't even show up on their search engine even if I type in the exact auction title, I can't make any money there anymore.

    I also used to buy there quite often, mostly used car parts. Now I have to wade through thousands of auctions of junk and new products that aren't any cheaper than if I bought them at a regular speed shop.

    To heck with ebay, they ruined it for themselves. Reset your business model to circa 2001, then you will have your traffic again.

    I have a whole garage full of parts that need selling, where is the best online auction house at now? Anybody know?
  • Current thriving ebayer
    The problem with ebay, is that they took too much stock in customer surveys, which is fine, but they went overboard with changes to help the customer and alienated all of the sellers. Sellers were and still are the main reason ebay is thriving - push out the sellers of unique items, the antiques, the hard to find - used and new and you have nothing but electronics - which is Amazon.

    Auctions are still important for the person cleaning out a garage, antiques, collectibles and unique items - auctions are not dead, ebay raised rates on auctions to kill them and therefore took the fun out of ebay.
  • Get ready for a new price hike - eBay is "testing" a new "promotion" - where you pay a smaller insertion fee but the ENTIRE value final fee is charged at 8.75% - NOT just the first $25. So if you sell cheap - chinese made junk - fine - if you sell anything over $25 it is going to cost you more money.

    Now it is going to be a first two auctions a month but I was told by eBay rep - that all auctions in Sept will be charged this new rate. That will put many eBayers out of business.

    Another nail in the coffin for eBay - Shame
    Ebizauctions.com
  • The sale price point at which the 'free auction listing' begins to cost more than you can save on insertion fees is actually $44.

    As Auntie May says "Some people you just have to count your fingers after shaking hands"
  • Subway Sally
    "Now it is going to be a first two auctions a month but I was told by eBay rep - that all auctions in Sept will be charged this new rate. That will put many eBayers out of business."

    No...its going to be the first FIVE auctions each month - unless you use a third party to list your goods. These first five "free" auctions are mandatory! Ebay is touting it as a gift! Pullleeeze - they must think we ALL have their level of intellect! Ebay never gives anything away. They used to - they used to have at least one free listing day a year - customer appreciation. That's only a memory now. Now they simply find ways to pork sellers even more...and buyers too because sellers have to pass on at least some of the fees Ebay squeezes out of them on to their buyers!
  • I have a feeling that the biggest mistake was taking the company public. Public companies are under constant pressure to grow the business at any cost, but not all businesses are appropriate for constant growth. There is a point at which the size is optimal for each business model, and once you reach that level, you should just try to maintain it well, and move on to some other business venture.
  • Charles MacKay
    Is the auction model really dead? Sounds good if you'd like ebay to move on, but is that a factual statement? I would suggest that the auction model is far from dead, just horribly mismanaged by ebay's new management.

    Rebranding efforts have about the same likelihood of success as a business start up, less when egos are involved. More often, rebranding efforts opent he door to competitive entries and put the rebrander on the defensive for years, if the rebrander survives. See "New Coke."

    ebay owned the online auction business for a decade, now they're bored with it and want to move on. Fine, I'll enjoy reading about ebay being the next Netscape as ebay flames out and a new market entrant takes the whole enchilada.