Suggestions for eBay 2.0

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Includes: AMZN, EBAY
by: Scot Wingo
This is the fourth and final (phew!) episode in a four-part series:
Episode I - Q408 in-depth analysis - available here with Q+A covered in an addendum (IA) (link)
Episode II - Introducing the ChannelAdvisor Ecommerce Framework (NYSEMKT:CEF) (link)
Episode III - eBay, Amazon and the CEF (I had to split it into to parts A (eBay) and B (amazon) )
Episode IV - How to fix eBay (you are here) - A NEW HOPE - Introducing eBay 2.0
Before we get started, I wanted to make a couple of editorial comments as I am alternatively accused of being either an eBay (NASDAQ:EBAY) cheerleader/shill or an eBay hater depending on phases of the moon and what-not. eBay is a small investor in ChannelAdvisor, they have no say/control/input in what we do, what I blog, say, etc.. eBay is very important to our customers as well as represents 10-100% of their ecommerce business. All of that being said, my goal in writing this is three-fold:
  1. Educate the thousands of eBay sellers out there to what's going on with eBay, with real solid data and not speculation or mud-slinging.
  2. I've been part of the eBay world since 1997 or earlier -first as a buyer and then as an entrepreneur in the eBay ecosystem with two companies. For us 'old timers', we know that eBay had something special going and now its painful to watch it fall apart, slipping through everyone's hands like sand. Some folks in the press have drawn the comparison of the relationship between complaining sellers and eBay to be like that of an abusive relationship. That may be a fair criticism, but the way I look at it is if you had some ideas to turn this thing around and it was important to you that eBay not crash and burn, you should do something about it. I'm as frustrated as everyone else, because I believe the strategy outlined here has been in front of them for 5yrs and they just don't seem to either get it or be able to execute (or both). eBay was something special, and can be again.
  3. I have a personal policy to never criticize something unless I also have a viable solution. I am presenting here what I believe is a very viable solution for eBay to solve all of the problems that I harp on.
The fact that if eBay does pull out of the death spiral that it would be good for ChannelAdvisor's business is icing on the cake for me as we're prepared for the worst and we counsel our customers to do the same. It's also very painful to watch a good chunk of the millions of people that make a living or considerable secondary income go down with the ship in the last year. I sincerely hope these folks can be brought back into the fold or at least find another way to supplement their income. Part of eBay 2.0 is bringing them back as you will see.
Finally, the ideas in this post are a mixture of inputs from hundreds of eBay sellers, buyers that I meet in my travels and lots of internal discussions we have at ChannelAdvisor. I also stay in touch with quite a few ex-eBayers and my thoughts have been shaped by many of the things they reveal about the inner workings and culture of eBay. Some existing eBayers will talk about these concepts off the record as well and I've bounced many of the ideas off of them, but not the whole enchilada. This is the first time I've put pen to paper to attempt to amalgamate all of the solutions into a cohesive vision I call eBay 2.0. I'm excited to hear what everyone thinks and to hear your ideas of where I'm right, where I'm wrong and most importantly if you think this plan would save eBay.
This eBay 2.0 post is organized into the following sub-sections:
  • Background - Some of the rationale for why we need eBay 2.0 and how I got to my approach. If I were pitching a venture capitalist on eBay 2.0, this would be the 'market opportunity' section.
  • The Pitch - eBay 2.0 - Introducing eBay 2.0 - the New Hope. If I were to meet you for 5 minutes at a trade show, this is the quick 'elevator pitch' I would use to describe eBay 2.0. Some would call this the executive summary.
  • eBay 2.0 - Foundational Changes - Some foundational things eBay would need to do ASAP to start down the path of eBay 2.0 and have a high probability of both doing it quickly and successfully.
  • eBay 2.0 - Meat and Potatoes - The details of what eBay 2.0 would look like, fees, etc.
  • eBay 2.0 Use Cases - In engineering we always act through a couple of 'use cases' to illustrate who our customer is and how our software will serve them.
  • eBay 2.0 and the CEF - Here we run eBay 2.0 through the CEF quickly to see how it fares.
  • Conclusion - it's a wrap.
This is a long post. Fixing eBay won't be easy and it's worthy of some verbosity to make sure we get it right ;-)

Background (or Market Opportunity)

If you've been reading along, I hope the following position statements are mostly review for you:
  • eBay has large scale, but is declining substantially while e-commerce and competitors like Amazon are growing. This is due to Amazon's out-execution on 5 important dimensions: selection, value, ease of use, trust and merchandising.
  • eBay is in a dire situation. Choose your metaphor - Rome is burning, the Titanic is sinking, death spiral, wings are off the plane, etc. eBay must do something drastic within the next 6 months or as I showed in Episode I, they not only will be surpassed by Amazon, I believe their only option as a company will be to either split into pieces or sell to Microsoft or (long shot) Google (NASDAQ:GOOG), Y!, etc. Billions of dollars of shareholder value have been lost, more could be on the way if something isn't done. The time to act is now. Analysis paralysis is not an option. Mis-execution is not an option.
  • E-commerce is a huge market and there is room for a healthy eBay and Amazon.
  • Amazon (NASDAQ:AMZN) is on the precipice of becoming as powerful in ecommerce as Google is in search. It's healthy for them to have strong competition and for sellers to have two healthy options. We are not on that path.
  • eBay's strategies of 2008 are not working and if they continue down the path of further 'amazonification', their problems will amplify vs. improving. In other words, eBay can not beat Amazon at their own game, they will lose this battle. I'm reminded of a quote from Jack Ma, CEO of TaoBao/Alibaba (eBay's competitor in China who kicked their butt left and right and then kicked them completely out of the country) - "eBay is a shark in Pacific Ocean and Alibaba is a crocodile in the Yangtze River. Competition is not the same as a battle. In battles, one has to die, only must survive." The eBay shark is heading to the Amazon piranha, and it ain't gonna be pretty.
  • Many insiders have told me off the record that eBay wants to fit a niche they see 'in-between' Amazon and Craigslist. There's even a much talked about secret twitter post that I've gotten multiple verifications is really from a distraught eBay VP. I'm with this VP - this is a terrible strategy. Why would you ever want to fit 'in between' something. eBay should try to crush them?! WTH?! In my following eBay 2.0 strategy, eBay competes with Amazon by playing a bigger game, not a smaller game. This 'in-between' strategy freaks me out because it's like Circuit City trying to fit 'in-between' Wal-mart on the low end of electronics and Bestbuy on the higher end. That worked really well for them, eh? This is like saying: "Hey my strategy is to fit between a rock and hard-place - sound good? "

Given these realities, what should the strategy be? Well, let me walk you through two opportunity areas that I think eBay has a closing window of opportunity to execute on as they are uniquely positioned to do so. The first is the product lifecycle.

Opportunity - Product Lifecycle

If you recall in Episode I, I reviewed the long tail concept and how it relates to e-commerce and is strategic to driving 'selection'. Another way to look at e-commerce is the product lifecycle as illustrated in this graphic:
Episode4_graphic1
You can pick your favorite product and understand how it goes through this cycle. I usually use iPods, laptops or digital cameras because most people have gotten caught up in the lifecycle in one of those categories. There are four sections to the product lifecycle:
  • Introduction/New - a product is new and just out. When this happens, it usually pushes the predecessor product into the end of life bucket.
  • In-season - the product has been out for a while and is really hitting its stride. This is where most of the margins and sales come from.
  • End of life - The product is being replaced by a new product and is not leaving the market for the most part.
  • Liquidation/vintage - The product is liquidated or there are some left out there, but they are either kept in new condition, used or refurb because there is still demand for them.
I frequently like to marry the concepts of the product lifecycle and the long-tail. If you envision the back end of the product curve going out for miles, that's really the long-tail. In other words, there are many more products that have come out in the last 10-30 years than are out right now and 'in-season'. Also, I think an important part of the lifecycle that is often overlooked is what I call 'local' and what eBay calls 'classifieds'. At some point and for some categories, there can be a benefit to both buyer and seller to search and transact locally. Why ship a couch when there's one 2 miles away. Why buy an old desktop computer from 500 miles away, when there's one from some local business? As the long-tail goes out, local becomes important.
Today, Craigslist owns the local long-tail (for products as well as other stuff), Amazon is well on the way to owning the in-season and introduction buckets while extending into the back half of the curve (you wouldn't believe refurbed iPods our customers sold this holiday on Amazon - trust me they are eating into that part of the curve). This graphically demonstrates to me that eBay's rumored strategy for being 'in-between' Amazon and craigslist is faulty.
I think the REAL opportunity is to be the only company to cover the entire product lifecycle. eBay is uniquely positioned to do this and that's the foundation of eBay 2.0.
Each part of the product lifecycle has a natural fit to a couple of buying formats that is also part of the eBay 2.0 thinking:
  • Introduction - When items are in short supply, auction is the best format to extract value from that inefficiency. Fixed price maybe the way to go later on with possibly offers.
  • In-season - Very few people want to mess around with auction for in-season products. Fixed price is the way to go.
  • End of life - Mostly fixed-price here, but potentially some auction if someone is liquidating and a value-consumer could find a good deal by investing some time.
  • Liquidation - Mostly auction as you have no idea what this stuff is worth. Sometimes you do though, so maybe some fixed-price. As for local, fixed-price may work if you just want to get rid of something, but have you ever sold something on craigslist and 40 people call you? Hmmm, auctions would have been nice in that situation wouldn't it?
I also believe each buying format has a natural search order:
  • Auction - Auction buyers are driven by serendipity. Even when they are searching, it is to help them stumble up on something interesting, not because they are specifically looking for widgetX. They like to see what's new, what's hot, etc. But most importantly they want to see things in Time Ending Soonest (TES). Ah TES, how I miss you. I never thought your simple algorithm would be so sorely missed, but I find myself constantly fighting BestMatch, slogging through ads and featured crap to get you back to no avail. Auctions are not the same with the vintage 05 TES.
  • Fixed-price - recent sales or popularity is important
  • Local - Local shoppers like to see what's new - so 'recently listed' is the way to shop. They also use serendipity, but are very sensitive about getting to the newest stuff before someone else has. Ever had a garage sale start at 8am and people are at your house at 6am?
These three search orders are immutable to me - meaning that if you mess around with them, you get bit - hard. BestMatch's attempt to hodge-podge auction TES, seller quality and fixed price recent sales into a jumbly mess has been nothing short of a train-wreck for everyone involved.

Another important point that's part of eBay 2.0 - I don't think that seller performance should factor into search results ordering. It just doesn't work because it confuses the buyers, kills sellers and tends to reward bad behaviors. Search is search and performance should be treated separately (more on this later). Search is for helping buyers find stuff. If you have bad sellers, well, don't put their items in search at all. Does this seem like common sense to everyone or am I crazy?

In addition to the product lifecycle, brand is an important area eBay can leverage that they haven't done 'right' to-date.

Opportunity - the eBay Brand

Now, I don't have a fancy MBA from an ivy league school and I haven't worked at any of the great brand companies out there like Mattel (NASDAQ:MAT), P+G (NYSE:PG), etc. and I sure as heck haven't been at McKinsey or Accenture or Bain. But I do like to drink soda (or pop for you mid-western readers) and a great case study I want everyone to think about is New Coke. You can read a fancy MBA paper about it here.


New_coke eBay 2009 is New Coke. They've taken the eBay brand that is 99% known for auctions and they've jammed fixed-price into it so much so that consumers are leaving, spitting out the vile tasting stuff and heading over to Pepsi (Amazon) because at least it hasn't changed and you know what - it's actually pretty good.

This affinity between eBay and auctions (or call it the flea market) with consumers is a core component of the eBay 2.0 strategy and in fact I think they can extend the eBay brand, but not to fixed-price/in-season.

You may recall an experiment eBay had called eBay Express where they tried to extend the brand with a different fixed-price site, but failed. Ex-eBayer, Adam Nash, had a great eulogy and behind-the-scenes view of what happened that I recommend everyone read to see his perspective.

I always likened eBay Express to diet donuts. It just isn't an extension and you are admitting that, well, if you have an eBay express, that makes eBay - what- eBay slow and poky? There were other problems too that Adam details, like they didn't send it any traffic and small things like that. Also the way the inventory worked was all jacked-up, it was a sub-set of fixed-price items on eBay (what?!). I've read all of Adams thoughts on eBay Express and chatted with him before on what eBay's doing wrong/right and many of his ideas have found their way into eBay 2.0. (BTW, eBay needs to get this guy back.)

As I've said, eBay is auctions in consumer's minds. So why fight it? If eBay is going to be our 'cola', then let's use a different brand, as Coke co does with Sprite, for our new citrusy soda (fixed-price).

While the eBay brand won't extend to fixed-price, I do think eBay has a Coke Zero/ Diet Coke opportunity to extend the brand to local - PLUS this gives us a good reason to put a bullet in Kijiji (the Tab of the family), but I digress. eBay has always tinkered with local, but never done it right. By extending eBay into Local, I think they could take this segment back from craigslist (well except for all the sex stuff - craig can keep that). I speculate one of the reasons they've never done this is craigslist' revenue is very small because it's mostly free to sell things. While that's a good point, by pulling in the local selection, you have a unique opportunity to out-selection even Amazon. While you may not make direct revenue from Local, the expanded selection will bring people to the other parts of eBay 2.0.

With those opportunities in mind (and the New Coke case study), allow me to introduce you to....eBay 2.0

The Pitch - eBay 2.0

(editorial note: I'm going to do this pitch in first person {as if I were eBay} because it helps me think through and articulate the pitch, not because I am eBay.)

Buyers want to shop how they want to shop. Some like the instant gratification and convenience of fixed-price shopping for new, in-season items, some like auction deals, some prefer local merchandise, some want a combination of fixed-price, auction, local at different times depending on what is available when and where and at what price. It also could depend on how urgent the buyers need is.

eBay 2.0 gives buyers what they want - unprecedented buying formats, selection and value across the entire product lifecycle and the long-tail.

Buyers get to choose the best experience for them through one of three sites:
  • eBay classic - Classic auctions that you know and love with some new enhancements and more trust via PayPal. We hear you loud and clear - we have taken out fixed-price and stores and given you pure auctions, just the way you want. The New Coke days are over and we're back to Coke Classic.
  • Shopping.com 2.0 - Our fixed-price, convenience brand, with buy-it-now items from many of the sellers you already know and love, with some interesting new offers from larger retailers. If you've ever used the old shopping.com, this is a much different site with an explosion of inventory at great values.
  • eBay Local - The eBay experience you know and love, but with the local flavor of a Craigslist.. PayPal makes it safe, so you don't have to worry about all the dodgy characters hanging out on a site like Craigslist.
As you shop, we'll surface different items that may help you, but we'll always let you choose how you want to shop based primarily on the site/brand you start with. We'll never spam you with ads or things that aren't relevant and helpful to what you are looking for.

To improve ease of use, we've enhanced PayPal to be the common payment and trust system for all three sites. With one powerful, yet simple, PayPal account, you have easy access to everything - no need to re-register or enter the same information over and over. Where appropriate, we've also integrated the new 'PayPal Cart' so if you want to add a fixed-price or local item to, say, an auction purchase, we make it easy! We even have the new 'PayPal FreeShip' where with your $100 subscription, participating retailers offer free 2day shipping at no cost to you!

We realize it's 2009 and we've added tons of 'web 2.0' enhancements that let you leverage your social networks, your mobile devices and the latest technologies to enhance your buying experience and add value.
eBay 2.0 - the only solution that brings you massive selection (intro, in-season, end-of-life and liquidation PLUS local), values (because you see everything, not just one site), formats (fp,auction, offers) with PayPal-powered trust and ease of use.

That's the pitch. If you think this sounds good, here's how eBay should go about implementing it. First with some foundational items and then the meat and 'taters as we say here in NC.

eBay 2.0 Foundational Changes

Before eBay the company can be successful with eBay 2.0 the concept, some foundational changes need to be made ASAP. I'll try to keep this short so we can get to the details of how I envision eBay 2.0 working. But I do want to emphasize that I don't think the eBay 2.0 concept would get done or work until these things foundational changes are made:
  • Culture change. eBay has to undertake a massive culture change that includes:
    • Ditch the corporate jet(s) - In today's world, executives look terrible drinking champagne on their corporate jets while their customers, employees and shareholders suffer. Ask the CEO of GM how well the corporate jet went over on his last trip to DC. Plus you always have pictures like this haunting you. Do you really want to be jetting to Davos while Rome is burning or right after a bad quarter? And yes sell it/them on eBay.
    • ReOrg - Today eBay is organized around buyer and seller. That is really complicated to me because every buyer interaction touches a seller. If you want the search engine to do something with say, shoe size. Guess where that shoe size is going to come from? Yep, the seller. I don't know enough about the internal org at eBay to hazard how to org this, but in eBay 2.0, I suspect you would pick out a foundation/core team to build things used by all three sites and then have a eBay classic team, a local team and a shopping.com team. These would look much different than the teams there are today and be lean and mean so they could execute rapidly.
    • Treat sellers like customers - There's been lots of lip service to this and not a lot of action. That needs to be swapped. Heck, I would ban the word seller and I would make everyone say customer or partner as a reminder of a new world order.
    • Streamline - It takes forever for decisions to be made and executed on at eBay. I don't know why, but it needs to be streamlined
    • Agile - Parts of eBay's engineering team are agile, others use a 1990's waterfall development methodology with all kinds of old-school trains, train cars, seats and junk like that. All that needs to be ripped out and replaced with Agile/Scrum
    • Variety in the workforce - eBay is a two class system. There are Harvard, Stanford, Yale, etc. MBAs that call all the shots and then there are worker bees. Many worker bees end up spending weeks on presentations that the MBAs slam and redo. Smart people in the ranks without ivy league MBA are passed over while wet-behind-the-ears MBAs that don't know the business are hired and pass over non-MBAs quickly and then leave for VP/CEO gigs. There are also too many business consultant lineaged people at eBay. You can't throw a stick without hitting a room full of McKinsey/Bain/Accenture consultants, they have lots of great ideas, but can't seem to execute. eBay needs more Jeff Jordan, roll up their sleeves, and GSD, execute execute execute type of people right now.
  • Mea culpa - Like New Coke, someone at eBay (JD would be first choice), needs to admit it was a mistake to change something everyone liked, and that we all miss eBay classic and are BRINGING IT BACK - HOORAY!
  • No ads - period. eBay should focus on one thing - GMV. That's the sole driver of revenue, margin and success for buyers and sellers customers. Ads are a distraction and not in line with that goal. I'm talking everything folks - the stupid mortgage banner ad, the irrelevant text links, the weird little things low on the page, the ads splatted in emails randomly - all of them need to go. They take valuable buyers off the site and compete with sellers partners and MOST importantly the erode trust and value of the site. The only time ads are acceptable are if they are for off-site products, like shopping.com's CPC network or ProductAds from Amazon.
  • Nuke or sell lots of stuff that doesn't fit in - Skype, StumbleUpon, Prostores, Microplace and half.com. These are not a focus. Buy-bye.
  • Fees - eBay doesn't seem to ever understand that their fees are just crazy-high right now and cause the prices on the site to go up. Thus in eBay 2.0, fees come down substantially and many that are additive, have discounts - like PayPal. If I sell in the family of eBay 2.0 sites, I should get some benefit vs. someone not doing that. Lower fees will actually increase revenue (counter intuitive, but it works). Prices on the site will come down, GMV will accelerate, revenue will follow. Overall, eBay's take rate of 12% needs to come down to about 8% - You'll see where each sub-site needs to be IMO.
  • Consolidate ticket category and make it 100% Stubhub - why haven't they done this yet?!
  • Nuke travel and real estate and partner with someone instead.
  • Wall St - I'd do a speciall call and tell Wall St. they are hitting the reset button on the entire business. There's risk in doing it, but the risk in not doing it is greater. I'd then outline the eBay 2.0 opportunity and a roadmap for how we're going to deliver it quickly. Everyone knows this needs to be done, the stock would pop 20-40% on this news alone IMO.
  • Become a platform and learn how to partner - A big win for eBay 2.0 needs to be an open platform. eBay has messed this up for the last 10 years. They worry more about 'what if someone builds something big on our platform' vs. 'I hope someone builds something big on our platform'. eBay's a very hard company to partner with as any CSP will tell you. They need to set a high quality bar too. If eBay were running the iPhone app store it would all be flatulence applications and other wacky stuff, but they'd turn away someone serious as that could be 'risky'.
  • Search - Search is the cornerstone of online shopping and has to be crisp with no advertising. Things like featured listings also taint the experience and the short-term win of some extra advertising $ do not outweigh the long-term loss of sales by not helping buyers find what they are looking for as quickly and easily as possible. Featured listings are not analogous to Google sponsored listings, that argument doesn't work for me.
  • Sellers are a strategic asset, not a liability (had to do this one twice and use some bold here). Say it with me: Sellers = selection. Selection = winning. Winning = good. Therefore sellers = good, not bad.
Finally, adopt a guiding mission statement that anyone can understand in and outside the company. Lots of eBayers are confused, not only because eBay is doing a lot of confusing things, but because there's no real mission there. Let's start with this: eBay 2.0 - Selection and value for fixed-price, auction and local products. This helps everyone understand that the top priority is selection and value. Ease of use and merchandising and trust are up there, but not in front of selection and value. No Skype isn't part of this mission statement.

Once these items are taken care of, it's time to implement eBay 2.0.

eBay 2.0 - The Meat and Potatoes

In this section, I'll outline each of the four main components of eBay 2.0 and some key points each will bring to the table that stitch together to implement the eBay 2.0 concept.

1. PayPal
In eBay 2.0, PayPal expands from a payment system and adds a unified account system for all the sites as well as the feedback system, cross-site cart (could be extended to any retailer) and possible shipping promotion engine. While eBay views PayPal as a payment system, I think it has the opportunity to become what I call an 'e-commerce federator' and that's the thinking that drives many of these features that would either move into PayPal or need to be innovated. In short, Amazon's success isn't going unnoticed by other retailers. Thus, PayPal has an opportunity with the items I'm suggesting here and more to build some interesting 'cross-ecommerce-site' technologies that give member sites an advantage and take many of the Amazon 'wins' and make them cross-ecommerce which makes them more powerful than an Amazon-only technology. With that in mind, I use the lingo 'in network' to mean - one of the three eBay 2.0 family sites I'm proposing (eBay classic, shopping.com, eBay Local) and out of network means any other ecommerce site that is integrated with PayPal.

Here's a little more detail about each:
  • Common registration/account system - Registration on eBay today is a complete goat rodeo and everyone knows it. It's been this way for 5+ years and eBay hasn't done anything to resolve it and in fact seems to make it worse over time. Everyone has to double register for everything (eBay/PayPal) and the worst part is if someone (buyer or seller) is kicked off the site, eBay lets them right back on to continue whatever shenanigans they are up to. Moving all of the registration/accounts into PayPal solves all of these problems because you tie it to the payment system which is the single most trackable and lock-out-able datapoint. It also is convenient for buyers and should pull some non-eBay buyers in as they are automatically 'pre registered and approved' to shop on the eBay 2.0 family of sites! This would look a lot like Google's account system that lets you access 10-20 various systems/sites/applications with one handy login, but could be even more powerful when you think about the extra-eBay network that PayPal extends to. Oh yeah, BML should be in here too. The PayPal registration system needs to be like Fort Knox for sellers - requiring a key fob and things like that. For buyers it needs to be state of the art with some online-banking like security. PayPal is far behind on this today, eBay is further behind.
  • Feedback system - Feedback should be moved from eBay and put into PayPal, thus becoming portable. Portable feedback creates a more valuable system for everyone involved - buyers, sellers and PayPal/eBay. Imagine being able to buy from a seller and see their feedback on eBay classic, shopping.com, eBay Local and even their ecommerce site.
    • By the way, DSRs go away and are replaced with something totally different that isn't a buyer survey, but is a calculated seller performance rating using data collected by PayPal. PayPal knows when you ship, it knows when buyers aren't happy, it knows if you've been good or bad and thus should be the driver of seller performance. There should be tough but fair rules put in place that are enforced. Once you are kicked out, you have one chance to get back in and are in a trial phase with limitations. If you blow that, you are gone for good - period. The registration system keeps you out for good - both buyers and sellers.
    • Buyer performance is also monitored here - I don't think we bring back negs for buyers, but a seller can be able to look at some buyer rating and not accept transactions from someone that isn't at the level they want to deal with. If buyers do anything fraudulent, they are out for good. Period. No constant reregistration, re-fraud, that is rampant today.
  • Cross-site cart - By having PayPal at least in brand as the provider of a cross-site cart (eBay classic, shopping, eBay local), you give users some interesting ease of use by being able to mix and match a lot of different types of things they may want to buy. You could even extend this out of the network for some interesting benefits.
  • Returns/customers mitigation - By consolidating all buyer relations here, the seller can have one single place to deal with this both in network and out.
  • Wishlist - Cross-site wishlist should live in PayPal. You'd start 'in-network' (eBay classic, shopping, eBay local) and move it to other sites as well.
  • Shipping promotion engine - You could leverage PayPal to first implement an Amazon Prime like program for the eBay family of sites, but later, I think you could extend this to other ecommerce sites. It doesn't make sense for every ecommerce site to implement this and there's a huge opportunity for someone to come along and federate this.
  • Cross-site recommendation engine - I believe PayPal, at least in brand could be an interesting innovative area to think about recommendations. Amazon can build recos based on what you buy - at Amazon, PayPal has the potential
  • Etc. - I think there's about 10 more things I would add here, but you get the idea.
In eBay 2.0, PayPal is the glue that holds the whole thing together.

2. eBay Classic - the auction brand is back!
Here are the steps we'll take to bring back the auction business that is currently on a steep decline:
  • No more fixed-price listing type (They move to shopping.com)
  • No more eBay stores (they move to shopping.com stores)
  • No yellow buttons, no spammy emails. No emails with clickable links.
  • We keep auction listings and all their features like BIN, offers, etc.
  • There is no catalog - everything is free-form, even media. Sellers have total control of merchandising - good and bad.
  • We revert to the 2004 pricing model - but take a point or two off the FVF and look at category-based listing fees.
    • Keep free gallery and make it free supergallery - why did they ever charge for this?
    • Free subtitle - why charge for something that helps sellers sell stuff?
  • We look at reserve auction fees as that model was broken years ago.
  • We bring TES back as the default search and still offer others, but TES is the default. Welcome back serendipity shopping!
  • We nuke all ads (banners too!) and featured listing types.
  • We've nuked DSRs (see PayPal section) - we need to offer amnesty to all sellers that were kicked off due to DSRs - there needs to be some thought here and data analysis (I don't have the data), but my sense is anyone kicked off for a low "shipping and handling price" should come back. Others, maybe not.
  • We beg Bruce@emovieposter to come back and we treat what I call the 'auction traditionalist' with respect as they add very important and strategic SELECTION to our business.
Now we're back to a vintage 04/05 eBay and auctions should come back alive and start growing. Next we'll add several things that have been sorely missing for years:
  • Extended auctions option at seller's discretion - Buyers (except for snipers) hate sniping. There's nothing worse than getting into an auction to have someone swoop in with 1 second left and defeat you. Thus sellers will have an option to extend auctions for X minutes if a bid comes in for Y minutes, until bidding stops. This will make bidders happy as they will at least get a shot (they can be notified by SMS, fb, tweet, rss, email, etc. that they have x minutes BTW) at staying in the game. Snipers will hate this, but that's ok. They can go over to shopping.com if they want a guaranteed win.
  • PayPal benefits - All the chaos caused by bad registration, return and other policies will be cleaned up by PayPal 2.0 above.
  • PayPal fee discount - PayPal fees for eBay classic will be half of those on other sites to encourage sellers to price their items as low as possible and pass that value on to consumers.
  • UPIs - They have to go away. Either eBay guarantees the transaction or PayPal or something. The poor registration control feeds into this. This is a 10% margin drain on sellers and needs to go away.
Overall, I think the eBay classic take rate should be 7-8%, with another point or two for PayPal. That will encourage some serious value on the site. I do think the auction model benefits from listing fees so I would keep them in this site.
I'm sure there are some other things we would want to tweak here, but this is a good start. As people search and browse on eBay Classic, we will, where appropriate, surface some Shopping.com and eBay Local items, but always in a value added way - not in a spammy way.
You'll know this model is working when Jay Senese's onecentcd auction business makes a come-back and we have a vibrant media category. If we do that, coins, stamps and all that other great stuff will have come back too.
3. Shopping.com - our fixed-price brand
Here are the steps for Shopping.com:
  • We transition away the current CPC model and go to CPA (FVF only in eBay-speak) (shopping is on a 50% y/y decline path anyway, might as well scrub the whole dang model and start over)
  • Get rid of all ads - yes even banners.
  • Everyone has to at least take PayPal.
  • You get the benefit of all the PayPal stuff above (cart, common accounts, feedback and what-not)
  • Retailers that join the PayPal registration system may get some added exposure
  • Value wins - items tend to be sorted by lowest price
  • There maybe a recent sales orientation somewhere or an option in the search engine to find 'hot deals' - maybe a little 'top sellers' box with 2-3 listings max above lowest price sort.
  • The shopping.com inventory consists of:
    • What is today called eBay stores moves to Shopping.com stores and is here under this brand
    • The 30-day fixed price listing lives here.
    • No GTC to keep the inventory fresh
    • Any large retailers that want to convert from CPC to CPA (most will, you'll see an explosion of inventory from this if you keep it simple)
  • Fees at shopping.com need to come out in the 10-12% range with PayPal. 8-10% without. Category pricing with maybe a very little (pennies) listing fee to keep junk off is what I'd start with.
  • Maybe some kind of way for trusted/larger fixed price sellers to pay $200/yr or something and get out of listing fees all together.
  • Tons of user generated content - shopping.com is the repository for the entire eBay product catalog and thus you need some very rich content here. If someone wants to auction off something with an entry in shopping.com's catalog on eBay classic, it's linked to here.
  • This site needs retailers working for it focused on categories with a relentless drive to increase selection. Shopping.com has to be THE most comprehensive listing of products on the internet.
In addition to the above, sellers must provide details on their tax rates, shipping and handling options+costs, returns, etc.. Sellers are able to offer a variety of different coupons that would be listed right here and taken automatically at checkout and factored into the search/cart/checkout. Thus sellers can have lots of flexibility on running promotions without having to nuke a bunch of 30-day listings.

4. eBay Local
Here are the steps for eBay Local:
  • The site is very location aware.
    • On the web it uses your IP or a zip code - you can store several locations if you'd like.
    • On your iPhone or mobile device it uses the GPS
  • Integrated maps in the search results (think Craigslist married to Google maps like this cool mashup)
  • eBay Motors local moves into here - it's actually pretty good, but not useful/used/known as it's brand is hosed by the larger eBay Motors. It also has very little inventory so that needs to change.
  • Fees are free - only fee is if you take PayPal, standard or maybe even some local fees apply. Some categories, Motors, maybe there's a fixed-fee FVF for successful transaction where PayPal doesn't make sense.
  • Search is recently posted oriented
  • Community oriented policing of the site.
  • Seller can opt-out of more national exposure if they wish.
  • Auction format is available - this causes the fees from eBay classic to apply.
  • Did I mention we nuke kijiji?
  • Random idea - Maybe you even loop in large retailers here with an interesting intersection of Shopping and local. Wouldn't it be neat to see what's available from wal-mart and target near your house too? This probably needs to live in something called Shopping Local - that's a eBay 3.0 thing though probably. We did a test with Sears locally on eBay that actually organically did pretty well, but eBay failed to support the effort and it has been discontinued. Consumers that could find the items got 50% off of appliances with excellent local delivery options too.
We surface these items in both eBay classic and shopping.com where appropriate. Local sellers have the option to leverage the catalog in shopping.com into a local listing. Have a collection of 100 CDs? Simply enter the ISBNs (or take pic with your iphone) and we'll pull the info into a listing for you.

When all of these pieces are in place, we'll run a huge online+offline campaign around the power of the new eBay - local, auction, fixed-price. The internet's broadest selection and best values.

eBay 2.0 - Use Cases
Now you see in broad strokes how our four systems are designed, the following use cases will show you how they work together to drive value for buyers and sellers:
  • I am a buyer looking for the hard to find Mario Kart Wii game. I like eBay classic (auctions) because I hunt for deals and hard to find stuff I bid like a wild-man and like the thrill of the hunt. I start at eBay and see 50 results of auctions ranging from $10 to $40. I notice in a little box in the results that shopping.com has the game for $39.99 BIN and someone in my town has it for $45 via eBay local.. This is helpful as I won't overpay for auctions - I hate it when I do that to later find the same thing is available somewhere else for $10 less. After looking at the auctions I decide that I'd actually just like it locally so my kid (ok, it's for me, but I can't tell you that, can I?) can be playing a little Kart this afternoon, so I buy that way. By 6pm, I'm home crushing Princess Peach with Luigi. Talk about instant gratification!
  • I live in Columbus, OH and want a bike for my kid. I go to eBay Local and find a gently used Trek for $100 that is only a mile away and they take PayPal - sweet! However, I see that shopping.com has a small seller e-discountbike, with a newer model for $50 more and they offer 2 day shipping via PayPal ShipFree (I'm a member - I love that program!). I decide to go with the newer model and trade-up.
  • I am a Star Wars collector (geek!) and want to see the items every day that have over 10 bids (a great indicator of collectible-ness). I don't care about fixed price so I turn that off. However eBay Local is interesting as me so I can find some things I normally wouldn't see so I set an alert for any Star Wars items within 50 miles over $100 that's newly listed to SMS me the second they are listed. I love that I don't have to go through 1000s of irrelevant fixed-price listings for stuff not of interest to me. We make it easy for you to turn 'off' fp. I RSS to this or create a gadget for my eBay dashboard/homepage thingy (see last bullet) and also put it into my RSS reader, iGoogle or facebook to share with my other Star Wars buddies, or have it tweet you. I can even put it on my starwars blog and make 10% of sales.. If something gets 40 bids, I want an SMS alert.
  • I am a busy professional with no time for auctions or local (blech) and want a good deal, but it doesn't have to be 'the best'. I use shopping.com because of its huge selection - it always seems to have what I want and it looks all over the internet so I don't have to. I like the product reviews too because I don't have time to do a ton of research. I love the facebook integration as I can ask my friends what they think - I trust them more than some random reviewer. Sometimes shopping.com recommends buy.com, others 1busyman, I don't care because PayPal makes it easy and safe. This site has more selection than even Amazon, so I check here first or at least second, just in case. The S+H is clearly defined for me and I understand the return policies. Shopping.com even identifies the best deal for me! I can set price alerts if I want a better deal.
  • I am a shoe shopper that wants only retailers that have free return shipping and a 6 month+ timeframe. I go to shopping.com, select that option and am only seen those choices. I end up buying from shoebuy.com vs. Zappos because they have the shoe for 10%, less, but the same generous return policies.
  • I'm a third party developer for seller software. I want to create an 'in demand' application. eBay gives me all of the search data, wishlist, cart-adds, zero search results, etc so I can build this.
  • I am a startup with a great idea. I want to integrate google maps, eBay local and eBay's sales data to show a map where products are selling over the USA and show pricing trends and tie it to weather. eBay makes this easy through an array of APIs.
  • I travel to my cousin's house in Columbia, SC and want to buy their kid a new stroller. I whip out my iPhone, pull up eBay Local. It shows me there's a stroller within 2 miles for $100. It also shows me some other great deals further away, but I opt for the local option. I go right to the buyer using the map and my GPS.
  • I am a powerbuyer. We give you the 'eBay dashboard' where you can create a variety of saved searches, product alerts, deal alerts. You can mix and match all the different formats. I love that PayPal shipping and feedback works on all sites and elsewhere on the internet.
I was going to have some of our graphic wizards mock up some treatments of these use cases, but they are really busy and I think you guys get the idea. Once you take ads off the site you get plenty of real estate to serve up relevant offers from other in-network sites and there are lots of great web 2.0 ways to do these kinds of things in an unobtrusive way.

eBay 2.0 and the CEF

Let's quickly run the new eBay 2.0 through the CEF and see how it does.
  1. Selection - By leveraging a massive fixed-price site with low take-rate, auctions and local - eBay 2.0 has unprecedented selection. While Amazon is good for non-local, primarily in-season items, eBay 2.0 gives me some really good items I never would have seen without auction and local. eBay 2.0 is the only site in the internet that spans the entire lifecycle of products - even down to local!
  2. Value - If you really want value, you can look at auctions and invest the time to win a great deal there. However, if you want to get something fast, shopping.com has done the work to find the lowest fixed-price item for you. PayPal's shipping promotion is a huge benefit as you can use it on a Dell computer or anywhere on the internet!
  3. Ease of Use - While not as easy to use as an Amazon, I do like that all three sites have many things in common - you don't have to re-register a zillion times, they have a unified shopping cart and checkout. PayPal keeps all of your information so you don't have to re-add it all the time. It's not Amazon, but it's light years ahead of eBay 1.0. The search engine matched to the shopping experience is really handy. It's like it is thinking for me and helping me find stuff versus getting in my way.
  4. Trust - By clamping down on re-registering bad guys, getting rid of spam-ads , you feel a lot safer shopping with eBay 2.0. It's comforting that you can see a seller's feedback on all three sites, that makes me feel better. I know PayPal has tough standards and kicks sellers out of ALL sites, for good. PayPal tells me how fast a seller ships which I find handy too. The PayPal guarantee is air-tight and easy to use if I get in trouble. If I call the 800 number, I get a human.
  5. Merchandising - After eBay 2.0, I think the PayPal federator model could be used to do some really creative things in merchandising that would have cross-internet implications. That would probably need to wait for eBay 3.0 as our primary focus is on Selection and Value - if we win those battles, we can start to fight work on merchandising.

Conclusion - If eBay builds eBay 2.0, will you come?

eBay needs to dump this New Coke and go to back to eBay Classic. They also need to bring out a Sprite (fixed price/shopping.com) and extend the eBay brand to local (diet coke). In addition they need to leverage the federation capabilities of PayPal to enhance trust and usability. If they can execute on these pieces, I 100% know they will start growing as fast as ecommerce again, and maybe give Amazon a run for the money. As a buyer, eBay 2.0 is the site I would use as the starting point for all my purchases. There is nothing like it available today (yet). Yes, I'd check Amazon, but it eBay 2.0 would be in the consideration set for almost anything I purchased online.

But eBay must start down this path quickly. Amazon could jump into this space quickly and Google has some great technologies for local that eBay can't match yet. The window is closing, eBay needs to move...now.
eBay Strategies readers what do you think - will this concept of eBay 2.0 work? Would you shop there? Would you sell there? What have I missed?
Disclosure: Author is long Amazon and Google.