eBay: Where Did All the Fun Go? 43 comments
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By Keith Rabois
Editor’s note: This is a guest post by Keith Rabois, vice president of strategy and business development for Slide, the social entertainment company. Prior to Slide, Keith was a VP at LinkedIn and an EVP at PayPal in charge of among other things, competitive strategy vis-à-vis eBay. He also worked at eBay for three weeks following its acquisition of PayPal. Keith currently serves on the Board of Directors of Yelp, Vendio, Xoom and FanIQ.
On Monday afternoon, I was speaking on a panel at the Social Graph Symposium when the moderator asked me what eBay (EBAY) could do to revitalize its marketplace by leveraging the social graph. Dave McClure, like many pundits, presumes the social graph could be a great boost for eBay, if not an outright panacea. I replied, “nothing.”
It’s actually the social graph and similar products that have placed a stake in eBay.com. Most often, people blame eBay’s decay on factors like the weakening economy, the rise of Amazon, as well as eBay’s own inefficient search functionality. But the real and simple reason is eBay is no longer fun. Over the years, it has lost online ground and eyeballs to pure entertainment destinations such as YouTube and social networking sites like MySpace and Facebook.
Do It eBay
Although it was always classified as an e-commerce destination, the quirkiness of the eBay marketplace was once a major source of entertainment on the Web. It was where people sought and bought everything from the first broken laser pointer to Beanie Babies to Bob Dylan’s boyhood home. While the catch—anything from an antique clock to a Gulfstream II—was rewarding for the buyer, it was generally the entertainment and excitement of the chase that brought a buyer to eBay in the first place.
When eBay launched its first U.S. advertising campaign in 2000, eBay spokesman Kevin Pursglove stated, “We hope they [the ads] reflect the fun that people have when they come to our site.” According to USA Today, “the fun aspect of eBay seems to have struck a chord with consumers.” At that time, eBay was downright addictive and when you won an auction, it was thrilling. That delight kept people coming back for more, whether or not they actually prevailed with their bids.
Almost half the U.S. Internet population
Let’s rewind to 2004, just a short five years ago. In January 2004, almost 50 percent of the entire U.S. Internet population visited eBay each month. If people were bored at work, chances are they were surfing the pages of eBay and unearthing eccentric auction items they never even knew existed. This was the height of the eBay heyday.
So what happened?
With the fun factor driving eBay usage, what really stole eBay’s limelight was the rise of social networking sites such as MySpace and Facebook and the likes of YouTube. In December 2006, almost half of the U.S. Internet population was still visiting eBay. But when you examine the total amount of time spent online, 11.9 percent was spent on MySpace versus 3.7 percent on eBay (according to Compete.com). By then, people were already devoting more of their online time to pimping out their MySpace profiles or snacking on YouTube’s videos.
To add further insult to injury, in early 2007, Facebook opened up its platform and ushered in a flood of new applications. The result was the introduction of even more entertainment options to consume your online hours. People began to swap the enjoyment of serendipitously discovering knick-knacks on eBay for watching people run into trees on YouTube or SuperPoking friends on Facebook. The eBay addiction was replaced with other, more entertaining addictions.
eBay strips out the fun
This was not lost on all of 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. An ad campaign labeled “Windorphins” was meant to remind consumers of the endorphin rush experienced when winning an auction. The purchase of StumbleUpon even had a rationale in this model. The ideals fueling eBay 3.0 eventually fizzled.
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 (AMZN) and Google (GOOG), eBay leadership essentially stripped whatever remaining fun existed out of its marketplace. In December 2008, eBay’s visitors accounted for only 1.5 percent of total minutes spent online (according to comScore Media Metrix). The leader board for top online properties showed Google, home of YouTube.com, and Fox Interactive Media, which includes MySpace.com, in the top five. EBay ranked sixth in total unique visitors, but was also the only property on the top 10 list to see a decline from 2007.
Where did all the fun go?
Ironically, at one point right after it bought PayPal, eBay had the leading actors of most of this entertainment revolution sitting in its offices. Chad Hurley and Steve Chen of YouTube fame, Peter Thiel (Facebook), Jeremy Stoppelman (Yelp), Max Levchin (Slide), David Sacks (Geni and Yammer), Reid Hoffman (LinkedIn, board member of Zynga) and others, myself included, were all too alienated by eBay’s bureaucratic and political MBA culture. So we decided to create our own fun elsewhere instead.
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Nice post! I agree with everything that you say except for the reason you (and eBay) give for the introduction of “hidden bidders.” Fraudulent SCOs were effectively stopped when eBay blocked access to users’ direct email addresses. “Hidden bidders” never had anything to do fraudulent SCOs; the only purpose served by “hidden bidders” was to further obscure all but the most naïve of shill bidding so that users had even less chance of spotting same and reporting it, thus saving those eBay resources (the 1600 that got the boot in October 2008) that were required to field those reports and then pretend to do something about it. As you well state, reporting such activity is undoubtedly pointless. Now, users have got no chance of detecting any shill activity of any sophistication.
Go on, waste 10 minutes and read my shill bidding case study and tell me what you think. www.auctionbytes.com/f... ?
Sorry, that's not true. Scammers were contacting losing bidders right thru Ebay's own email....which made it seem even more legitimate. Even now - I can contact ANY Ebay user right thru the same emails. Now, if I had a spare ID and was scamming bidders in this manner - who is there to stop me? More than one got scammed by these second chance offers - to the point where people were asking Ebay to do away with them - they made the sellers look bad when these bidders never got their item. Ebay...never ready to let go of a single dollar then came out with hidden bidder ID's and that put a stop to scamming second chance offers. If it improved shill bidding...so what? Ebay got their end of the second chance money and that's what they really cared about.
I take everything eBay says with a grain of salt. For one, as you say, users can now only contact each other via the eBay messaging system; eBay controls the formatting of those messages so it is no longer possible to produce an effectively formatted scam email, as it was when they could be sent directly. Further, a message by the eBay messaging system can only be sent by a “registered” user, and if, as you suggest, the eBay messaging system is so openly subject to such abuse, that says a lot for eBay’s verifying process; after all they do have all those identifying details on users, don’t they? Frankly, anyone that is scammed by a message received via the plain text body of a message via the eBay messaging system is a fool. Sorry, but I simply don’t believe that “hidden bidders” was devised to stop fake SCOs; it is much more likely that it was devised to do what it is doing: obscure shill bidding; the effect of which is the “aiding and abetting” of the defrauding of their consumers.
I realise that all the activity on eBay is a significant contributor to GNP, but I still do not understand how local consumer affairs regulators allow eBay to get away with such behaviour towards its consumers that is so patently unscrupulous, if not criminal.
Personally, I have never received a fake SCO. Maybe if I change my deodorant. The only two SCOs that I have received were genuine but both resulted from failed attempts by a sellers’ shills to push me higher! If anything eBay should have done away with SCOs, but as you say, that was not in their interest.
I don’t feel bad about sniping; I only ever snipe my maximum bid, it’s the only way to protect oneself from the “nibbling” shill bidder (such as the classic example in my case study of shill bidding at www.auctionbytes.com/f...). But if everybody eventually snipes, that would undoubtedly hurt all sellers and eBay itself.
I wholly agree with your comments on eBay management. The fact is eBay still is the “golden goose” of the on-line auction world (albeit with a little tarnish now), but still with an effective monopoly of this type of business. In the normal course of events it should then have been very difficult for any competitor to make an impression. And, then, along came the new captain, known better in a previous life as a “dismantler” (ie, wrecker) of companies, and he is proceeding apace with his task. Of course, to justify their sometimes seemingly obscene performance bonuses, such executives of public companies apparently are required to grow a business’s revenue by at least 50% every year. Realistically, that is going to be problematic when you are already the household name in your chosen field of activity. Nevertheless Captain John “Noise” Donahoe has attempted to improve eBay’s bottom line by various means. What a shame it is that the sum of most of those means has had just the opposite effect on eBay’s bottom line. The real threat to eBay is undoubtedly eBay itself. Time to go John …
The only question then is, can this “turkey” survive yet another Xmas?
The real question is when will Donahoe admit he's on the wrong track and a train is coming straight at him! As a seller, I've lost 90 percent of my business due to Donahoe's bungling. I sell one of a kind items - but he has chased so much traffic away with his outrageous policies and huge final value fees. Without traffic almost everyone's sales are down. Hence the bleeding of sellers (who are also buyers). These are the real reasons Ebay is dying. Sniping and shilling and scamming have been going on since day one! Now its an excuse? Sorry, that just doesn't float.
Here's an example. I wanted to list a painting last night - something a bit special. Starting bid only 39.95 - regular listing fee 1.00 - if I featured it (meaning it would be on the top of the page it normally appears on) that would cost me 14.95 besides the final value fee. Ebay would take almost half if it sold. With the type of traffic these days it probably won't even sell. Ebay is greedily charging for traffic it no longer has! Should I list it elsewhere....you bet! Has about the same chance of selling as on the other venues for far less money. These are the things that are killing Ebay! These are the things veteran sellers have been complaining about this past year - on top of that put the stranglehold policies ebay has placed on sellers like 21 day holds of their money - disputes that end in the seller losing his item and his money and suspensions due to the whim of a buyer and those are FAR MORE IMPORTANT than anything I've read in articles lately - those are some of the true causes as to why Ebay is dying!
JD can't find his rear end with both hands and a flashlight - this guy has no understanding at all of the marketplace and has no business leading the company.
eBay deserves to fail. If they stay the course, they Will fail, utterly.
The 'fun' went out of this tragic joke a LONG time ago. What any of it has to do with Facebook and YouTube is beyond me.
I would heartedly agree, Facebook and YouTube, etc, have got nothing to do with eBay’s problems: they are quite obviously self-inflicted.
Yes, I understand that shill bidding has ever been a problem on eBay; that is not the point. As predominantly a buyer, my pet peeve is “hidden bidders”, and it can be demonstrated that Bay’s disingenuous introduction of same serves principally to further obscure all but the most naïve of such shill bidding presumably so that eBay does not have to waste any of their resources pretending to do anything about it. See the case study at www.auctionbytes.com/f...
Disclaimer: No action taken (or not taken) by eBay has anything to do with benefitting or protecting eBay users (buyers or sellers): eBay’s every action (or lack thereof) is currently purposed solely towards desperately attempting to improve eBay’s bottom line (undoubtedly more to do with the triggering of executive performance bonuses than with any direct consideration for shareholders), and if at any time there appears to be some benefit to eBay users, that will be purely coincidental.
Philip - you and I are in agreement - except for the hidden bidder ID's and whether it was done to stop scammers from capitalizing on second chance offers (which it was) or whether it is allowing rampant shill bidding - is really a moot point. Either way we both know that hidden bidder ID's is NOT good and is there simply to benefit Ebay and for no other reason. Every time they do something for the "safety" of their users - you have to figure out what's in it for them this time....such as using Paypal and getting rid of paper payments like moneyorders and checks or the 21 to 180 day holds on funds to sellers! They don't even try to cover up the greed anymore.
I believe Donahoe is desperate long about now. One more bad quarter and the board is seriously going to think about letting him float away on his golden parachute - perhaps thats why he's now sitting on Intel's board....a foot in the door so to speak. Time will tell. I just hope it happens before its far too late for ebay. Ebay has helped me thru the years and now to see it floundering this way is way too sad! :-(
Patricia, disregarding for the moment the question of why the UK site still has the totally anonymous bidding mask, “Bidder x”, the more telling question is, why is eBay periodically changing (monthly/quarterly?) even the anonymous mask (“a***b”) currently in use in the rest of the eBay world? Periodically changing this already anonymous mask has got nothing to do with the control of fraudulent SCOs: if ever there was a patently disingenuous excuse, that is it. “Hidden bidders” can be shown to be principally (if not solely) about obscuring shill bidding, which is effectively an aiding and abetting of the defrauding of consumers by unscrupulous sellers (simply so that eBay could get rid of even more of their non-income-producing customer support staff); an unconscionable, if not criminal, action by eBay.
And for anyone interested, a detailed refutation of all eBay’s disingenuous spin at www.auctionbytes.com/f...
You keep bringing up auctionbytes. I have the greatest respect for Ina and David Steiner - doesn't mean I always agree with them. Shill bidding ALWAYS was rampant on Ebay and probably almost to the extent it is now. Whereas second chance offers were relatively new and hidden bidder ID's came out only after people began getting ripped off in large amounts by scammers and the second chance offers. Nuff said on the subject. You can agree or disagree but you won't change my stance on it one inch ;-)
"But the real and simple reason is eBay is no longer fun."
".. and others, myself included, were all too alienated by eBay’s bureaucratic and political MBA culture."
Keith, believe it or not, that culture has gotten worse. It was what killed ebay 3.0 - killed by the Prez of Marketplaces. None other than the Donahoe.
BTW - I joined X-COM as a member in 2000. We were kicking the azz of ebay's Billpoint, weren't we? Good times!
But (you knew one was coming, right?), I view ebay's actions differently. For quite a while now, they have acted, so as to cause a reaction. Look deeper within their action and you'll see their goal.
What would happen if everyone that uses ebay for auctions was to become fully aware of the scope and possibility of shill bidding? Auctions would die, correct?
Is that not what JD et. al. have been prophesizing all this time - the death of auctions? They want that. Or wanted it. Today they do, tomorrow they don't. Or vice versa.
They prolly view your ongoing mission as a plus in their favor. But I do understand your desire to educate others..
There's viable alternatives to the hidden bidder policy and you seem to be aware of that fact. Some of those alternatives would even open up auctions to the potential for more bidders, because quite a few experienced ebayers do know about shill bidding.
The amount of money kept from the site due to "shill bidder concern" is more than whatever money is gained by that shill bidding. It has to be - every seller knows that bidding has fallen off since hidden bidders was implimented.
A viable alternative would mean more bids, more money and more revenue for ebay. But ebay doesn't choose that route. Why do you think that is?
You’ll get no argument from me.
Undoubtedly, a fixed-price marketplace would be less complicated than the auction platform, particularly given that eBay is so clearly unprepared to invest resources to ensure that the auctions are equally fair to both buyer and seller.
Being a collector of mainly early “flat art” items to which it is difficult to put a value, I can only say that I come to eBay for the “auction experience”; if I wanted a fixed-price experience I would go to Amazon.
Donahoe: He seems to suffer from a severe case of “MBA arrogance”, and clearly he has the diplomatic skills of a third world dictator (like me, but then I am not the figure head of a major public corporation).
eBay is what it is because of what it originally was: an auction site. That even an imbecile could think that it could be a good idea to try to alter eBay’s marketplace structure to something radically different, frankly, defies belief.
Why would anyone want to risk killing this “golden goose”? Well, I suppose the modern-day “Captain Queeg” (and, please, no jokes about “steel balls”) has to do something in his desperate attempt to keep growing the shareholders’ ROI by at least 50% every year and so justify his (probably obscene) performance bonus (ie, the bonus that he/they is/are not presently getting).
I just hope that, before it is to late, a modern-day “Mr Roberts” will come along and throw, not only the potted plant, but also this idiot captain overboard; then we collectors can go back to enjoying eBay for what it used to be and what made it great in the first place: the best marketplace in the world for a lot little people to trade “collectable goods”, etc.
Frankly, the thought that Donahoe’s decisions may ultimately bring this once-greater company to its knees irritates me intensely.
My opinion above does contradict Ms Pat's - she says that ebay did it for the sake of it's users. I say that ebay has never done one dammed thing solely FOR its users.
Early on in the SMI (Safeguarding Member ID) phase, several suggestions were offered as alternatives. One was to simply abolish SCO and make an announcement of that fact.
(For the record, there were some sellers that didn't like the idea of abolishing SCO, but even they agreed that it would be a small sacrifice to pay, to keep bidder IDs from being hidden.)
OK, back on point. Guess what the T&S VP said about that suggestion? That it wouldn't work because users wouldn't know that SCO was abolished. say... WTF?
Present every user that logs-in with a splash page informing them of it. Send out an email to every registered user. Have a banner proclaim it on every ebay page. What would be so difficult about that?
"users don't read - they pay no attention to banners - they don't get half the emails sent" Lots of excuses. (note the contradiction about banners not being effective!)
Funny thing.. ebay used all of those methods to announce their new TOS Policy, didn't they?!
Back on point, again. Some think that ebay wanted to keep SCO because of the revenue it generated, but I have to ask if that amount made up for the loss of bids that followed SMI.
Either ebay had no clear idea what effect the SMI would have upon bidding - OR - they wanted bidding (and thereby auctions) to falter - OR - they're simply morons.
You may choose any three options. ;-)
(Philip, can I put you down for all three? LOL)
"eBay users should by now understand that no action taken (or not taken) by eBay has anything to do with benefitting or protecting eBay users (buyers or sellers): eBay’s every action (or lack thereof) is purposed solely towards desperately attempting to improve eBay’s bottom line (undoubtedly more to do with the triggering of executive performance bonuses than with any direct consideration for shareholders), and if at any time there appears to be some benefit to eBay users, that will be purely coincidental."
Did they really put up all those absurd reasons for not simply axing SCOs? I would have thought that to put a stop to SCOs, had that been the decision, it would have been simply a matter of removing the SCO "trigger" from the sellers' dialogue, reinforced by the blocking of access to the underbidders' direct email addresses (done, but for some other reason?), and no more SCOs fake or otherwise!
Not that any of that was actually necessary as the blocking of access to all users’ direct email addresses was going to effectively stop fraudulent SCOs anyway. I am not interested in hearing about fraudulent SCOs being sent by the eBay messaging system. You would have to be a total idiot to be taken in by such a text message, and a user’s mental defect should not be eBay’s problem.
It is all such a shame, all of us could have still been having fun, making money—even the stockholders; but users would then have still been able to track, and report, the shill bidders, and so eBay would probably not have been able to axe so many of that mass of customer support staff that they "pink slipped" back in October 08.
I have no doubt that Captain Donahoe is a very cunning man; what a shame it is then that none of his cunning plans have been able to counteract the loss of all those "noisy" steerage passengers that he so arrogantly dismissed as being of no value to his ship. I’ll bet this arrogant man has since wished he had kept his big mouth shut; but then I guess that’s the difference between a real CEO and a mere backroom “consultant”.
Is that blood that I can see in the water? And are they sharks that are circling?
I can't quiite relate to ebay being somekind of social happening - if someone goes on ebay to "have fun" they really need to get a life.
The only fun I have on ebay is when I actually sell something - the rest of it is a big drag jumping through all their hoops.
The last year ebay with all their changes (for the better), extortion (compulsory paypal), insultive and demeaning edicts has become such a drag that I haven't sold for 9 months.
My fees have QUADRUPLED due to compulsory paypal and increased commission fees.
If I do anything I will list more so to advertize my goods but encourage buyers to complete transactions off ebay - that way I buyers can afford to buy my stuff and I don't end up taking a big hit on fees.
I am not going to let ebay take almost 15% in commission, plus go through all their insulting seller requirements along withliving in fear lest some buyer say something less than positive about the transaction.
I really have to laugh about the DSR charade - "communication". With Pay Pal there is absolutely no personal contact with sellers whatsoever !
Half of them jump the gun and send payment before you can "send" them the invoice with the correct shipping amount. Before when I could accept MO's they would confirm payment amounts, advise they had mailed payment, I in turn confirmed payment receipt and when the article was shipped. Now I don't hear a word : not even when I still do the courteous thing and advise that the article has been and request confirmation of receipt.
Personal interaction on ebay is the same as waving your penis off of a cliff is to having sex.
Like others before me have said; every single improvement (to the seller experience sic) has just been a dishonest insult as they dream up more ways to extract money from the sellers.