EBay seeks ways to keep buyers coming back
For eBay, it's a matter of supply outstripping demand.
Facing mounting competition in its core market, online auction leader eBay Inc. is seeking new ways to drive consumers to use its auction system by making the buying process more convenient.
It is opening up its auction system to allow more business to be done off eBay on independent sites, seeking to fend off the threat posed by search-based advertising offered by Google Inc. and Yahoo Inc. that both drives customers to, but also lures traffic away from, eBay.
Over the years, a vast sub-industry has grown up to support part-time and professional sellers on eBay. But the basic way buyers take part in auctions has changed surprisingly little.
By and large, bidders still sit hunched over their computers, constantly clicking the "refresh" button on their Web browsers to guard against suddenly being outbid in the final seconds or minutes of auctions.
"All the investment has been on improving the seller experience," said Indraj Gill, chairman and CEO of start-up UnWired Buyer of Austin, Texas, which makes notification tools to help users make last-minute auction bids.
"The experience (of using eBay) hasn't changed very much on the buyer side from what it was 10 years ago," maintains Gill, who until last year had been director of marketing for computer maker Dell Inc. in China.
UnWired Buyer developed a new feature introduced on eBay this week, which calls bidders on their mobile phones to notify them of last-minute bids in the final minutes before an auction closes, allowing them to respond and win deals.
SELLERS NEED BUYERS
"It's all about demand, stupid," Bill Cobb, president of eBay North America, self-mockingly told a crowd of upward of 15,000 of eBay's most loyal sellers, who packed into an arena at eBay's annual user conference here on Tuesday night.
With more than 200 million registered users, eBay is far and away the world's foremost e-commerce site. But it is under pressure from eBay sellers, who increasingly are learning the tricks of how to drive customer traffic to their own sites.
Over six days of speeches, product demonstrations and training sessions at the Mandalay Bay hotel complex, eBay has introduced revised auction policies and new software tools to rev up the volume of sales transactions.
Nabit, of Indianapolis, Indiana, offers a desktop trading application that makes bidding on multiple eBay auctions akin to the scrolling news and quote systems that day-traders use in the stock market. UnWired Buyer is unveiling a similar system.
FilmLoop, a Palo Alto, California-based company, offers a novel photo broadcasting network that allows independent Web sites to pull in running feeds of eBay auction items to allow users to watch for items they want without remaining on eBay.
"There are a number of accelerants in front of us," Cobb said in an interview following his speech, citing as examples its soon-to-be-heavily promoted eBay Express instant-purchasing format and policy changes to rein in shady sales practices.
EBay Express offers a subset of the goods offered on eBay's vast auction site at a set price, allowing buyers to complete purchases in seconds or minutes rather than waiting up to a week for a bid placed on the auction site to close.
Still in the early stages are new marketing pushes into areas such as on-site advertising, click to call customer support and other efforts at customer lead generation. This week, eBay said it plans to pay independent Web sites a cut of sales that result from featuring selected eBay listings on their sites.
Two weeks ago, eBay struck a broad alliance with Yahoo Inc. in its core U.S. market to help it better compete with Google Inc., which according to a recent report by RBC Capital will later this month introduce GBuy, a rival online payments system to eBay's market leading PayPal service.
But many efforts to improve the transparency of the buying process also make it easier for sellers to take business off the eBay site and avoid paying eBay's sale closing fees, cautions Stifel Nicolaus analyst Scott Devitt.
"If I was running a business, I would take a step back, and say to myself:'Wait a second, why would I pay eBay?'" he said.
"I still think there is a demand issue on eBay. I am not sure that anything announced at the conference is going to change that," said Devitt, who, while concerned by challenges eBay faces, still recommends that investors buy eBay shares.