Wednesday, August 20, 2008

eBay - Look beyond the .com

With the time/life commitment required of startup life at RockYou, I haven't posted much of anything in 6 months. Guilty. I find that a lot of things I think about or ideas shared from partners, friends and competitors can actually be put to use at the company. I'm left either not feeling comfortable openly sharing things via the blog or not having time to do it.

That said, recent articles and blog posts on eBay (this one actually insightful from Techcrunch)
sound increasingly like memorials or obits. Now that the vast majority of my friends have left eBay (including my wife), I finally have some leeway to add an opinion.

eBay faces two major issues today. 1) Lack of product leadership at the executive level and 2) an almost over-zealous opinion that eBay's problems can be fixed on the eBay site alone. The second issue is obviously a direct result of the first. I actually have great regard for many of the leaders both past and present at eBay. The company hires very smart folks on both the business and product end. But when company-wide strategic decisions continue to focus on things like site pricing, eBay seller feedback and improved buyer experience on, it's clear that eBay's top executives are anchored on the wrong assumptions. The primary reason buyers are bleeding off eBay is not due to trust and safety issues, lack of marketing or anything directly site related. Are those things problematic, sure. But take a look at eBay on Alexa or Quantcast. The decline of unique traffic/PVs is accelerating. Now if this was only on eBay, maybe the problems would be site-centric and could be handled on alone. But Amazon,, and the vast majority of eCommerce sites have a similar decline in activity over time, which spells out the broader problem.

The fortunate/unfortunate truth is that the radical shift in Internet usage, especially with teens and young adults, will continue to erode traffic at former leading mass-market Commerce or content sites like eBay. Simply put, the Internet is becoming WAY social and web-service oriented. If an online site or service is not heavily invested in both, the future is dire. Three years ago, MySpace was the only social-platform among the top 10 visited sites globally. Now, six of the top 10 sites are social in nature (Youtube, MySpace, Facebook, hi5, Wikipedia, Orkut). Additionally, the disaggregation of the web is now a reality (think Iphone, Opera Mobile, Social Platforms, Integrated Activity Feeds, RSS, micro-blogs). Web services are driving this extreme segmentation of user's online experience. In either case, I don't see any material reaction from eBay to the shift.

Companies like Amazon are trying at least to understand that shift, leading the way with cloud computing and hosted bandwidth. There's seems to be no corresponding response from eBay. The company actually has some great platform centric web services, namely Paypal and Skype. But these very services are eroding the need for online commerce and communication to be anchored onto a single site. Paypal has massively increased trust across all eCommerce sites, making SMB marketing through Google the most cost effective and direct route for generating online transactions. Skype has had HUGE adoption (i'm probably one of the few folks who actually still think the acquisition was a smart one) and represents one of if not THE largest P2P network on the web. P2P as near-costless distribution model for media and digital goods is a massive asset. But if I can communicate openly and freely with my customers and embed trust on my commerce site via Paypal, the need for eBay as a central service (i.e. the site) is increasingly limited.

One possible solution is to bridge the transactional eBay model to an ads-based business. Unlock the massive amount of transactional data eBay has across its 260M online users and port that off-site to publishers that are looking for higher eCPMs and advertisers wanting more distribution channels based on effective product-based behavioral targeting. Another option is to extend major, high value eBay functions (eBay's feedback, commerce/transaction engine, auction platform, product finding) as web services, which would widely propagate the eBay brand across the web as the eCommerce tool of choice, and make it extremely easy for users of those services to post product into the site or eBay network. I imagine there's a boatload of developers currently building to the iPhone, Facebook, MySpace and the numerous Opensocial platforms that are launching, that would be psyched to engage those APIs to build transaction, commerce-oriented applications, on the very sites eBay has little to no brand presence. If eBay is going to aggressively pursue a true web service focus, it needs product leadership willing to make a material investment in the space (i'm talking a 40-50 person web service team).

What's key is for eBay to accept and embrace the changes that occurring today - widespread usage of social platforms, disaggregation of content and services, increasing trust across all web sites vs focus on a few 'trusted' sites - and build a corporate strategy that at the very least makes material long bets in this new/volatile environment (ala Amazon Web Services).

Now back to work...

P.S. - I'd been waiting to post this for a bit and lo and behold, eBay announced the hiring of a new SVP of Platform, Mark Carges. Let's hope Mark believes in life outside the 'site'.
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