EBay has ruled the online auctions market virtually uncontested for years, but with competition heating up new management this year has made several adjustments to the giant marketplace with an eye on dramatically improving the buying experience.
"They have realized that their way forward, especially in the fixed-price sector, is to improve the customer
experience," says Jeffrey Lindsay, senior analyst at Bernstein, who covers eBay. "Amazon's platform and customer
experience is so much better that if eBay is going to make any headway, they have to address both issues."
The most obvious change to buyers is that eBay has made it easier to pay for products. In the early days of eBay,
when online payment processing systems were nascent and unreliable, money orders were the site's common
currency. Recognizing that today's customers have little interest in standing in line for a money order, eBay now
requires a growing number of sellers (new signups, established sellers with short track records, and some categories like computers) to accept credit cards. Buyers can also save time when shopping with multiple eBay sellers, as its payment site, PayPal, now allows buyers to aggregate several purchases under a single payment checkout.
A more subtle change for buyers is the one to eBay's long-running community feedback system, which gives buyers more
flexibility to provide detailed ratings of sellers rather than a simple positive/neutral/negative rating. For the
first time, sellers will be limited in their ability to penalize buyers for being candid. "Retaliatory feedback,"
as it is known on the site, discouraged many customers with legitimate complaints from airing their grievances.
And feedback matters more to sellers now, as well. Only sellers with the highest ratings-in all categories-will be
entitled to participate in eBay's lower-fee offerings and PowerSellers privilege program. PowerSellers also receive
priority customer service, higher rankings in searches, extra insurance against bad buyers, and an icon attached
to their profiles. Newer and lower-rated sellers are subject to curbs on their trading activity, including 21-day payment holds on PayPal transactions. (Read the sellers' perspective on eBay's new policies in the in-depth article,
Did eBay Sacrifice the Seller Experience?)
EBay also cleaned up its search experience, which has been a victim of the site's success and wide-ranging appeal.
For instance, a prospective buyer searching for "iPod" would historically see a list of auctions ending soonest,
and might turn up hundreds of low-priced incidental accessories, such as headphones and sport armbands, before
seeing an actual media player. EBay's enhanced search now returns search results using collaborative filtering criteria, which it says rewards sellers for accurate descriptions and gives buyers a more reliable and accurate answer to their search queries.
"Now customers can quickly find what they're looking for, from a seller they can trust to fulfill their promises and
provide a great experience," says Esher Lieberman, eBay senior manager of corporate communications.
eBay is also taking steps to get sellers to standardize shipping prices and reduce shipping markups, with carrot-
and-stick policies revolving around the use of its shipping cost calculators, and rewarding or punishing sellers based on buyer evaluations of shipping prices. "eBay is totally at the mercy of the seller, so they have to try to close the gap by addressing the charges for delivery," Berstein's Lindsay says.
eBay denies that it is trying to squeeze out small-time sellers, although some fee shifts have discouraged the
listing of low-value items. Instead, it says its efforts are strictly focused on stimulating demand, a course the financial analysts endorse. "The best thing for sellers is for eBay to attract more buyers to the site," says Aaron Kessler, senior research analyst at Piper Jaffray & Co.
eBay has yet to implement all of its announced changes, so the results of its customer experience campaign are still
unclear. What is clear, however, is that even for e-commerce pioneers, there are always new business challenges that
require a fresh, customer-centric approach.
"We're encouraged by the signs we see. It seems like they are dealing with some real issues, and becoming overall
more professional," Lindsay says. "It doesn't take many truly dreadful experiences for people to get turned off a
website, and that's what the new management team is addressing."