eBay Master Plan & eCommerce – Speculation – Why Not Join The Two?

eBay is in a period of transition...

As sellers we are left to react to the changes - wouldn't it be nice to have an idea about the master plan?

eBay Plan

I don't think eBay will be revealing the complete master plan any time soon...

Either because they do not have one (a possibility proffered in multiple other blogs and chat rooms) or, more than likely, eBay knows each change brings with it a cloud of worry and concern from the users of the site.  If they were to set out the overall plan all at once, it would be met with so much resistance from the community the transition would become almost impossible. 

Once again we are left to speculate - and with speculation comes opportunity. 

Opportunities to dream, opportunities to succeed...

An opportunity to think about what could be...

Lets take a look at what eBay has to work with...

  1. eBay has traffic - Internet Traffic - In comparison, the local super mall in your community would be envious of the numbers of people "walking" through the eBay doors each and every day.
  2. eBay has infrastructure -Computing Power like no other single website in the world, eBay processes more calls to it's API than any other site or service except possibly one - Google.
  3. PayPal - the king of payment processing now accepted as the gold standard of reliability by buyers all over the world (a view not necessarily held by all sellers).
  4. eCommerce - With eBay Stores, eBay Express and eBay Prostores - You would think eBay would have enough resources at their disposal to develop a full eCommerce channel that works for merchants.
  5. Trust - eBay, even with certain lapses in public relations has developed a history and a feeling of overall trust for the name.  Some of the information they release themselves erodes that trust to a degree but buyers are more likely to trust the site today than in the beginning.

Speculation - What is eBay's new focus and direction?

The past is an open book... eBay as created was a place of equal access and opportunity. Yet eBay has grown into what Pierre Omidyar intended the site to fight against - Big Business. 

So what is the future of eBay? 

All indicators seem to point towards a more business like or big business style retail like website.

This is not speculation, eBay has clearly stated in no uncertain terms that the site will evolve into a more retail like experience and eBay will not be the same place in 2009 as it was in 2008.  The Buy.com deal brings with it an end of any uncertainty of what it eBay wants to do with the site.  I think we can all safely assume that the management does have a plan, even if they are not real communicative about what the plan is...

Does this new focus at eBay, eliminate opportunity for small business on eBay?

I don't believe so, not if small business wants to accept the fact that they will have to adapt and act more like a small business.  eBay needs small business to raise the bar, to treat customer service as only small business can. Big business is not the king of customer service and eBay knows that. But there are to many sellers on eBay who treat the business of selling as if it were a weekend garage sale activity. 

eBay's message - bring up your business skills or move on, this is not a part time sellers venue any longer.

What will make all of this change easier for small business to swallow?  What is it that eBay does not provide, which if they did would make almost any sacrifice on the core site worthwhile for merchants of all sizes?

eBay should take a step back, realize what the entire Internet merchandising world is looking for...

Real business is attracted to eBay for only one reason - traffic. 

In a nutshell eBay is a traffic machine, a fire hose of consumers.  All of the other stuff is considered as a barrier to entry, the feedback system, the complicated fee structure, fraud etc...

eBay knows what the main draw card is for bringing merchants to the venue and they have historically leveraged the traffic asset to raise fees. Now eBay is looking at lowering listing fees or eliminating them altogether.  eBay has determined every seller in Australia must use PayPal, they seem to be moving towards a payment processing business model versus a fee for listing model.

PayPal is now the cash cow of eBay and while a preponderance of the transactions completed on eBay are processed via PayPal, the eBay site itself is not growing as it once was. If PayPal is to see continued growth they must devise a way to make PayPal the predominant payment processor on sites outside of eBay.

Up until now, eBay has protected it's fee structure mainly by not allowing any direct outside links to eCommerce platforms from the site.

This self protection strategy was essential in the early days and it helped eBay become what it is today.  But this adherence to protecting listing and final value fees by limiting outside linking was developed prior to owning PayPal. 

The world is now very comfortable with using PayPal, but there are competitors out there like Google check out which can and will increasingly take bites out of PayPal's market share unless eBay does something to drive traffic to external sites using PayPal.

This is what merchants want, they simply want to get traffic to their own sites from eBay.eBay eCommerce

Why Not?

  • Allow merchants to link to off eBay eCommerce sites which offer PayPal?
  • Insist these merchants offer consistent levels of merchandise on the eBay site but allow them to send traffic to their own site in return.  A Win Win situation.
  • Covert eBay into a massive feeder of consumer driven traffic to the sites who agree to offer PayPal as a primary payment processor.
  • Dominate the payment processing in the world of eCommerce

PayPal is the money engine now - eBay is losing that game, why not simply use the eBay site as a feeder for PayPal payment processing on sites all over the world?  No restrictions, No final value fee on off eBay sites, No requirement to use a poor ProStores product, just confirmation the merchant site checkout offers PayPal. 

Consumers are comfortable with PayPal, and the merchants want eBay traffic. PayPal wants to control the world of payment processing... Seems like a simple exchange to me...

What do you think?

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3 Responses to eBay Master Plan & eCommerce – Speculation – Why Not Join The Two?

  1. Sunray May 18, 2008 at 4:26 pm #

    A very reasonable analysis and I wouldn’t be surprised if the emphasis moves a lot more toward “professional” retailing and Paypal processing as you suggest.

    As eBay Live 2009 has already been cancelled I think it’s safe to say some major changes are in the pipeline adn I’m expecting some clues to emerge at this years Live event.

    I’ve linked to this article at http://www.pheebay.com/forums in the hope other members will come and read this.

  2. Steve May 18, 2008 at 8:34 pm #

    It will be very interesting to attend eBay Live 2008. I think that there will be many opportunities created for people that read between the lines and lead the way into a new E-Commerce world. Thanks for the insight!

  3. Sanjit May 19, 2008 at 3:43 am #

    But it’s all about control for eBay.

    Let’s be clear as a large merchant, we wouldn’t use eBay and jump through all its hoops and pay all that money unless we absolutely had to. You have hit the nail right on the head — it is all about the traffic. Same for Paypal — there are some great payment systems out there, and Paypal isn’t one of them. We wouldn’t use it unless we had to in order to use eBay which we have to in order to get their traffic.

    The model you describe is Google’s approach — hose traffic around (we spend more each month on Google adwords than we do on eBay fees) — and then have a payments system behind that you can use. And in Google’s case one that links back to your advertising spend — the eternal wetdream for Marketing Directors and the business leaders who manage them.

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