Saturday, August 23, 2008

If Auctions are Dead - eBay Killed Them.

I feel like a salmon swimming up-stream fighting against the current. I don't think auctions are dead ... yet, but, we may be eulogizing them soon, just like Adam Nash eulogized eBay Express.

If Auctions are dead, than the idea that I am going to present won't have any impact, but it also doesn't have any downside. If Auctions are not dead, just held captive by the Fixed Price hordes, than by not even considering my idea, eBay will be turning their back on their brand and a very profitable business.

The premise: Auctions are a niche and should be treated like one. Fixed Price is the dominant ecommerce standard and is what eBay should focus on to grow, but they don't have to sacrifice Auctions to do it.

There current strategy will end up sacrificing auctions, because they don't have the balls to make the hard choices. eBay Express failed because of execution, but it wasn't the wrong idea. It wasn't the version of eBay that should have been spun-off.

Here are three reasons why splitting the site up makes sense:
  1. The site is made up of small sellers and big sellers, auctions and fixed price, Hard to find unique product and commodity product. Management is trying to be all things to all people and that just won't work. Splitting up the site makes room for growth for each separate group.
  2. The "noise" will abate as soon as they split off eBay Classic. The traditional eBay shopper and buyer will once again feel comfortable at their "new" auction only site and the new convenience shopper won't have to be bothered looking at all those auctions.
  3. If auctions are dead than you can't hurt them anymore by separating them from eBay.com. But, if they aren't dead you open up room to grow once again.

Adam Nash and I have discussed this and there is a disagreement. I believe that my idea of eBay Classic is much different than the creating eBay Express. Adam, beleives eBay Classic will face some of the same challenges.

So, I've included Adam's reasoning for why eBay Express failed and I will add my 15% in bold as to why that issue will not affect eBay Classic.

  • Branding. It was a tough decision. If you don’t use the eBay brand, you lose any possibility of the positive affiliation and traffic that comes with a known consumer parent brand. But, if you use it, you are also stuck with the negative attributes. eBay means auctions to most people. We ended up going with eBay Express because in the end, it was eBay inventory and we expected traffic to flow from the eBay association. It didn’t, and it also didn’t generate any real unaided awareness for us.

    eBay Classic on the other hands benefits from the eBay brand. By adding Classic to the name it also sets it apart from the "New eBay" and helps the Fixed Price marketplace separate itself from auctions.
  • Traffic, traffic, traffic. One of the unanswered questions was how to drive sufficient traffic to the new site. We had initial stabs at this problem, but eBay was still in a phase where it believed in buying traffic. TV, Catalogs, Email, Paid Search. It doesn’t take an Internet genius to realize that buying traffic is horrendously expensive, and frankly, ineffective. Our biggest course correction post-launch was a crash course on how the rest of the e-commerce world looks at traffic generation. Figuring out how to drive traffic in volumes to the site, and build organic traffic in the long term became our 24×7 focus.

    eBay Classic, will not have the same needs to generate traffic. The auction business is already a huge part of eBay Marketplaces so those buyers who want that experience will naturally migrate there. eBay Express was a new experience and required retraining. If eBay Classic is created than eBay.com can become what management wants it to be and the brand will change. All of the organic traffic will still come to eBay.com, those looking for auctions will find them everybody else will just get fixed price items in their search results.

  • Inventory and merchandising. It may be hard for most people to believe this, but eBay at the time was incredibly under-developed on many of the retail basics of merchandising, inventory selection, and promotion. Why? Well, because eBay.com isn’t actually a retailer of anything. We realized post-launch that we needed to develop that expertise, quickly, even to the point of understanding sourcing, distribution, and product selection. Having 10 million+ products is great, but it’s no good if you don’t have the right products at the right price.

    eBay Classic doesn't demand/require any additional resources or learning, just set it free and it will take care of itself. Management is already committed to the Fixed price marketplace and that is where the resources will be focused. Basically, if you split things up, one can grow organically and be very profitable and Jeff King and his team won't have to try and figure out how to work auctions into the new search.
  • International. We designed and built the site, from the ground up, to meet the different needs of the US, UK, and Germany. In fact, I even spent time on concept versions for India, China, and a host of other countries. There were some fundamental disagreements about which model would be most effective, so we built a platform to handle them all. In retrospect, we should have done the US only, and only expanded internationally once we nailed the basics. The distraction, debate, and expense was counter-productive, and in the end, a mistake.

    eBay Classic doesn't have that problem, it is already available in most if not all International markets. For those markets that don't have a sizable auction business you may not roll it out, but for many it will be just like in the US -- Split it up and roll it back.
  • Expectations. There was so much enthusiasm internally around the various aspects of the project, and it was impossible to contain expectations rationally. The reality is that building a consumer brand and a billion dollars in sales doesn’t happen overnight, and it isn’t cheap. Look at how long Amazon has been stretching to build it’s third party sales efforts. We believed we could cut that time in half, but rationally, that was still a minimum 5+ year effort. In the best of times, that kind of effort requires a company with long term focus and commitment. And as we all know now, 2006+ were not the best of times for eBay.

    eBay Classic won't have high expectations, remember auctions are dead; so any growth that comes from eBay Classic will be exciting. It is also already close to a $30 Billion business. Tell me how many companies can say that.

One other thing, that Adam didn't include in his eulogy. If eBay were to spin-off eBay Classic then 90% of the "noise" would end. The traditionalists would have what they want and the big sellers and commodity sellers would have what they want and the complaining would cease.

The "New eBay" could do the things necessary to compete with Amazon while Classic eBay would move along at its own pace, but still be very profitable for the company. Sellers would stop complaining (well okay that might not happen entirely) and everyone could concentrate on improving their business.

Alright, I feel like Don Quixote tilting at windmills, but I'm opening myself up to those of you who think I'm loony. Before you tell me what you think, answer this question. What is the downside to splitting off a business that everybody in the world says is a fad or dying?

Just my 15%

60 comments:

Mitzi said...

I love this idea - it makes total sense, so I suppose that means eBay isn't considering it!

I am interested to see what comes from the WorthPoint/GoAntiques site - I sell vintage collectibles and feel like eBay has forgotten we exist...

ms.pat said...

I don't think you're looney at all - you make perfect sense...something ebay has never done! I read that auctions are still 57 percent of ebay's business...why then kill them off. Any other company on earth would salivate to get their hands on it and ebay is purposely killing it simply because the grass looks greener on Amazon's side of the fence. How woefully inadquate this management team is. How come only the sellers can see this?

Incidentally, I caught a glimpse of what the listings might look like after Sept. 16. I was browsing and when I refreshed the page it had two columns of listings and not just the one. Listings were side by side instead of one under the other with "Auctions" on a tab at the top of one column and "Buy It Now" on a tab at top of the other. All the usual nonsense was still in the left hand column. The whole thing looked pretty confusing.

I hope they think of a better way.

Anonymous said...

Randy-
You're idea makes so much sense and I can almost guarantee you Ebay won't do it.

If they were to do it, I have a pretty strong suspicion, Ebay Classic would grow and Ebay New would die. Why? Because e-Commerce doesn't need another Amazon, Overstock, Walmart, etc. etc.

If John Donahoe was smart, he'd put you on the management team. :)

Anonymous said...

Randy,

Brilliant!
Especially the part about letting us concentrate on improving our business, oh how I miss the times when the only worry wasnt BDR calculation and rule hoop jumping, when we could actually comercialize, market, merchandise, innovate because we had the time.

I feel like this year sacrificed some of my total lifetime duration, mostly stress etc...

I hope it will have been worth it. This depends on how ebay goes with respect to auction vrs FP.

--A just turned Diamond Powerseller

Stefan said...

Auctions aren't dead yet, but they will be very soon if eBay doesn't plant them in a sunny new garden (ebay classic) with lots of sunshine (money) and let them grow, grow, grow.

ms jewelry-maker said...

As a seller who left ebay at the beginning of the year, I would be willing to dip my toe back into ebay if they went with ebay classic. I bet one of the big reasons ebay is going down the tubes is because lots of the sellers who left the site were also buyers. Lots of folks sold stuff on ebay, just to turn around and buy something else. (I can't tell you how many times someone who bought from me mentioned they had to sell more of their items in order to buy more of my items.) When ebay started hurting sellers with higher fees and stupid regulations, they took $$ out of the seller's pockets. This money would have been recycled back into the ebay 'economy' by the purchase of another item if it didn't have to go into ebay's pocket. I wonder if ebay ever ran stats on how many folks sold AND bought on ebay. They might have been surprised to see what type of self-sustaining micro-economy they had.

3P Masses said...

eBay cannot split the site into Fixed Price and Classic. Doing so would spoil the magic that will enable eBay to beat Amazon. eBay management is working on the magic formula now and here are some of the ingrediants.

Auctions are the driving force in Fixed Price sales on eBay. eBay needs to keep auctions with FP so as not to fragment the market (and traffic).

I believe Adam Nash missed a point... EE didn't work because it didn't have auctions and their organic traffic.

I think most eBay users come to eBay looking for a deal (auctions or used FP is the brand identity) and see that the retail price (FP) for the new one isn't that much higher than what most small-time sellers want for their 2nd hand items. Full warranty and no waiting... so they buy it now.

Auctions drive sales of new FP items.

By removing commodity items from auctions (which is what eBay just did with their price change) and shifting them all to FP the items will be seperated but comingled.
Buyers will see both auctions and FP, auctions will drive FP sales for commodity items.

Auctions win here too, over time commodity FP items will draw more everyday buyers to the site who will be drawn into auctions. This is what Amazon cannot do. They already tried and failed.

When large eBay sellers of new items succeed on eBay, everyone will win (the fight is on between Buy.com and the unholy masses of 3P sellers). Customers will come to the site for the best deals on new items and discover their passion in auctions. Every buyer of new, commodity items has a passion (collecting, art, antiques, etc) that auctions can meet.

Finding the correct mixture or 'comingling' of Auctons and Fixed Price is the magic that Amazon lacks and CANNOT create.

eBay has the upper hand here. They just need to get the formula right and let sellers do the Amazon and Buy.com hunting ourselves.

nadine said...

3p, very interesting comments and you surely have pegged the way ebay mgmt is thinking BUT it hasn't been working so far; what 'magic' do you think they can add to make it work? If they really wanted to follow your logic, they would be trying to make the site a good place to be for both auction sellers and fp sellers and this is not what they've been doing.

I have to disagree with this comment

By removing commodity items from auctions (which is what eBay just did with their price change) and shifting them all to FP the items will be seperated but comingled.


This won't be the result of the just announced changes. Because they announced such radically different fee schedules, they will drive all the business INTO FP for Computers and Cameras, but drive it OUT OF FP for Clothing and Parts and accessories, unless you really have the slow moving, high multiple qty listing that can take advantage of the new FP - and these items will tend to have retail prices on them; they will need to to cover the shipping and fees. So I don't see things working out like you say at all.

Stefan said...

Finding the correct mixture or 'comingling' of Auctons and Fixed Price is the magic that Amazon lacks and CANNOT create.

..And eBay doesn't seem to have an answer for this either. Splitting the site just seems like it would be so much easier than trying to satisfy both needs in one cluttered, messy site.

Tony P. said...

3P is spot on, and so is Nadine. Ebay won't separate them 'cuz they know that Old Stuff brings the peeps. That's where, as Randy put it, they ain't got the kahunnas.

They also won't hit the magic formula because the two arenas have entirely diverse needs.

Specific selection = get in, get it, get out.

Lazaire-faire browsing = ebay classic

Just so you know, Randy, you've stated exactly what the Noise wants. (that was mighty pretentious of me) Anyhoo, on to your question...


"What is the downside to splitting off a business that everybody in the world says is a fad or dying?"

It makes a 'miraculous' recovery and mgmt is revealed to be a total bunch of manipulative morons?!?


Here's my Q for you, Randy:

So, if you're presenting this here, like this, I take it that not one word of such a thing came up while you were in SJ?

Randy Smythe said...

Hey all, thanks for the comments. I was out watching "Death Race" for some get away from eBay time.

3P says what management says and believes. They have the formula. I looked in Jeff King's eyes when he explained two separate sorts put together in one list, well that new list now needs to be sorted so what gets preference? FP does!

My idea is not going to happen until their approach fails and by then I feel it will be too late.

They can't change now it is too close to Q4 so they are just going to have to ride out Q4 and hope this works. My only hope is that they are working on this plan as a back-up in case that doesn't work so in Q1 09 they can roll it out.

That last scenario has little chance of happening.

I have written similar posts like this before and there is no real need to write them again.

I hope they are right becasue if they are wrong and don't at least consider my plan than eBay is toast.

No Tony, this did not come up while I was in San Jose and in retrospect I should have. Not that it would have done any good.

ms.pat said...

From the little bit I saw its going to be a complete mess...let alone banning the elderly and the poor because they don't want paper transactions. What a bunch of complete and utter idiots. They don't deserve Ebay and Ebay never deserved them! Here goes yet another holiday season straight down the toilet!

This may look like a success at first but without buyers or with confused and disgusted buyers - its going to fizzle right out!

permacrisis said...

Let's think about what happens when It's Too Late.

For instance a skit called Gonna Hafta Rip All This Stuff Out where the guy (google) who buys the junky house (post chapter-11 ebay site) calls up a plumber and together, they examine the piping.



(Hey, why should Steve Lindhorst have all the fun!)

Which changes of the past 2 years would you "rip out" and why. Would a dead ebay out of the way be more likely to jumpstart a viable replacement? Or is competition a more driving force -- in other words do monopolies need to go under before someone dares take the space?

The 'too late' scenario seems the most likely, so let's explore it!

Adam Nash said...

Hi Randy,

I'm honored to be such a focus for a post on your blog. :)

I do think you are underestimating how much the auction business would shrivel if the massive amount of eBay.com traffic did not automatically funnel there. Very few people would seek it out in proportion to the number that see it today.

Many other fixed price sites have tried to launch auctions, and one of their fundamental problems was they were unwilling to shift the bulk of their traffic to the auction site. Thus, even when they had inventory, demand wasn't their, conversion cratered, and the auction dynamic failed.

If eBay launched an eBay classic, and removed auctions from the core experience, they'd be left with the same dilemma.

The auction business is huge, and dramatically more profitable for eBay than fixed price. Auction buyers are more likely to return and buy again. As a result, it's hard to imagine eBay placing it anywhere but in the default flow of eBay.com.

It is possible, of course, that eBay might discover that segmenting the formats is the best buyer experience. Then you might get an eBay classic, "site within a site" effect. It hasn't worked in the past, but as they say in the stock market, past performance does not necessarily reflect future returns.

Adam

Randy Smythe said...

Adam,

Thanks for stopping by. I appreciate your insight, especially regarding the traffic issue -- this is where theory and practice diverge.

I just "think" the traffic would split, but you are working from actual knowledge and have at least seen the data; though not for a year or so.

Jeff King is a bright guy and they are going to at least sort the auction and FP results differently but when they put them both together they will need to make some decisions. This is where I'm worried they will fail.

The problem with failure at this point is that means another year of changes on the plaform. That will do a lot of damage.

Don't you think that after a split Auctions would get more traffic than Express got?

Linda said...

I think auctions could easily pull in their own traffic. I still love the auction format and hate to dig through the fixed price stuff to see all that is there to offer.

I loved ebay when I could browse for auctions by category and look at newly listed and going, going gone. I did the same search twice a day (morning and evening) for years.

Am I the only one that hated EE for: the blah page view, the tabs on the page, the search itself?

That means I will soon hate searching for things on Ebay.com.

I guess I'm the minority and Ebay will prosper. But, it will be without me as a buyer.

I would love to see an Ebay Classic and could go back to spending the $300 to $400 a month I used to spend back before 2004.

nadine said...

Adam, you said,

The auction business is huge, and dramatically more profitable for eBay than fixed price. Auction buyers are more likely to return and buy again. As a result, it's hard to imagine eBay placing it anywhere but in the default flow of eBay.com.


So please explain why ebay is trying to strangle the auction business? Name one single site change of the last four years that has benefited auctions!

Instead, ebay has louded proclaimed the imminent death of auctions and worked hard to make it a self-fulfilling prophecy.

At best, ebay regards auctions the way today's socialists regard capitalism: as a necessary evil which they hope to tax and regulate into generating enough income to allow them to do what they really want, which has nothing to do with fostering capitalism.

Now, ebay is just like dogs in the manager, who won't eat the hay themselves but prevent the cattle who want to eat from getting in either.

nadine said...

An afterthought: what Adam said is an acknowledgement that "the Old Stuff brings the peeps," as Tony P. put it, and that without the auction traffic, New Ebay will just die the same death as Ebay Express.

So if they know that the Old Stuff is the secret ingredient that brings the traffic, why have they worked so hard to chase it away? Riddle me that one.

Cliff said...

Okay, I don't believe the statement "auctions are dead," but to play devil's advocate let's say they are and let's say splitting it off into Classic fails at reviving them.

The downside is, what happens to eBay if Amazon buries them in Fixed Price?

Cliff said...

What if eBay just removed the Auction option for new commodity items, leaving it in place for used?

Cliff said...

Final thought, and I mentioned this on twitter: what happened to the test with auctions segregated into the flashy horizontal scrollbar across the top of the search page? If they're going to change anything, personally, my own opinion is that this was by far the most attractive solution brought before us, and a change that looked like it would bring some real separation of the two formats while keeping them married to some degree.

Obviously, I want it all on one site. You split the sites and my work automatically doubles as I'm performing dual searches, I'm missing out on store upsells from auctions I've won, and in time I'm probably choosing one venue over the other for my shopping, thus contributing to the death of one format or another.

(I split all this into mini-posts this time around since they're all their own ideas, didn't want to give you another chapter-length post!)

Thanks,
Cliff

ms.pat said...

Auctions aren't dead...ebay has been killing them since 2004 when they did away with Going, Going, Gone! I have no idea why they feel they need to push fixed price down everyone's throat. Take auctions, the one unique feature from the site and its just one more boring retail site....with NO bargains because fees are still way too high for the reduced traffic we're getting this year. Pushing sellers to offer free shipping in order to get better placement in listings is about as low as a company can go. Sure, we'll compete with Amazon, Ebay will beat it out of you!!! I'm thoroughly disgusted with the site and I see one big tangled mess coming when both fixed and auctions are put together...and I don't even want to go into omitting cash, checks and moneyorders! Instead of fixed price, why didn't ebay simply make BIN free and keep it running during an auction until the auction ends or the BIN price is reached? Too simple or am I not thinking straight?

I'm afraid the biggest obstacle to Ebay's growth is and has been Ebay's management! Just my honest opinion as a 10 year seller.

Cliff said...

Hi ms.pat,

I'd like to see eBay make a push of some sort with the Best Offer feature as it does at least make their Fixed Price different from Amazon's and adds an extra element of fun to the site.

It'd be great if eBay were to run a free or even discounted listing day with Best Offer, however I suspect that will never happen since it encourages lower FVF.

But it is, at least, a potential way to spice up Fixed Price, differentiate itself from Amazon, bring back some fun, with the bonus of already existing on the platform.

As I buyer and seller I find it both more exciting and more functional than Markdown Manager, which has the benefit of a separate "Sales" link in stores. Just a little push is all I ask.

Thanks,Cliff

Jonathan said...

Its important to remember that shoppers spend 10x on fixed priced items on the internet as compared to auctions. For eBay, they need to help sellers sell more items, which means more GMV for everyone. If they ignore 90% of what buyers want, isn't that limiting sellers opportunities on the marketplace?

As far as traffic goes, I have to agree with Adam, if eBay stops pushing traffic, you'll have bids dry up very quickly. Let's remember that as great as Amazon is in fixed price, they were awful in auctions. Does anyone remember Amazon auctions?

Mitzi said...

I'm with Cliff on the Best Offer thing - in fact, every item in my store has Best Offer on it, so it essentially acts as an online flea market! I sell vintage, so a lot of my buyers shop flea markets in "real life" - they seem to really like having that experience duplicated for them online.

I am looking at IOffer as a way to back up my eBay store - the entire site is set up around the Best Offer idea! And they have a tool that imports your listings and feedback from eBay.

Randy Smythe said...

Jonathan,

Amazon wasn't know as an Auction site. eBay is known as an auction site, that is eBay core competancy.

For Amazon is was an add-on just like for Overstock.

There is no reason not to tie auctions on eBay Classic back to a sellers store where there are fixed price listings and there is no problem having an Auction tab on eBay.com just like a motors tab.

Its a separate site in that it has its own URL but it would be connected to eBay.com just not in search results.

The current approach isn't going to work. This should be called Plan B

Anonymous said...

I think your idea makes so much sense, it almost makes me want to cry. Ebay is going to continue plodding down this path and in Jan. 09, we'll probably have Ebay Classic back anyway.

The trouble with analysts, like Adam Nash and Jeff King, is they are extremely bright, dealing with numbers and statistics. Does Ebay even use real users to test? I used to be a tech writer, and I worked with programmers and tested their work as an ordinary user with fresh eyes and then would go back with my input. Mostly, they were just interested in glitches.

Analysts and programmers tend to have a know it all attitude. I know, I'm married to one.

3p masses said...

Randy, splitting the site simply will not work.

What you are describing will orphan auctions from eBay.com traffic and search; that's more than EE was orphaned. Also, you lose any chance for synergy between auctions and FP if you split them up. Plus you got two sites to maintain which is more overhead.

Even if buyers/sellers find the eBay Classic you describe, and it works... eBay.com will be the new EE.

Let's find a way to power-up eBay with the right combination of auctions and FP.

Can you explain why Auctions and FP can't coexist in peace given the right listing/fee/fvf formula?

What do you think is fundementally wrong with having auctions and FP together?

Do you not believe auctions help drive FP sales?

Do you think FP sales don't help bring new auction customers?

Do you think eBay can't get the right mix of finding/display/fees?

And Adam, you don't want a site-within-a-site. You want one site that elegantly solves the Auction/FP Finding Display problem. A site that leverages the synergies between Auction and FP.

To allow sellers to be price competitive the maximum FVF should be 12%. Sellers need to price at or below Amazon and other eTailers for eBay FP to be competitive.

Management should bake this in for Q1 next year because 15% is too much for new commodity items.

Maybe tax 'used' higher than 'new' by restricting FP30 to 'new' items only.

-3P

dan said...

eBay does not need to split up into more parts. It needs to consolidate its ingredients so the site is tasty for as many people as possible.

There are 5 ingredients and they are as follows: Salty, Sweet, Bitter, Sour and Umami (savory). If best match peppers the fixed price site with auctions, that make s for a good experience.

The chef at the helm (Jeff King) needs to make sure the ingredients and customers (both buyers and sellers) receive a consistent experience. This DSR/Neutral is a negative stuff is pure nonsense -- any restaurant that serves overseasoned/overcooked food will lose customers.

Randy Smythe said...

3P,

You have two separate buyer demographics with Auction and FP.

There may be some synergy between the two but the consumer will lean toward FP when given a choice.

Auction listings clutter the search when you are a FP buyer and just want to get your product. FP listings establish a value for the item so auctions bids are lower.

Mixing the two formats means the the site is not ideal for either format.

Express failed because eBay didn't commit to it and they executed poorly not because it was a bad idea. Though it had less chance of working than eBay Classic has of working because eBay Classic is already the accepted element of the eBay brand.

If buyers want Fixed Price items they will go to eBay.com and if they want Auctions they will go to eBay Classic.

For synergy, Auctions listings can link back to a sellers store where Fixed price items live and Auctions can be displayed in a Sellers store when a fixed price buyer visits.

Here is the problem with our discussion. I beleive you cannot grow each format optimally when you combine them you cannot make search work optimally for two desparate listing formats.

Jeff King told me that Best Match doesn't really work well for either format currently, so they are going sort them separately and then put them together.

Those separately sorted results will still have to be sorted again when they are in the search results. How do you do that effectively? One Auction then 1 FP and so on, or half and half?

I will give you this. They need to try their approach first, because my approach is so radical but if they don't make my approach plan "B" then after a terrible Q4 what will they do. Do we all have to wait another year for them to figure this out.

Yes, running two separate sites does add more overhead, but if each site is run optimally who cares? Nobody is complaining about StubHub being run as a separate site.

In my concept Stores become the synergy you are looking for to bring a customer to your FP listing through an auction or vice-versa.

Do you not agree they should have a plan "B" if this apporach they are working on doesn't work?

Anonymous said...

So Randy Jeff King actually told you best match doesn't work well for either format?

What a suprise we have been telling him that since it became the default sort.

My question is if it doesn't work well for either format why are they so in love with it?

Dave H

Randy Smythe said...

Dave,

Well that would be another long post. Basically BM was supposed to be one part of an integrated search (Finding 2.0) but Finding 2.0 hasn't been rolled out fully yet. BM, IMO, was ready to go before the rest of Finding 2.0 so they rolled it out, but it doesn't work optimally without the rest of Finding 2.0 (That is my interpretation of what Jeff said)

They also found that you could not optimize one BM sort for two different listing formats, that's where Jeff's comment came from. BM basically doesn't work optimally for either format.

They hope to fix that with the new release coming in Sept. By that time 50% of the US site will be using Finding 2.0 and BM will sort auctions and FP separately, hoping to opitmize the sort rank.

Once they are each sorted separately they will be placed in the SRP (Search Results Page) and that is where I'm having my problem.

Those two different sorts need to be resorted again for the one SRP, how do you do that optimally?

Is it half and half (Auctions/FP)? Is it just a few auctions because they have 7 days to find a bidder and lots of FP? How are you going to come-up with an optimal SRP? They could not explain that to me.

Ending soonest will no longer be a part of the FP BM sort so in order to get those 30-day listings to the first on day one, they will need to bump auctions that are ending soonest.

A lot of people are arguing against my idea of splitting the sites (very bright people I might add) but I don't hear anybody arguing for the approach eBay is currently taking other than eBay folks.

It's funny, because the "innovative" idea would be to make these two desparate formats live optimally in the same SRP and that is why management has chosen this approach.

I contend that the real innovative idea is to split them apart. I realize this is counter-intuitive but the site is too big to treat each of these formats and each of the their sellers optimally.

If their approach doesn't work where do they go from here? All I'm asking is that my approach be plan "B" in case plan "A" fails.

Anonymous said...

I thoroughly agree Randy Auctions need to be sorted by time ending soonest as that is the most important part of an auction when it ends.

As it is now many times if you use the best match sort you find an aution ending in 3 days on page 1 and an auction ending in 3 minutes on page 3.

I'm with you also on auctions being a seperate animal . Things made 100 years ago or ook items that do well at auction just don't work well with FP items that were made yesterday and have a sku#.

I myself have never bought those type of items on ebay and never would when I can drive to Wallyworld and buy them for as cheap or cheaper . And no waiting for shipping.

I hope they have a backup plan because I don't think this ones gonna work.

Of course their backup plan may be that when this fails they just let Google or Microsoft buy them early next year when their stock hits about ten and let either of them clean up the mess.
Dave

Cliff Aliperti said...

Hey Randy,

I agree with much of what 3p masses says.

You discuss the search tabs in your reply to Jonathan. I think a less radical approach which would go a long way towards testing your idea would be to just move the default search from Auctions/FP to BIN only.

And if they are curious about these specific results I'd assume they'd do a select test of the plan on live buyers like they are with the new (and horrendous) item pages.

While I agree that auctions could get in your way if you are a FP buyer, the benefits the other way around are obvious and overwhelming. Auction winners do add FP items to their orders.

I'm glad you agree that they need to go with the current approach first, and I wouldn't be surprised at all if your idea is on their list of back-up plans, but yes, there's really no going back if they go your way and fail as they would then need to rebuild the entire brand.

Going back to my earlier reply: "what happens to eBay if Amazon buries them in Fixed Price?"

Randy Smythe said...

Dave, that is the backup plan they are not prepared for and if they don't have a plan "B" then they will either spend another year fixing eBay or investors will vote with their shares.

Right now I feel they are all-in on this plan. I'm just suggesting they hedge their bets.

Randy Smythe said...

Cliff, I actually wouldn't have a problem with testing thst approach. If it doesn't work then I was wrong. I have no problem being wrong. I just don't want sellers to have to wait another year for ebay to figure this out.

As far as Amazon goes, they aren't worried about eBay they are executing their plan and if eBay doesn't figure out a way to remove the distractions and concentrate of Fixed Price they will be toast.

Managing auctions is easy and they've done it for years. Just roll back changes (keep the ones that work and get rid of the ones that don't) and concentrate on being the best FP site you can be. Spending all this time trying to make everything work together just keeps delaying things.

At Amazon's growth rate (compared to eBay) eBay will be in their rear-view mirror in no time.

Henrietta said...

If your plan was implemented I would go back to eBay. I would not go back unconditionally, to sell, because I have lost trust in eBay & found a site which is my new home (Bonanzle.com) but I would buy there.

I read somewhere (and can't find it again) that in September there will be no links to stores in the new listing format, that the red door will no work as a link etc. Do you know anything about this?

ms.pat said...

Randy - I doubt if Ebay would ever split auctions from fixed price as you suggested. They're afraid they'll find out for sure that auctions will attract the bulk of the buyers.

As for Amazon, Ebay isn't even a drop of sweat on their brow. I imagine them sitting back, laughing and watching Ebay's desperate attempts at success...much like watching the old Keystone Kops!

Tony P. said...

This will prolly offend some, but it isn't meant to do that. I do have an ebay store with FP items. ;-)

Auctions are ebay. ebay is auctions. period.

Ebay shouldn't 'spin off' auctions into an Ebay Classic. Rather, ebay should STAY what ebay is and anyone going to ebay should be automatically directed to www.classicebay.com

It is all of the FP stuff that should be 'spun off'. It started as the trinkets and dodads at a set price to compliment the auction goodies and has grown to some sort of monster. This monster now requires all manner of tweaks and twists to extract the most revenue, while not overloading the site.

FP (as it exists today - gobs of retail crap) rode in on the coattails of auction collectibles. It was cute and fun as hand-made refridgerator magnets and custom wooden signs, but is an absolute monster as the harbinger of modern retail goods.

There is a place for that stuff and as pointed out, it accounts for 90% of 'Net sales. Great! Do that 90% somewhere else. We want our 10% back. There, I've said it. Leave us to our crappy old crap and go make mega-bucks on a spiffy looking, Web 3.0+ site somewhere else!

Yeah, we could have lived together in peace and mutual prosperity, but our 'togetherness' simply sent the ebay elite into periods of Change This, Change That, Screw with this, tinker with that. ENOUGH ALREADY!!

It ain't your fault that your 100,000 DVD copies of Harry Potter made a shambles of our once great auction site, it was the fault of Greed. And it wasn't even your greed - we all know who's greed it was.

But, if they did spin off the FP... just like EE... no one would come. So you need us. Fool yourself all you want about great value and huge selection, but we know the truth. The peeps that want that stuff, go get it on Amazon.

We bring in the peeps. Auctions. Old Crap. Bizarre Junque. Our stuff will always be a value, a steal, a bargain, but your stuff??? When ebay gets through with you, even a direct connection to the manufacturer in China won't be able to help you make a dime.

I'm sure this'll piss off some, but I just wanted to say it. It is what a lot of us auction/collectible sellers think. We've had our asses reamed the past few years, all for the sake of FP. Try to see it from our side, for a change.

I'll leave with this one thing. Ask yourself this question... if ebay totally closed down, went offline, except for a lone email address, which email would they get first:

Hey, where's all the DVD's?

Hey, where's all the old crap?

nadine said...

Yay, Tony! You tell 'em!

Anonymous said...

FP (as it exists today - gobs of retail crap) rode in on the coattails of auction collectibles.

And it's gobs of retail crap that keep the cog wheels of America turning. Don't blame FP'ers for trying to make a living on their own. And don't blame eBay for wanting, needing to make more money, for ruining the once-loved auction site. It's all a byproduct of Wall Street capitalism, whether you like it or not.

nadine said...

It's all a byproduct of Wall Street capitalism, whether you like it or not.


No, it's not. The Street just exerts pressure for growth; they don't care where it comes from.

Nobody told eBay to be this stupid; that was their own idea.

If they had bought Paypal (Meg Whitman's one really good idea) and laid down good plans for how create and grow an eBay FP site while being careful to continue nourishing & feeding the core auction business, they could be doing very well right now.

They planned stupidly because they thought they could manipulate the retail markets on their site without bothering to learn the businesses they were trying to control.

nadine said...

...and without ever spending real money on marketing the new FP business, though goodness knows they had plenty of cash in hand to fund the effort.

Randy Smythe said...

Anonymous, the problem is they could have them both, growing and vibrant.

Auctions slow organic (profitable) growth.

Fixed Price - faster profitable growth (not quite as profitable as auctions)

It shouldn't be an either/or scenario

BMX said...

I think the point that most of you are missing is that ebay's commissions are too high.

Items such as consumer electronics, DVDs, Video games, which attract tons of traffic are very low margin items.

Ebay sellers have normally added in some cushion in the shipping and handling to make the units semi profitable. Now ebay has raised the FVF to 15% + another 2-3% for paypal and you're talking 18% of the gross sale of the item.

Do you really think that small/medium sellers can underprice amazon with this type of pricing structure?

Most likely not. So the site attracts more used, refurbished, and fake items. All of these items are not optimal for the buyer experience.

The reason ebay express failed, is because its impossible to build a business based on NEW items only and provide them at the discounts that buyers would want. Buyers expectations are unreasonable and no one can compete with amazon's/buy.com's ulta low pricing. If it was possible to sell ipods and video games for 50% off don't you think Amazon and Walmart would do it??

Amazon can charge a high rate because they sell at a low price and it sets the bar. They can afford to sell at that price because they don't have to pay the 15% commission to anyone.

I really don't see how ebay thinks making the media market FAR less profitable is going to bring growth to the site.

Any business student knows that when the interest rate goes down, investment goes up. Ebay's fees go up, people list less and the amount of items listed for sale goes down.

Ultimately I think there is no way to grow the business unless ebay decreases their FVF rate or their (take rate). That will piss off wall street but I think its the only way to save ebay.

nadine said...

Randy, I think you're not asking the right question, which is, if they split the site as you suggest, what will keep the New FP Ebay from dying the same death as EE?

bmx, by now, there are even voices fromt the Street telling eBay to stop playing around and really cut rates to regain growth. They could sell it as part of a turnaround plan. The hit to the stock would I suspect be no worse than the hit the stock is taking anyway.

Randy Smythe said...

Nadine,

Fixed price is already growing, though I contend it is taking share from Auctions.

All the traffic would still come to eBay.com and all the listings there would be Fixed Price, so the traffic problem express experienced would not happen.

My contention is that Auctions are the only viable eBay business that can grow on its own. A tab on eBay.com, some cross promotion between the sites and auction listings in stores would be sufficient, IMO

Ginny said...

Randy,

I agree that it would have made sense for ebay to split. But I have thought that the split should have been between new items (which are mainly FP) and antique & collectible (both auction and FP). They have a separate division for ebay mothers. They could have done something similar to divide the rest of the site. You are correct. They can't be all things to all sellers and all buyers.

I have lost all confidence in the current management of ebay. They are set on a certain track and they can see nothing else. They don't understand anything other than what they want to see. They wear blinders.

We are Silver Powersellers with a 100% feedback profile and very high dsr's. We've been on ebay for ten years.

I will be trying out other sites and improving our own website because we can't keep our eggs in the ebay basket. If we did, I can see the disaster coming down the track.

Ginny

Anonymous said...

Ebay is so big now and unwieldy. I did a search for hoodies and almost 25,000 came up, new and used, men and womens, etc.

With the success of Etsy and Mommie Auctions which specialize in a niche, I think that could where e-commerce is heading. A lot of people are excited about GoAntiques being sold and the new company planning to be run like the old Ebay. If this pans out, buyers will follow the good merchandise. And probably other companies will be eager to invest in niche sites with profitable items.

My guess is Ebay won't be able to compete. They're so wishy washy right now. What can they offer that Amazon and Overstock and Zappos and et al don't already have?

If the niche sellers find new homes, Ebay will be left in the dust. And that will be due to poor vision. I don't think anyone has any faith in the current management. They blew it back in January when they essentially said "we don't want you."

Anonymous said...

I agree that auctions could be revived in a second if eBay was inclined to do so. All they'd have to do is switch back to the old fee structure - 25 cents to post and a Final Value Fee that tops out at 5%.

Alternately, they could give free listing credits or free upgrade features when auctions get 2 or more bids, or when the closing price is at least 2 times the start price.

Personally, I prefer the auction / buy it now format, but I wish the buy it now price didn't drop off after the first bid. I know there are some categories where the buy it now price drops off when the bid reaches 50% or so, but I'd like to see that user defined. I'd love to run true "buy or bid" sales. I'd start auctions at a penny if my $50 Buy It Now stayed on the listing either until someone bought the item or the listing ends.

I also think eBay could capture some of the magic and fun of real auctions if the bidding didn't end until all the bids were placed. Suppose that, if a bid was placed in the last 15 minutes of the listing, it extended the auction for another 15 minutes. Then you'd see actual bidding, rather than everyone placing snipes and forgetting about the auction.

Anonymous said...

I agree that niche web sites are the future of internet auctions for quality hard to find items unless ebay DRASTICALLY lowers listing & FVF fees. I have a feeling ebay would rather buyout the competition than try to compete.

Randy Smythe said...

Hey everybody, thanks for the comments, you've made this post my most popular since the Buy.com scoop.

Last Anonymous, buying up companies that already have done the customer acquisition is usually what corporations do.

A start-up can take 5 years to build something if they have enough cash, but a corp like eBay can't wait that long, so instead they buy companies that are ready to take off (PayPal and StubHub) or sometimes they make unusual purchases (Skype, Stumbleupon)

If eBay chose to grow by buying up niche sites like Etsy and Bidz.com that would make sense from a business standpoint, but they have to get their house in order first.

They've chosen their path and they are going to sink or swim with the outcome.

Tony P. said...

Nadine did an excellent job laying the 'blame' on the proper party, although I don't actually blame anyone. That's just like the story about the scorpion and the frog - ebay is the scorpion.

No, ebay didn't have to do what they did. I see the reasons for them doing such, was given as 'wants' and 'needs'... sorry, but that's two entirely different motivations. As far as their Wants go, that is the realm of avarice and their downfall.

Their Needs were being met just fine. They made profit and pocketed net income. Their stock went upwards to $50. Any other talk of Needs will be crossing the line into Wants. Seeing an opportunity to make more money and taking IT, while hindering your primary business, is not a Need, it is a Choice.

As Randy writes, only the auction portion has enough true patronage to break away from the main site and still have a chance at success.

I believe that could work if auctions were given a CLEAR route (can we all say, "big, bold Tab?") from the landing page, and combined with a KISS format on every single page and in every single function on that sub-site.

You do that same stuff with FP and it will fall on its face. The eCommerce world may move by way of retail, but not on ebay, baby! And, that is the whole point. Auctions are the flashing neon sign and ebay won't (figuratively) cover that sign.

The synergy between auctions and FP is equal to the disparity caused by having both groups shown together. It is even more complicated than that. What "FP" means to an auction-only seller and a seller with half of their inventory in an ebay store are two different things.

To me it is simple - anything made within the past 20 years is modern. Some of those items are collectible and really don't qualify as 'new'. But where do they belong? On the New or Classic site?

What about something with even more ambiguity to it - a 200 watt/channel stereo amp made in 1995? Yeah, there's one helluva market for some of those, but which are they? New or collectible?

And, if the sites are separate and one has more interest than the other, you can bet that's where a seller will 'think' their item belongs. It happens now within the sub-cats. The only way to make it all work, is to have clear and concise rules, but just coming up with the rules would be a chore.

Take a look at etsey. They have rules, but have recently made a few adjustments to allow for Vintage items. I was invited to put my old stuff on there and I wrote an email back, WARNING them to be careful.

They may be looking past their Needs, into their Wants and in the process, ruin it all.

Mitzi said...

I have a vintage shop on Etsy, as far as I am aware they have allowed vintage since the beginning, as well as commercial supplies.

They recently tweaked the search function so that you have to actually choose vintage or supplies from the drop down menu, while handmade is the default search. It was bumpy at first, but now that everyone is used to it it seems to be working fairly well...

Vintage is really growing on Etsy, they have had a flood of eBay sellers like me giving them a try!

Anonymous said...

Nice idea but it presupposes that Ebay management is basically ethical, just misguided.

I disagree. Their chronic lying to the media and to their customer base demonstrates that their ethics are even lower than World Com or Enron ilk. Ebay specializes in jerking around and taking advantage of little people: Ma, Pa, the disabled, unemployed, home schooling moms & pensioners, many of society's most fragile elements...what some neo-Nazi's like to label as "noise".

I suspect Ebay's gorilla mentality has less to do with $ than with power. They've been drunk with it for so long that they've become addicted and imagine themselves to be a New Ebay Nation.

Nothing less than an FTC intervention will suffice. My choice of names for a government mandated spin-off: The Non-Ebay.

David said...

As a buyer I don't have a problem with seperating the sites, however as a seller I have a problem.

When I list an item, I'd like to get all of the traffic that eBay has to offer.

I'd hate to have to list my inventory on both an auction site and another site and pay double the fees.

However, since eBay seems to love raising fees, they are probably now seeing dollar signs.

If anybody remembers eBay of 1999 (and it does seem like it was forever ago), if you saw a $2,000 necklace that you wanted, you'd have til the auction ended, and there was no buy it now.

There were lots of reserve auctions back then.

I predict that we will soon see a lot of auctions at high starting prices like 10 years ago.

Here's another idea. If eBay wants to revive auctions, it might not be the worst idea to add a tool that allows people to snipe auctions.

I think one of the reasons fixed price is getting so popular is because people don't like waiting 5 days and get out bid at the last minute. If eBay allowed sniping, it might help out both buyers and sellers.

nilrem said...

Try this scenario, this management team has been put in to place to destroy the auction business and to milk as much profit from it as possible on the way down.

Why would they do that? Every dollar traded from person to person is one less dollar for big business. Every cash transaction is one where the banks may not get a cut. As a public company eBay's responsibility is to its shareholders not its customers so like all public companies control ends up with The Street and the Bankers.

Look at the changes at eBay, fees relentlessly increasing for small sellers who are now subsidizing large sellers of new products. Frauds allowed to continue many of them really obvious, usually recognized by members but not acted upon by eBay when reported. eBay not putting a stop to frauds is damaging the brand, that is the small business/private seller brand.

That's the only conclusion I can draw from eBay's death wish, it certainly isn't happening by accident. Before anyone says never attribute to malice that which can be adequately explained by stupidity these guys aren't stupid and have been groomed by the top management groups.

nadine said...

Ebay management is operating under what they conceive of as orders from The Street: must keep up revenue, must keep up margins, must show growth and have a good story to tell at at the end of the quarter.

Until 2004, Ebay grew like gangbusters and did the hard work for them. They got spoiled with easy money.

Then growth slowed and they began casting about for this and that to keep the money flowing in and the story sweet. Instead of asking, how do we really grow the business, they asked, how do we grow while keeping revenue and margins up? So they started to squeeze their customers. And squeeze. And squeeze again.

Now the costs are starting to come home to them, but they don't know what else to do. They are trying to find a refuge in new software when the real problems lay elsewhere.

permacrisis said...

For ebay classic/ebay.com to work you don't need to default to one format or the other for the home page; you just need two buttoons next to the search box.

Mark one Auctions and the other Sales or some such, (I almost said 'BUY' whew!) and you will have just enough display separation between the auctions and the FB so as not to depress auction pricing too badly.

Another thing is the constant futzing with search from a buyer perspective. Ethics aside, about half my buyers transacted on a work computer- for some it was the only computer they had the use of.

When it worked correctly ebay was a habit-based site where the buyers would periodically visit, do their little sequence of clicks, and check back often. Like it or not, many were visiting on company time and needed fast page loads for boss avoidance mode.

Disrupting the quick routine enjoyed by these buyers has done immeasurable damage IMO. Amazon has kept disruption of the buying experience to a bare minimum and is now reaping the benefits from these 'fake out the boss' shoppers-- right or wrong I'm sure they count for a lot of purchases.Many of my buyers had their purchases mailed to work!

You can't determine that stuff from querying a database... You have to wonder, did anyone even consider the at-work buyer when they rejiggered search?

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