How EBay Is Winning With Bid to Enhance the Customer Experience

Becomes More 'Hands on' With Better Search, Service, More Fixed Prices

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NEW YORK (AdAge.com) -- How do you rejigger an $8 billion company to catch up to rising customer-experience expectations that have passed it by? That's the task facing eBay.

EVOLVING EBAY: Auction site improving search, increasing fixed prices and more.
EVOLVING EBAY: Auction site improving search, increasing fixed prices and more.
In the 11 years since the dot-com darling went public, the e-commerce world grew up -- but eBay looked stuck in its 1.0 past. Unlike Zappos, which built a name using customer service as marketing, and Amazon, where shoppers can log on and find virtually anything at a clear, set price, eBay didn't control the fulfillment chain. That often leaves its customer service, a component key to branding, at the mercy of its sellers. Moreover, it was riddled with auctions, a type of transaction that has garnered less and less interest from the mainstream consumers who account for much of the $130 billion in annual online-shopping sales.

While the company's marketplaces unit, which includes eBay.com, is in the middle of a three-year turnaround plan to fix those problems, "I doubt they can ever catch up totally [to competitors like Zappos and Amazon]," said Larry Witt, an analyst with Morningstar. "They can't directly control the customer experience, though they can influence it."

Yet that's exactly what eBay has set out to do. It's giving top buyers and sellers access to a phone service seven days a week and allowing them to submit queries online -- a service being expanded throughout the holiday and 2010 to more sellers and buyers. It's hired talent to improve its search-technology capabilities to make eBay more consumer-friendly and has begun incorporating user feedback more quickly. And it's taking steps to add more fixed-price options for its customers.

It all adds up to what Lorrie Norrington, president of eBay marketplaces called "a sea change in customer service," going from "an offline function to much more hands-on."

Part of that charge is being led by Christopher Payne and Dane Glasgow, search technologists brought in from search startup Positronic, and Hugh Williams and Eric Brill, who arrived from Microsoft. They have reshaped the process in which eBay works: When you used to search eBay for an item, results would be listed by auction-expiration dates, with ones expiring soonest showing up first. Now, it's taken a nod from Google, which pioneered the use of quality factors in its paid-search ranking system to improve the kinds of ads and offers people see.

Beyond auction
Today eBay search looks not only at auction end date but also rewards the stature of the seller, factoring in things that matter to buyers: the price of goods, the reputation of the seller and free shipping offers. The improved site functions, paired with a broader selection, will improve the overall experience, Ms. Norrington believes, which should actually end up cutting back on the need for customer service.

"You're beginning to see some of the differences," she said, of the upgrades eBay's new tech-savvy hires are making. "It's about making sure the buyers have great-quality sellers and items surface. It's making sure the search experience is one suited to what the buyer is looking for."

In order to increase the quality and variety of goods on its site, eBay has also lowered sellers' fees and is focused on adding fixed-price options. Several years ago, the mix was 80% auction and 20% fixed-price sales. Today it is almost evenly split, and, in the future, eBay expects 70% to be fixed and only 30% auctioned.

Not all of these changes have rested well with sellers -- an important and powerful constituency for the company. However, it has taken pains to communicate developments to sellers through e-mails, discussion boards, seller summits, web seminars, web radio Q&As and small group dinners.

"A lot of the changes were necessary. Hardcore eBay sellers are not happy with them, but they were necessary," Mr. Witt said. "Take search, for example. You want to bring up products people are looking for. Delivering more-relevant results is the most important thing they had to attack."

Positive results
And the changes, which have been communicated to consumers through a mix of events and media outreach, have instilled more confidence in the site. "There's no question that eBay is safer than it was 18 months ago," Ms. Norrington said. "Two big proof points are that our highest-quality sellers are growing substantially beyond e-commerce, up 14% in the second quarter in the U.S. And where we use a net promoter score, we're seeing good results on trust and confidence. Our top buyers are buying more than ever."

Wall Street is taking notice. In the past month, a number of Wall Street analysts have upgraded eBay's stock. UBS, one of the firms issuing an upgrade, said that it believes the company's marketplace business has "turned a corner."

What you can learn

Remaking a business that's as entrenched in the consumer psyche as eBay takes a lot of hard work, some risk-taking and a bit of chutzpah. Here, a few tips on how to tackle it.

Invest in talent. It's a tough economy and eBay, like everyone else, is hurting. But that hasn't stopped it from bringing in well-regarded tech talent.

Don't be afraid to cut loose dead weight. Yes, eBay has angered and even lost some sellers, but the changes it's making are rewarding its best sellers and best customers.

Look for partnerships that will upgrade your image. Teaming up with fashion icons Narciso Rodriguez and Normal Kamali on fixed-price lines instantly elevated eBay with the influential fashion crowd.

Don't lose sight of the end customer. Both sellers and buyers are essential to eBay, so it added customer-service features to benefit both groups.

Communicate change consistently. To avoid seller confusion when it makes changes, eBay now rolls out changes twice a year, instead of on an ongoing basis. It gives sellers 60 days notice, and it reaches out in mass communications, as well as one on one.

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