Five Things eBay Can Do

26 Comments

This week’s PodSession is about eBay shopping for partners. This is inspired by recent buzz about eBay looking to take on Google with new allies such as Microsoft and/or Yahoo.

EBay is voicing its concern with its checkbook and looking for new preferred advertising partners and cross-promotional opportunities. Should eBay be afraid of Google? How many management consultants did it take for eBay to wake up and realize its business direction? Is anyone safe from the growing power of Google over search and commerce?

Here are five things we suggest they do instead of mucking around with half-baked alliances.

1. Come up with eBay 2.0 and figure out a role for the company in the digital future.
2. Focus on core strengths. Buy Intuit (Quicken) to give eBay buyers and sellers accounting features.
3. Focus of the company should be Paypal and turning it into Citibank of online world. (Very Very Important.)
4. Figure out a way to get into shareware sales business. Perhaps acquire eSellerate. This is where Ebay can put its heft to good use.
5. Get into digital media sales. The recent Skype-EMI deal could be a good start.

This is just for starters. In the very near future, I am going to write a five-day series on eBay’s strategy and what they can do to grow even bigger. Funnily enough, Skype might be part of that strategy, though not as eBay might have thought. And the best part – all the advise is going to be free. McKinsey not required. I am sure one of you can even cook-up a nice PowerPoint presentation as well.

Anyway more here in week’s PodSession which is 20 minutes in length, a 9 MB download.

26 Comments

Jen

I don’t think eSellerate is owned by Digital River, though I think they’re the only one of the shareware ESD services that isn’t.

I also don’t think shareware reselling is anywhere near profitable enough for eBay to take up.

eBay needs to get their act together better before expanding. Right now they own half.com and PayPal, but I can’t use PayPal to pay for anything I buy on half.com.

Nick Hebb

Re #4: I don’t think eSellerate is on the table. They’re owned by Digital River, which has been on an acquisition spree of its own for the past several years. Also, eSellerate and Microsoft are teaming up on Digital Locker, which sounds like it’s going to be a big online software store. Lastly, from what I understand it’s not that difficult for software vendors to sell their software on eBay right now.

Dennis Howlett

Has anyone realised that accounting applications are specialised? eBay/PayPal can take a degree of pain out of the processes of double entry book-keeping, but they can’t do it all. Users would need professional training. The accounting vendors will tell you this is their single biggest challenge to successful adoption and customer satisfaction.

Jackson

“Come up with Ebay 2.0” is somewhat of a vague suggestion. What would Ebay 2.0 be like?
Ebay already has a considerable advantage over the likes of Yahoo! and Google in that it’s revenues are not entirely advertising based – they provide a service that people actually pay for. Although I use Yahoo! and Google fairly frequently, I have paid neither even a penny. And with Click fraud on the rise, Yahoo! and Google have plenty to worry about that Ebay doesn’t. Most advertisers will eventually realize they have spent way too much on Y!/G, and gotten very little in return.

Ebay should just focus on it’s core business and continue to expand on it (B2B markets, auctioning of services such as contractors, etc., expand in foreign countries). Paypal has been well integrated. Skype was a mistake, Ebay will eventually come to see that it plays no role whatsoever in the Ebay environment. The Paypal acquisition, however, made sense from the very beginning.

Jesse Kopelman

You forgot mobility, Om. Maybe it just goes without saying. Tying SMS functionality (or even a slimed down version of Skype IM that can run on phones without killing the battery) into bidding would be a huge upgrade and make mobile carriers smile too. Trying to leverage PayPal as the standard for carrier-neutral mobile-commerce would not make the carriers smile, but would be the right thing to do for both E-bay and the carriers.

Steven Maroulis

Personally I think Ebay needs to focus A LOT on integrating Skype. I don’t think Ebay bought Skype to use as a standalone VoIP platform. Again the $60m revenues vs the $2.6bn purchase price is insane so this solidifies my view.

I believe that Ebay did two things with this acquisition:
(1) Skype can synergize with PayPal for payment processing (that’s READY revenue low integration skills required)
(2) Skype can plug-in into Ebay’s “future” marketplace – a marketplace which moves from consumer oriented to enterprise oriented auctions on services rather than products

We have to wait and see, but I do firmly believe the Consumer auctioning is reaching market saturation and maturity as such the only “logical” next step would be to evolve to Enterprise / B2B & Services auctions. It would be like off-shoring only virtual 24/7 made available from a unique and Web-based Platform :)

Either way, EBAY 2.0 Skype would make a killer app/platform especially if they start exploring/integrating at the core features like Presence/IM in addition to Voice..

DJ Joy

The Paypal angle needs to be developed if only to defend against the impending Gbuy release in June. Google’s payment system enjoy’s 2 advantages at the outset:

1) Google search is a fantastic start for online purchases
2) Existing merchant relations through adsense/words and a monolithic platform launch in Base, etc.

Turning Paypal into the next Citi is an opportunity, as the Citi model is antiquated and in need of overhaul as is. For Citi and other banks right now, too much of the conversation with consumers is about pricing (look at credit cards, savings accounts, fee-less checking, etc.) and we all know this is not sustainable and creates no incremental gains for anyone in the system.

An outside shot: Ebay should take a look at leveraging a combo Skype-Paypal offering for emerging social networks and MMPORGs, as an all-in communication banking transaction platform.

aye

You must be joking. I guess we shouldn’t listen to McKinsey and Om.

Al

Hi Om, I have to say how much I agree with you but it’s not 5 things it’s 4 things

I quote :

“Nice one, but unfortunately moving forward it makes eBay even more of a closed shop. Remember we are now in the Web 2.0 age, it’s about open APIs and mashups , remixes etc.. What the customer needs is a product that will work with eBay and google and shopify or even their own web site and has an API to get your data out along with connections to AdSense etc..”

Check out what we are up to, it is obviously very relevant given this post and your podcast..

regards
Al

Angus McDonald

For #2 they could do worse than buy NetAccounts.com … at least they have a web version of the typical small business accounting package, and they even have an API to allow others to mash-up with it.

Paul

Om is right, ebay has no real idea of its strategy: I know it fro, there, and has lost its start up flair.
Skype and PayPal are crown jewels though and should not be estimated.
Intuit buy is a good idea as it would fuel the US business which is not growing as much as people would like, but it is not solving the global issue (Intuit is nearly not existant in Europe/Asia) growth.
eBay more than anything has to reinvent itself while solving lots of internal issues such as its brand, its value proposition, its positioning, its technology …

Gerald Buckley

I WISH the Intuit deal would come true RFN!

I’ve just had one of the worst experiences (as a merchant) with Intuit’s little merchant services branch called Innovative Merchant Services.

What PayPal does in it’s sleep, Intuit’s little merchant services group just can’t quite seem to get straight.

I think that would be a good marriage on a LOT of levels.

Look out BCG & McKinsey and Co… GigaOM has arrived on the scene! And is dispensing more good ideas for free than you’d charge $185,00 for!

Avner Ronen

i believe they bought skype for:

a. consumer brand, which could be expanded to yahoo!/google like services (email, portal, etc.)

b. pay-per-call business

c. the potential of skyple becoming one of a select few communications networks of the future

Mind Reader

“Funnily enough, Skype might be part of that strategy, though not as eBay might have thought.”

Or may be just as eBay did think. May be you are the one finally getting it and eBay has it figured out all along.

gustav

“Get into digital media sales. The recent Skype-EMI deal could be a good start.”

You must be kidding. That would be the wrong way to go…

The should figure out paypal though

EnergyGuru

I think #2 and #3 should go together. All in one merchant solutions should be a driving force and will increase the switching costs for ebay customers to go to Google Base or elsewhere.

Josh Morgan

With a market cap of nearly $10b, Intuit would be a big pill to swallow. Although if they could figure out a way to make it integrate seemlessly with PayPal it could pay off for eBay’s ‘power sellers.’

theidiot

is it all your mind is capable of producing? Come up with eBay 2.0? Are you stuck in this meaningless conceptual fog?

Digital media? Intuit? Bank? If you were running eBay, you would run it straight to the ground.

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