|EcommerceBytes-NewsFlash, Number 2758 - March 12, 2012 - ISSN 1539-5065 1 of 5|
Former CEO of Thomson Reuters Markets Devin Wenig joined EcommerceBytes Editor Ina Steiner to talk about his new role as eBay President of Global Marketplaces. Six months into the job, he's now ready to talk about his priorities for the business and what's ahead. Sharing data with sellers, helping them with shipping issues, and increasing the growth rate of active customer are part of his agenda.
EcommerceBytes also asked Wenig about the challenges facing eBay Marketplaces and its sellers, including small sellers such as antiques dealers and vintage clothing sellers; what eBay was doing to drive traffic to the site; eBay's stance on free shipping; and whether eBay had plans to take over payment processing worldwide as it is doing in Germany. EcommerceBytes also asked about the effect recently announced policy changes were having on certain types of Top Rated Sellers and about ads appearing on eBay Item pages.
The MP3 podcast is available on EcommerceBytes Industry SoundBytes, and a transcript of the interview follows.
Ina Steiner: Devin Wenig joined eBay in September, and is President of eBay global marketplaces. Thanks for joining us, Devin.
Devin Wenig: It's my pleasure. Thank you for having me.
Ina Steiner:You have experience as a mergers and acquisitions attorney, and you come from a top position in the New York publishing world. Were your first six months at eBay a big adjustment?
Devin Wenig: Less so than you would think. I'm delighted to be here. I'm really enjoying it. I came from a tech driven media company, a platform company, and eBay is very similar in that regard. So it's been really quite easy.
There's certainly things I'm learning. eBay is a very strong culture, and there is very strong history here. That'll take time for me to learn, and I'll probably always be learning. But I'm delighted to be here. It's a great business, and there's an awful lot here I'm familiar with in my 21-year career, so it's been a great transition.
It's been a little more challenging personally moving from New York to the bay area and moving my family out but that's settling down as well. So far so good.
Ina Steiner:No shoveling snow, this winter.
Devin Wenig: That helps, but I don't think there's much shoveling snow on the East coast either. I picked the wrong winter to leave.
Ina Steiner:Right. I wanted to ask you, what are the big challenges that you see facing eBay marketplaces?
Devin Wenig: I think there are a couple of things are just great opportunities. I think the challenge for us is always just competition in a very really moving dynamic marketplace. But that's great, competition is great, and our response to that for me is one of the things that I'm so excited about to be here.
As I look forward in the future, ultimately us being a dynamic marketplace means bringing more buyers to the site means bringing more buyers to sellers, who are your readers. For me that means things like getting bigger globally.
As somebody who still has a new set of eyes to eBay, we are very concentrated in the U.S. and in western markets and there is obviously great growth outside those markets, as you look towards emerging markets. And particularly with our CBT (Cross Border Trade) business, if we can open up those markets, I think more buyers means a more dynamic marketplace. So that's one thing.
I also think our ability to use data and target it better and to get that information more holistically to our sellers will make them better, make them more profitable and ultimately make our marketplace healthier. I've been a little surprised that, I think we do that in places but we can do better. Those are just two places. For me ultimately it's about the health and the growth of the marketplace which benefits everybody in the ecosystem, sellers and buyers.
Ina Steiner: What do you see as the most important way eBay can drive traffic to the site?
Devin Wenig: I think what I've learned in six months here is that eBay, the marketplace is a very complicated ecosystem, and ultimately everything helps, so having a healthy marketplace with buyers that trust the buying experience, having sellers that believe they're getting the right data and tools and can make a profit in the marketplace, all of that helps.
Ultimately there are other levers if we want to grow our user population. If you look at the last few years, in terms of new active customers, we've grown about 5 percent, maybe 6 percent, and I'd like to see that number get better.
Obviously all of the things I've mentioned are ways to do that, but equally using our marketing leverage to bring new people to our marketplace is something we're going to begin to do. I'd certainly like to see that six percent number go up. If that happens it means more customers, more buyers, for your sellers, and that means a bigger flywheel, a more dynamic marketplace for everybody.
You'll begin to see us pivot some of our marketing that is in support of the marketplace; ultimately it is in support of sellers. Last year we spent over a billion dollars in marketing and this year we'll do it again. We'll begin to reposition that. Now that we feel like we have a healthier marketplace and a better buying experience, a better experience overall, we feel now a bit stronger that we can direct people to the site and they'll have a positive experience. You'll see us using some of that marketing leverage to do that.
Ina Steiner: Is Google Search optimization an important part of that strategy?
Devin Wenig: It always is. It has always been part of our toolkit to help bring people to the site. It will continue to be that. But you're staring to see a different mix of marketing expenditure. You've seen TV campaigns and partnerships , and I think those are things that eBay traditionally hasn't done and we're experimenting with them and you'll see more of that experimentation.
Ina Steiner: And what are the challenges facing sellers on eBay?
Devin Wenig: I've been here six months, and I've traveled extensively and almost everywhere I've gone, I've held seller events. I've held seller dinners, I've spoken to sellers individually and then groups, I must have spoken to hundreds of sellers now in the last six months.
They have a fairly consistent set of requirements from eBay. Ultimately they want to make money in the eBay marketplace. It's that simple. Sellers want to find buyers. They want a fair marketplace that's transparent.
They want consistency in what we do, and I know sometimes when we make changes, that causes some frustration, and we try to do the best we can with that.
What they want is information, like I said, they want information so they can better drive their businesses and target their offers to buyers.
And you know, there's slightly different flavors to that. In China, in Germany, in the U.S., in New York, or in California, but they're all similar themes. I've taken that on board and that's very much...I've made those things very much part of my agenda going forward.
Ina Steiner: Have you had a chance to meet smaller sellers like antiques dealers and vintage clothing sellers? How are their challenges different than larger merchants on eBay?
Devin Wenig: Most of the meetings I've done are with smaller sellers, including some individual people that literally have businesses out of their living room. And I've met some very large retailers as well. But I think for big retailers, let's start by saying some of the challenges are similar. Some of the things people want from eBay are similar whether you're a mom and pop or the biggest brand-driven global retailer. You want to make money in the eBay marketplace, or you wouldn't be there.
But there are some different challenges. If you're big, you're struggling with big forces; you're worrying about managing store cannibalization. You're worried about brand maximization. That's not as much the case when I've spoken to smaller seller whether it's consumers or small businesses.
I think some of their challenges are, how do I know what to sell? How do I know at what price to sell it? How do I compete in the eBay marketplace? How are my goods shipped and fulfilled?
Those are the types of things I hear, and there's a lot of, like I said, consistency around that. I understand that and like I said, I think we're trying to do a lot of things to help those small sellers compete in the eBay marketplace.
Ina Steiner: Sellers are different in size but they also have diverse business models. Is there a "build for the rule" approach at eBay? A kind of, "let's build for the rule and deal with the exceptions" kind of approach?
Devin Wenig: You know, it's a really interesting question. We have 25 million sellers. This is an enormous marketplace. We have 100 million active customers and 25 million sellers. As much as there are some common themes, as you just said you can get some very different requirements and expectations. And it is impossible to do something that will absolutely fit all the requirements of 25 million different sellers. So we try to do best fit.
We try to do what's right for the marketplace. It is an ecosystem. And as I've learned, it is a complicated ecosystem. There are things you can do to benefit buyers and sometimes sellers say, I wish you did that differently, and vice versa. There's sometimes things you can do for sellers that buyers then react to. And ultimately, we need each other, right? Buyers and sellers need each other. There's a flywheel.
What we try to do is continue to promote and advance the health of the marketplace which, over time, inures to the benefit of the most sellers. That's what we try to do. That's good for eBay as a business and that's good for the people in the business.
But when you've got such a long tail business like we have, it really isn't always possible to do what 25 million sellers exactly want. Because, as you said, there are different business models and there are different sizes and different geographies, and we're trying to make this a great, fair, growing transparent marketplace, and if we can do that, the most people win, we think.
Ina Steiner: There's a great example of this with the spring seller release that was announced last week. The policy requiring tracking information for TRS sellers. It means that sellers of stamps and postcards and decals who put their items in first class envelopes, they're going to lose their top-rated seller status because they can't, there is no tracking information from the USPS with that situation. Buyers have weighed in and said they don't want to pay extra for tracking information. So as eBay moves towards trying to provide buyers with information, you have this kind of exception to the rule. What is eBay's approach when these kinds of issues come up?
Devin Wenig: We watch very carefully what's happening in the market. eBay doesn't exist in a vacuum. You have big competitors out there who are offering choices, and you have small competitors.
This is a very dynamic industry, and I've certainly learned that loud and clear in the last six months. This, the standard is evolving and moving in ecommerce. There's no doubt, we have extensive data that buyer expectations are rising. Again, I'm being general because I have to be general with 100 million buyers on the left and 25 million sellers on the right. It's impossible to say what will work for everyone.
But if I had to do a best fit, we know that returns and tracking and shipping are huge issues. And they're not just buyer issues, right? Because of this ecosystem. If we can advance our market, if we can have buyers believe that eBay is safe and goods are fair and fast and free and returns are available, that might be easy in the short run for some sellers but in the long run if buyers leave, it's not good for anyone.
So our approach is to continue to advance the marketplace, and we do think in the long run that's good for everybody. If people believe that eBay is as good as the standard on ecommerce exceptions, and you know things like free shipping are absolutely a buyer standard - they believe that is their right and entitlement - whoever created that standard, I won't comment on it, but we know that's the case.
And it's the same with returns. This is just part of buyer expectations now, which have been rising really quickly over the last few years. We need to continue to move our marketplace to that standard. That keeps buyers. It brings new buyers. Ultimately it's good for sellers.
Ina Steiner: I'm glad you brought up free shipping, because what I hear from sellers is that they would love to offer free shipping as an incentive, so, "If you buy a certain amount from me then I'll send it free shipping." If you comply with certain rules that I have set up, or if you're purchasing certain items from me it'll be free, but other items won't be.
And it really depends on the seller. Some sellers just can't afford to offer free shipping because of the types of items or the dimensions or the weight or what have you. When eBay says "we want sellers to offer free shipping," what about building in some sort of way sellers could make that an incentive, and I think that would benefit eBay too because it would increase the size of the shopping cart. When you look at free shipping, do you want all sellers to offer free shipping, or is eBay thinking of ways that they can actually make free shipping work to increase order sizes?
Devin Wenig: I think I understand what you're saying - let's take a half step back. My sense is that, you said "We want sellers to offer free shipping." I don't...sellers are free to offer free shipping or not. We haven't mandated free shipping. I would place a distinction between what you can do in the marketplace versus something that carries an eBay badge.
Just to put free shipping in the context of the issues you've raised, is that where there's an eBay badge, a special set of privileges, we just believe that has to be on the ecommerce standard. We believe it has to be on what buyers' expectation is. But there will be, out of our 25 million sellers, the overwhelming majority of them won't have the eBay badge and they'll happily sell in the eBay marketplace and they'll profitably make money.
We don't require free shipping or returns or tracking or anything else. It's just that, if you're going to carry a top-rated seller badge, we expect that you'll meet that market standard.
Now with regard to the question directly about shipping, we do want to help mediate shipping. We're doing more around that. You'll see us do more this year around trying to offer assistance to sellers to help them ship easier and track easier, so working on something to open up our global markets. We're working on some things to help get better information on shipping fees and costs and average delivery times.
We're not passively sitting back; we're actively trying to put our hands on the scale and help our sellers with shipping. But again I think our sellers are free to charge for shipping or not, but there's no doubt that there is buyer expectation, certainly or certain goods that shipping will be fast or will be free.
Ina Steiner: In terms of buyers who really ask for free shipping, usually they know that they might have to work for it a little bit. What I'm getting from your answer and I don't want to assume anything so I'll ask it again: Is eBay doing anything so that sellers can build incentives so that buyers are incentivized to order more items in order to qualify for free shipping? In other words, if they buy up to $25, they pay for the shipping; if they spend over $25, then they get free shipping. Right now I don't think there's a way for sellers to offer those incentives easily into their item description and proposition on eBay. Is that something that eBay is looking into at all?
Devin Wenig: I'm happy to look into that. I don't know what the issues are that are specifically around that. That's a very specific case you're raising and to be honest I'm not cited on it, but I'm happy to look at it.
Ultimately, I want our sellers to have flexibility and have choices, and if those choices meet the expectations of the sellers and they work for buyers, then I'm thrilled. Maybe there's a product issue or something; I can look into that.
But with regard to whether or not sellers should have the right to package, to offer incentives, even to price discriminate, I have no problem with that. Ultimately that's a seller's decision about how they run their business. My view is, as long as we can be fair and level and not tilt the scale in one direction or another, that's the way I want the marketplace to run.
Ina Steiner: Great. In terms of payment processing, I wanted to cover that as well. In Germany, eBay is processing payments in terms of sellers. Is that part of your vision for marketplaces worldwide?
Devin Wenig: Not necessarily. I think we'll do what we need to do in certain markets, again, to try to meet the market expectation. It's been interesting to see what the consumer expectations are in Germany, in the UK, in Korea, and in the United States, which is of course where we have our largest market. It's slightly different in those places.
What I care about is not necessarily driving every single thing common across the world, but as a platform business we keep the most important things common, but then we allow for a degree of local customization to bring health to those local marketplaces. In Germany we know trust ias a big issues. If you think trust is a big issue for the U.S. consumer, generally in the market, it is so even more for the German consumer.
Ina Steiner: Have you seen any changes as a result of offering that policy?
Devin Wenig: We haven't done it yet. We are just trialing it, we haven't launched it yet, so it's a little premature to declare that, but I think in our testing, we do believe that ultimately this is good for buyers and sellers.
Everything we do has to work for the marketplace. We've said publicly, our German marketplace has been growing very slowly, and one of the reasons for that is I think we can do better at the trust proposition. This is exactly why we're trialing payment intermediation.
So far the trial results are positive. We do think that buyers seem to like that. It gives them confidence that what they buy they will receive, and they won't be put out on funds, and that matters a lot as I said to the German consumer. If that data holds up, we think it gives us a chance to bring growth back to that marketplace, more consumers back to that marketplace, and ultimately that works for the seller community as well.
Ina Steiner: Where does Magento fit into your strategy for eBay marketplaces?
Devin Wenig: Let's step up one level from marketplaces to eBay Inc. eBay Inc. is an enabler of commerce, so what that means is, ecommerce, it's so interesting to see the pace of change in this industry.
It's funny, I spoke yesterday at an investors conference, and what I said is that technology has been an important background for retail and for commerce. But it feels to me like in the last 12 months it's become a huge rock in the pond.
Every seller, whether that's the hugest global brand driven chain, all the way down to the smallest seller, a consumer seller, a small business, now, this is the number one issue, and it's front and center.
And eBay Inc. is positioned along a continuum to provide those businesses the tools to deal with this technology revolution. Whether that's PayPal as a digital payment intermediation strategy, whether that's marketplaces to get access to global markets of 100 million people, or whether that's on commerce and Magento, which in essence is an extensible platform which allows retailers to build their own digital strategies.
So what Magento basically does, if I'm a retailer, and I don't have an ecommerce strategy, I'm not really online, this gives you the ability in a very cost effective way to do it. The way I think of Magento and all of X. commerce is, it's an open platform. It's a set of technology that allows you to build a digital strategy with a nice ecosystem of third party developers who are building on it, which again gives you the ability to dip into that intellectual capital, into all of that community building apps, and drive your business.
And that's part of eBay's strategy is to help merchants, not just by plugging them into eBay's marketplace. Because you know, as much as I'd like to think that eBay's marketplace will solve every problem for every merchant, that's not realistic. Most sellers will want multi-channel strategies. Most sellers will want their own website, and they'll want to leverage eBay. That's what we're trying to do.
Ina Steiner: As head of eBay marketplaces, you don't worry about the potential Magento has to cannibalize eBay sales?
Devin Wenig: No, first of all, obviously I'm an officer of eBay Inc., so I want to do the right thing for eBay as a company, but more realistically and practically, it's not like this trend we created. If we don't enable sellers to get online, somebody else will enable them to get online. It's not a trend that we can stop or start.
The technology commerce revolution is here, and our view is there's a big wave, and we want to help sellers and merchants surf it. I don't worry about it one bit. If we can do a great job for sellers through all their multi-channel strategies, it will be good for them and it will be good for eBay.
Ina Steiner: Any thoughts on how ProStores fits into this strategy?
Devin Wenig: Um, I just think all of, um, if you look at X.commerce, it has Magento, and we've put a number of acquisitions in there, and there are a number of business propositions. They're all doing the same thing: they're all helping sellers get online, build their strategies out, and they're all shades of gray, all parts of the same continuum. Some things will work for very small sellers all the way up to bigger merchants, and that's how we're trying to position ourselves.
Ina Steiner: I wanted to ask you about advertising. eBay has ratcheted up the monetization of the site through advertising. It's an approach that many media sites have adopted, which is your background. Will ad dollars become a significant source of revenue for eBay?
Devin Wenig: No, I don't think so. Remember as a media company, oftentimes that is your only time to monetize content. That is your core business, to create an audience and monetize it through advertising.
That's not eBay's core business. eBay is a transactional based marketplace. Advertising is a supplement, a small supplement. In terms of its overall impact on even marketplaces, it's very small.
What I care about is to come back to where we started, I care about the user experience more than anything. I would never allow the user experience, the buying experience, the browsing experience, to suffer in return for advertising dollars.
Ina Steiner: I know that people are concerned about the ads on Item pages distracting from those paid listings.
Devin Wenig: And we look at that balance all the time. I think there is a way to have advertising on the site without the buying experience suffering. We look at that very carefully; we measure that; we look at behavior in terms of both click stream and serving people, and there is never an exact answer. That pendulum swings, and we will always work to get the balance right.
But back to your question, we don't spend a ton of time obsessing about advertising. We want to drive the health of the marketplace. Advertising is a small supplement to what we do. We always look at it, and as I said, the customer experience will always trump advertising if there is a conflict in those two, and it's our job to make sure there isn't a conflict.
Ina Steiner: I know over the years eBay has allowed sellers to participate in certain advertising programs. Right now there is no kind of sellers advertising program available. Do you think eBay will ever revisit that?
Devin Wenig: It depends on how,...we've put a lot of time and effort into search, as you know, and for us, to me the issue is just what we don't want to have happen is, some advertising program in essence undoes the progress we've made in search by allowing people to buy their way into search rankings or otherwise. So the answer is maybe, but not if it harms the buyer experiences, which is sort of where we started.
Ina Steiner: I really appreciate your joining us. It's really interesting to get your thoughts on eBay marketplaces.
Devin Wenig: I wish you the best of luck and I hope we stay in touch.
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Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to firstname.lastname@example.org.
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