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EcommerceBytes-NewsFlash, Number 2993 - February 04, 2013 - ISSN 1539-5065    3 of 5

eBay CEO Donahoe Sees Big Changes in Next Three Years

By Julia Wilkinson
February 04, 2013

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eBay CEO John Donahoe said he predicts more change in how consumers shop and pay in the next three years than we've seen in the last 10 to 20 in an interview with The Wall Street Journal's Deputy Editor-in-Chief Rebecca Blumenstein on Jan. 30 as part of the Journal's Executive Breakfast Series. "We're on the cusp of what is one of the most exciting and transformative periods in two enormous industries in which we participate: retail and payments," said Donahoe.

Donahoe noted it was analogous to how people now consume media in a fundamentally different way since the advent of the iPad. "I now get the majority of my media through my iPad. I want my media when I want it, how I want it, when I want it. It's now on my terms." The same thing is about to happen in retail, he said. "And in this case, a piece of technology is having a transformative effect" - in particular, "the smartphone is blurring if not obliterating the line between online and offline," he said.

"Three years ago I'd have said eBay competes in the ecommerce market, a $400 billion market, and ecommerce is 5% of offline retail, and it's going to double or triple...but consumers have grabbed hold, and now that line between retail and ecommerce is obliterated, so we just call it commerce now," he said.

eBay Now and Disruption from Acquisitions
In over half of all retail transactions in US last year, said Donahoe, the consumer accessed the web at some point. He used the example of shoes, saying a consumer may make a decision to buy them online have them shipped home tomorrow; or choose to try them on, making sure "they're available in my local Nordstrom"; or they may buy them and use eBay Now, eBay's new service that promises delivery within an hour.

Donahoe used eBay Now as an example of how eBay likes the founders of the companies it acquires to stay on and help innovate. Blumenstein noted eBay had acquired more than 40 companies, and that it was an "interesting way of taking talent on, as most companies would clean house." In the consumer Internet there is a need for "disruptive innovation," said Donahoe; where "someone sees the world differently." He said he found acquisitions "a great way" to bring that in. "We've made 20 acquisitions roughly in last two years," he said, and 18 of them were small, but "with them often comes founders." The screening criteria is, "Does the founder want to stay and innovative its scale inside eBay?" he explained.

It was Jack Abraham, the young founder of eBay's acquisition Milo, who was put in charge of eBay Local and came up with the eBay Now concept, said Donahoe. "He builds it in three months; we launch in San Francisco, and people love it," he said.

Editor's note: Fortune Magazine reported on Jan. 28 that Abraham was leaving eBay, though retaining an advisory role on areas like shopping innovation.

From Mostly Used to Mostly New
Blumenstein said she thought most people still had an image of eBay as a seller of used collectibles and antiques, and asked how eBay was trying to change that. Donahoe said five years ago, eBay was 70% auctions, 30% fixed price, and "probably half new items and half used items." Today eBay has 70% fixed price and 30% auctions, and "that's on its way to 80/20," he said. "And consumers are driving that, not us." He added that the eBay of today has a money-back guarantee, and buyer protection, and is "growing very attractively": 19% in the fourth quarter in the US.

The iPhone is driving some of the growth of new, fixed-price goods; "eBay is on the top ten on the iPhone Deck" (a sidebar menu where people can access their favorite apps), and "for many, many people, and that's where all the action is," said Donahoe.

PayPal Here...and at the Deli
Donahoe also talked about PayPal and its presence in retail establishments with "PayPal Here," which was giving retailers more data about its customers and the ability to "have a relationship with" the customer, for example. Blumenstein asked about privacy concerns with things like "checking in" to a deli restaurant with the local feature on PayPal's mobile app, but Donahoe said with PayPal, "your financial information never leaves that encrypted vault in the cloud," and that with eBay your personal and purchasing information is never shared with anyone else. At the same time, he said, "Privacy is very important issue. I think at some point in next two years there's going to be a trigger point where we're going to have a national dialogue about what's acceptable and not acceptable."

Thoughts on Amazon.com
When asked about competition with Amazon, Donahoe said there was room for multiple winners in commerce, and Amazon is "fundamentally a retailer, whereas we're a technology platform that's an online marketplace and partner. What we do is partner with sellers: small, and some of the largest in the world, and we're helping them compete, and we will not compete with them," he said.

Selling on eBay a Cinch with Mobile
The voice of the seller may have been best represented at the event during the question section when someone who identified themselves as an executive with Leventhal and Co. said she'd "love to hear more about the individual sellers and what you're doing for them." She said she'd been a buyer and a seller and found the process cumbersome in selling, but said she hadn't sold on eBay in two years.

"Please, try today!" answered Donahoe. He then touted eBay's mobile selling app: "we're getting two million listings a week off mobile devices. So you have something you want to sell, you enter two fields, take a pic and boom, you're done."

Blumenstein couldn't let Donahoe go without asking about his view of the economy and the outcome of the election, given as both he and the Republican presidential candidate Mitt Romney were both veterans of management consulting firm Bain and Company.

Donahoe replied that his wife is an ambassador for President Obama, to the human rights council. "People ask, "who did you select?" I supported the president for one and one simple reason, which is that I like to sleep inside," he quipped.

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About the author:

Julia Wilkinson is the author of "The eBay Price Guide" (No Starch Press, 2006) and "eBay Top 100 Simplified Tips & Tricks" (Wiley, 2004-6). Her free "Yard Salers" newsletter is at available at YardSalers.net where you will also find her latest ebook, Flip It Again.

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