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eBay presented its strategy for its three main operating units to analysts and investors at last week's Analyst Day. Christopher Payne's presentation on eBay Marketplaces was of particular interest to sellers, where he explained the changes eBay has implemented and how that has impacted the business.

Payne, Senior Vice President of eBay North America and a former VP at Amazon.com, said, "We are a different and better eBay." To create the new eBay, it used many different levers, and Payne said that during the presentation he would focus on three of those levers that were critical in driving eBay's turnaround:

1) Buyer Experience
2) Retail Standards
3) Selection

Buyer Experience
"We didn't just fix things and make them prettier," Payne said, and he explained that eBay used conversion to measure success.

Key to improving the buyer experience were: improved search, cleaned navigation, easier and faster checkout that reduced friction and made the process seamless for our PayPal users. "We also made the site more attractive and relevant through improved merchandising especially in key categories like fashion."

Conversion on eBay.com was up 13 percent over the last 2 years, according to Payne.

Retail Standards
Payne said eBay worked on customer expectation, including: trusted name, simpler shopping experience, fast and free shipping and options for returns. "We've made great strides in improving against these customer expectations."

"In 2009 we launched a watershed program known as eBay Buyer Protection, which we believe influences our customers' perceptions of eBay." The program has paid off, Payne said, with buyers buying more and buying higher priced items.

"We also improved the experience through our Top Rated Seller program. This group of sellers represent the best of the best. They deliver the best experiences to our shared buyers. This program recognizes them and rewards them for their efforts. Today they drive a significant portion of the GMV in North America.

"Over the past 3 years, we've raised the standards for this group so that they have to continue to deliver on those ever evolving and improving standards. For example, we made a change last year to require ship-tracking, returns and fast handling time - we made those mandatory.

"The impact was significant on our marketplace. We saw increases in the number of listings that offer free shipping; that offer 2-day shipping; and that provide returns in a window of 14 days or more."

Payne continued, "This is great news for sellers who met this standard - is that they were actually rewarded. Top Rated Sellers' growth in 2012 not only outpaced non-Top Rated Sellers, but outpaced the ecommerce market overall.

"And as you can see, we attacked the challenge of building trust from both the buyer and the seller point of view. And this is really unique to eBay at this scale. Essentially we have figured out how to build trust in a marketplace-wide ecosystem. And we believe this is an incredible competitive advantage for us. And we plan to continue to build on this and scale it out globally."

Selection: B2C
"The third lever we pulled was selection," Payne said. First, he outlined the selection added by B2C merchants (business-to-consumer), which had synergy with its GSI Commerce unit. "We have a powerful set of capabilities for these large merchants."

Payne displayed some of the B2C merchants on a slide, including: Argos, Target, Media-Saturn, Best Buy, Toys R Us, Timberland, House of Fraser, Overstock.com, Aeropostale.

"Our goals is to become the partner of choice for large retailers and brands globally - and I'm not just talking about marketplaces (but rather, all of eBay Inc. assets) that make an unbeatable combination for large merchants. Nearly 20 percent of the largest ecommerce companies in the United States sell on eBay."

Payne pointed to Target, saying they recently opened up a store on eBay because of its strong marketing and customer-acquisition capabilities.

He spoke about tailored shopping experiences - "shopping for fashion is not the same, say, as shopping for gold bullion. Which is not the same as shopping for golf clubs. Which is not the same as shopping for a Christmas present for yourself, a Ferrari."

eBay was far more successful in the 2012 Christmas holiday shopping period than in previous years, and Payne attributed eBay's success to its daily deals, email, merchandising, flash sales and other promotions, "which changed that trajectory for the first time" and actually gained eBay share "during the most promotional period of the year. This is what being relevant to large merchants looks like."

Selection: C2C
Payne then explained that eBay was going after consumer sellers (C2C) to increase selection. "This is our founding business, and we plan to continue to invest and grow this space. We already have millions of buyers around the world who are potential sellers and this group represents our biggest opportunity."

eBay's internal research shows that buyers who sell buy more - and their customer value increases as they start to sell, he said. "And let's not forget the unique inventory they bring in to the eBay ecosystem. So our mission is to turn eBay buyers into eBay sellers."

He said one way eBay is doing this is through its new C2C mobile selling app. "We've increased first-time selling by 67 percent," he said.

Payne said that eBay's B2C and C2C initiatives mean there's more inventory on eBay than ever, doubled to 400 million items in 2012 from 200 million in 2010. "At the same time, we drove up conversion significantly."

In what was likely a reference to Amazon, which continues to grow out its distribution network around the globe, Payne said, "No warehouses with no limits on the amount of inventory we can carry - you can imagine the opportunity that we have of taking millions and millions more products - not only to the U.S. market but around the world.

"We have many levers at our disposal and have developed a strong execution muscle. I am confident in our ability to flex that muscle in the coming years to delight our buyers, and sellers, and shareholders around the globe."

Comment on the EcommerceBytes Blog.

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About the author:

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 ina@ecommercebytes.com.

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