How eBay Became Relevant Again

When a website goes into tailspin, common wisdom dictates that there's no way it can make a comeback. But eBay has done just that, transforming its dismal financial state into successes resembling its glory days. How the hell did it do it?

Back in 2004, eBay shares hit a peak of $US58. It was an internet sensation, which revolutionised online retail. But by 2007, decline had set in: growth slowed and sellers began to grumble that the site was increasingly expensive and less supportive. By early 2009, its stock had sunk over 80 per cent to barely $US10.

But something changed. In mid-July, eBay announced that its profit had doubled and its revenue increased by 23 per cent. Last week, eBay stock hit a six-year high. So what happened at eBay that suddenly changed its fortunes? The New York Times offers some insight:

Excitement about eBay's prospects has little to do with its traditional auction business, or even its core e-commerce operations, although its marketplace division posted solid results and had its best quarter since 2006, the company said. Most of its growth came from mobile retailing and its PayPal online payments division, a business it acquired in 2002 for what now looks like a bargain $US1.5 billion.

As consumers embrace shopping on their smartphones, "mobile continues to be a game-changer," Mr. Donahoe said. He noted that 90 million users had downloaded eBay's mobile app and that 600,000 customers made their first mobile purchase during the most recent quarter. "A woman's handbag is purchased on eBay mobile every 30 seconds," he said. "Mobile is revolutionizing how people shop and pay."

Speaking to the Times, current eBay CEO John Donahoe explains that smartphones have blurred the line between e-commerce and offline retail. "Four years ago, you had to be in front of a laptop or desktop to shop online. Now you can do it seven days, 24 hours. We're going to have to drop the ‘e' from e-commerce."

And he's right. Somehow, eBay has held on to enough of a reputation to ensure its mobile apps perform well, and its used that to great advtange. During its slump, you might have expected Amazon to take it down entirely, but eBay has instead shifted its focus, embraced mobile, and succeeded. Its bid for success seems to have paid off. [New York Times]

Image: brianc/Flickr


Comments

    I don't know about anyone else, but being able to shop on a mobile for me is no bonus. I generally do a lot of research prior to purchasing anything and that is a major pain on a phone.

    I suppose people that buy on the spur of the moment would use the mobile app.

    The only reason I use ebay for buying is because of Paypal security, both with credit card security and protection against dodgy sellers.

    I have never found a cheaper or more effective way of selling than with ebay.

      I also do a lot of research, but when looking for not so common items it can be a great bonus to be able to check if any have come up on eBay throughout the day, and snatch it up when they do.

      Has little to do with 'shopping' while mobile for me, but a lot more to do with sniping something I already know I want.

      You are not their target market. A woman doesn't need to do a lot of research on a handbag. It is a case of load the app and find the one that matches the shoes she wants to wear. Done.

    I research the prodcuts then go to the mobile app to search for what i've found. It's simply a quick and easy way to buy things at a cheaper price.

    Yeah they are posting higher revenues as they have devised a way to rip of sellers twice in one transaction. I sold an iPhone 4S on ebay for $800 and was forced to offer paypal, owned by ebay. The fee for selling was $50 and then paypal charged me $20 just to use their service, which I was forced to do. That's $70 on fees alone for one $800 product, disgusting!. I have now stopped selling on ebay.

    I use it regularly because you can get items that are double the price here from Hong Kong or Singapore etc. I stopped trying to sell stuff however because that is just a ripoff, the only people who make a profit on eBay nowadays are businesses. eBay actively discourages personal seller these days.

      Nah, Ebay doesn't discourage personal selling at all. It's very
      simple, and user friendly. Me mum even sells on Ebay, what are you
      on about?!

    there is nothing on ebay that i can't get elsewhere for the exact same price. it has lost its usefulness for me. it is more like a shopping comparison site these days, there are very few personal sellers

    Wow, a good example of how share prices are totally out of touch with the true value of working companies.
    "Struggling"? HAHAHAHA!

      Amen to that! I'm still getting over the Headline, as ebay is
      extremely relevent - especially for the collecting scenes (ie
      videogames, retro etc.)

    Ebay fee structure is pure rip-off. I will never sell anything on
    fleabay again. Between fleabay and paypal's fees why would anyone
    use it?

      Actually, basic selling fees are free now on ebay - you only pay a
      little bit more for bells and whistles! More info;
      http://pages2.ebay.com.au/Hub/May_2012_seller_changes

        Not really. While item listings are generally free unless you do high volume, it's the commision eBay charges which stings - 8% to eBay and 2% or so to Paypal

    I whinged a couple of days ago about lack of competition for
    Paypal, Low and behold the facts come marching in. I wish I had the
    money to set up a rival as the profits would be amazing.

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