A Eulogy for eBay Express

If you follow eBay closely, you may have heard the news already. If not, I’m sure you’ll be reading more about the big eBay announcements over the next few days.

AuctionBytes has coverage, as does Business Week, but I actually think Randy Smythe has the best summary I’ve seen to date.

There are a huge number of changes, and I’m not going to cover them all. Instead, this post is dedicated to one of the smaller bullets in the announcement:

Closing eBay Express: The best features are now on eBay. We’re continuing to bring the best features of eBay Express into eBay.com including more selection in Fixed Price merchandise, improved buyer protection from PayPal, and easier, more intuitive ways for buyers to find your relevant listings. So we’re closing eBay Express and focusing our resources on improving and bringing buyers to eBay.

Since my name was so closely associated with this effort at eBay during my last two years at the company, I figured it was appropriate to post a few thoughts here for those who are either personally or professionally curious.

First off, there is no way to avoid the fact that I feel sad to see eBay Express close. When you build a team and put literally thousands of hours into something, you want to see it continue to live, grow, and flourish after you’re gone. But I’m not going to spend a lot of time on what might have been now.

Instead, I’d like to reflect on just a few key topics: why eBay launched eBay Express, what we got right, what we got wrong, and why eBay Express likely doesn’t fit with eBay’s current strategy.

Why eBay launched eBay Express. This is one is pretty simple, and was publicly discussed in several forums, but I rarely see it accurately reflected in regular press/analyst coverage. It all started in Q4 2004, which was a real wake-up call for eBay. It was the first quarter where the metrics made it clear that there were significant issues with the way buyer demand was scaling on eBay.com.

eBay Express was the culmination of three years of various forms of market and customer research that effectively argued a simple truth: as e-commerce continued to become more and more mainstream, an increasing number of buyers were looking for a different shopping experience. At the time, we called them “convenience-oriented buyers”. While buyers loved the value and selection of eBay, convenience-oriented buyers were looking for more convenience and trust in their shopping experience. They wanted good prices on fixed-price items from reputable sellers, with first-class convenience in checkout and customer service.

When we looked at the needs of both buyers and sellers to make this type of market successful, we found that they were radically different than the auction model eBay.com was based on. eBay Express was the culmination of one possible solution to that problem – a site that leveraged the tens of millions of high quality fixed price listings that eBay already had, while providing a brand-new shopping experience for buyers.

The key to this bet was that with literally zero additional work for sellers, we could boot-strap a brand new marketplace with millions of sellers and tens of millions of items from day one. Once the marketplace had traction with buyers, we would then be able to roll out new seller features and services more appropriate to a high-volume, fixed-price venue.

What we got right. Without getting into the weeds here, there were quite a few things eBay got right with eBay Express. Not all of them may be appreciated by those outside the company.

First and foremost, eBay Express represented a radical break with the way eBay designed and built products. We had volumes of research from over the years, and we literally went across every page, every flow, and asked the tough questions on why this couldn’t be simpler, easier, better for the buyer. The team had two fundamental principles:

  • Keep the site “seller agnostic”, ie, 100% backwards compatible with existing seller process. Selling on eBay Express should be so compatible, sellers shouldn’t even necessarily know that their items were selling on eBay Express.
  • Always ask, relentlessly, “What’s best for the buyer?”

With a strong, dedicated founding team, the effort drew many of the best and brightest from within eBay to assist with every area of the product and across technology, design, and product. At the time, most people at eBay worked on a large number of projects at once, with divided focus across many different features. With eBay Express, time was of the essence, so people had a chance to spend 100% of their time dedicated to the effort.

The end result was a huge leap forward in both technology, patents, user research, and design thinking for many product areas. A modern search classification engine. Relevance sorting. A full featured shopping cart. A completely rethought integration with PayPal. 24/7 Customer Service. No listing fees, with revenue coming purely from promotion and successful sales conversion. Even though the team did not win all of its feature fights to break with the old, the team asked the hard questions, and fought the hard fights.

Not as visible to end users, the groundwork was also laid for significant changes to the way eBay Express would integrate with other sites, both inside and outside of eBay. Half.com integration. Shopping.com integration. Dynamic CPC & CPA-based Featured Placement. API-based platforms to allow any e-commerce site to offer multi-vendor inventory to complete their offerings.

Most importantly to me, eBay Express was designed with extremely heavy involvement from our customers, both buyers and sellers, as well as development partners. In fact, it was reviewed so many times, that even at launch, I don’t think one “new” question came up that hadn’t been raised previously. That isn’t to say that every customer loved every decision made for the site, but it did mean that every concern, every suggestion was considered and incorporated into the design when possible.

What we got wrong. This could be a long section too. Like all 1.0 products, there were a lot of small things we missed. But there were a few big ones that seem so obvious in retrospect.

  1. Branding. It was a tough decision. If you don’t use the eBay brand, you lose any possibility of the positive affiliation and traffic that comes with a known consumer parent brand. But, if you use it, you are also stuck with the negative attributes. eBay means auctions to most people. We ended up going with eBay Express because in the end, it was eBay inventory and we expected traffic to flow from the eBay association. It didn’t, and it also didn’t generate any real unaided awareness for us.
  2. Traffic, traffic, traffic. One of the unanswered questions was how to drive sufficient traffic to the new site. We had initial stabs at this problem, but eBay was still in a phase where it believed in buying traffic. TV, Catalogs, Email, Paid Search. It doesn’t take an Internet genius to realize that buying traffic is horrendously expensive, and frankly, ineffective. Our biggest course correction post-launch was a crash course on how the rest of the e-commerce world looks at traffic generation. Figuring out how to drive traffic in volumes to the site, and build organic traffic in the long term became our 24×7 focus.
  3. Inventory and merchandising. It may be hard for most people to believe this, but eBay at the time was incredibly under-developed on many of the retail basics of merchandising, inventory selection, and promotion. Why? Well, because eBay.com isn’t actually a retailer of anything. We realized post-launch that we needed to develop that expertise, quickly, even to the point of understanding sourcing, distribution, and product selection. Having 10 million+ products is great, but it’s no good if you don’t have the right products at the right price.
  4. International. We designed and built the site, from the ground up, to meet the different needs of the US, UK, and Germany. In fact, I even spent time on concept versions for India, China, and a host of other countries. There were some fundamental disagreements about which model would be most effective, so we built a platform to handle them all. In retrospect, we should have done the US only, and only expanded internationally once we nailed the basics. The distraction, debate, and expense was counter-productive, and in the end, a mistake.
  5. Expectations. There was so much enthusiasm internally around the various aspects of the project, and it was impossible to contain expectations rationally. The reality is that building a consumer brand and a billion dollars in sales doesn’t happen overnight, and it isn’t cheap. Look at how long Amazon has been stretching to build it’s third party sales efforts. We believed we could cut that time in half, but rationally, that was still a minimum 5+ year effort. In the best of times, that kind of effort requires a company with long term focus and commitment. And as we all know now, 2006+ were not the best of times for eBay.

Why eBay Express likely doesn’t fit with eBay’s current strategy. If you’ve actually made it this far through the article, you probably already know the answer to this question.

At a high level, economics speak loudly here. eBay needs to focus on its core marketplace business, and for the most part that means that investing people, technology and dollars towards building new businesses has to take a back seat. You’ve seen other announcements from eBay about closing other businesses, and that stems from this simple truth.

More importantly, eBay has decided against the premise of eBay Express. Our entire reason for building a separate site was because we believed that the changes needed for buyers and sellers in a massive fixed-price marketplace were not compatible with the experience of the traditional eBay auction site. As I used to tell buyers and sellers, we built eBay Express so that we would not have to change the auction experience that millions of buyers and sellers loved on eBay.com.

eBay has now decided that it needs to fold the convenience and trust we identified into the core platform itself. So there is no need for a separate site to preserve the original.

How this new strategy will fair is good topic for debate, but for another time. With eBay’s new strategy, eBay Express will now live on as its feature design concepts and technology innovations become the basis for the new buyer experience on eBay. Of course, the team at eBay has made a large number of improvements and changes in the design concepts to adapt them for the needs of the core marketplace, both from a technical and user experience perspective. eBay Express also lives on as a relentless focus on building a great buyer experience, and a recognition that the needs and economics of high volume, fixed-price sellers are different.

In retrospect, I’m a little jealous of the progress Amazon has made with its FBA and API programs since then. These were all part of our long term thinking as well, so it’s nice to see the validation of their success, but it’s never as much fun to see someone else with that success. Maybe, just maybe, back in 2005 before Amazon had it’s run-up in stock price, eBay & Amazon could have merged, and the the eBay Express backend could have been used to power the Amazon marketplace. Easier said than done, of course.

For the 600+ people who had a hand in creating perhaps the greatest technology & product effort in eBay history, please do join the eBay Express Alumni group on LinkedIn. One of the great things about this industry is that we all get chances to take our lessons from each challenge, and then go and change the world again.

Go with peace, my friend.

Update (08/20/2008): Wow.  This post has been really popular.  Over 300 page views already.  Given the interest, I’m digging up some of my earlier posts on eBay Express:

Ask Not For Whom the IRS Bell Tolls, It Tolls for eBay…

… wow, not sure how I missed this.

Found this today on the eBay Ink blog.  Points to a WSJ piece from last week that explains how the new housing bill includes provisions that require payment providers to report accounts with over $10,000 in transactions to the IRS.  Hello, PayPal.  Hello, eBay sellers.

The new reporting requirement is similar to a proposal the Bush administration has put forward in its most recent budgets as a way to ensure that taxes owed are being collected. It also applies to intermediary banks that process card payments for restaurants and brick-and-mortar retailers. Congressional tax estimators predict the reporting change will help the IRS collect an additional $9.5 billion in taxes owed by online and traditional businesses over the next 10 years.

The payment processors will be required to file a 1099 form for each merchant to the IRS and to the merchant. They won’t have to file for merchants with less than $10,000 in gross sales and less than 200 transactions in a given year.

And they won’t start reporting until 2011, giving the banks and the merchants a couple years’ head start to make sure everything is in order.

It was likely inevitable, of course, that the government would find it necessary to insert monitoring hooks into payment services and online marketplaces.  And this new policy doesn’t take effect until 2011.  But I don’t think people really appreciate how much this might affect the economics of online selling and small businesses.

Look at the advice given to eBay sellers:

Report all income from online sales, even from casual or hobby selling. If you made a profit from goods sold on eBay — whether vintage KISS action figures or hand-knitted doggy sweaters — you owe income or capital gains taxes, and likely self-employment taxes, too. No taxes are owed, however, on used items that you sold for less than what you paid for them, essentially using the online service as a virtual garage sale.

If you mean to deduct expenses, act like a business. One of the most common mistakes eBay sellers make on their tax returns is to claim deductions to which they aren’t entitled. The tax code allows deductions for business expenses, but deductions are limited for individuals who sometimes make a little money on the side from hobbies.

One rule of thumb the IRS uses to determine whether an individual is engaged in a business is whether they made a profit in any two of the past five years. Another is if the person would still, say, frame landscape photographs, or carve garden gnomes, or buy and sell rare 45s, regardless of whether or not they made any money from the activity.

“If the answer is yes, you may be on the wrong side of an IRS argument that you are taking a hobby loss,” said Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants.

Keep your personal and business accounts separate. Make sure you have a PayPal business account separate from your personal one, an eBay business account that is separate from any casual buying and selling you do, and a separate business checking account.

These steps will not only make it easier for you to determine how much you owe, but may help protect your deductions by signaling to the IRS that you are serious about running a business. “Everything you can do to treat it like a business will help,” says Kristine McKinley of Beacon Financial Advisors, based in Independence, Mo. Ms. McKinley specializes in tax advice to eBay sellers.

Claim the home office deduction. While this deduction has fallen out of favor because of a popular belief that it triggers IRS audits, it is still a valuable deduction if you have a separate space in your home that you use exclusively for business purposes, according to Ms. McKinley. It’s true that you will owe more taxes when you sell the home on amounts that you have depreciated. But the deduction can still be a major benefit because it will reduce your income for the purposes of self-employment tax, she said.

If you don’t think issues and requirements like this don’t translate into overhead for small businesses, then I have a bridge to sell you.  More importantly, I don’t think people realize how issues like this can stifle the initial enthusiasm for selling that often predates any idea that you might be able to “make a living” selling online.

Very few people realize the economic magic that eBay enabled in the last decade, making “small business” activity available and affordable to millions of people who normally would not have thought to step out on their own.  It facilitated nationwide markets with low transaction costs for highly illiquid markets.

Because very few people realize this, it will most likely die a quiet death; unmourned by those who assume that the priority should be protecting the older, “real life” small businesses and their particular economic structures.  There is an argument to be had there, but only after some analysis has been done on the new economic systems and opportunities that have been created in the past decade.

My bet is that argument really isn’t happening, and that the inertia of the real world will overwhelm these new entrepreneurial opportunities.  These online retail businesses will retreat, like physical retail, back into the hands of a smaller number of larger entities who can handle the regulatory and economic challenges.

At eBay Live 2004, I remember a woman coming up to me after a talk I gave on Buying & Selling Lots on eBay.  She had been a paralegal, but had quit five years before to sell cosmetics on eBay.  Her business was not large by retail standards, but enough money for her to stay home with her children.  She told me her son had now placed into an advanced program at school, and she credited eBay for giving her the time to stay home and support him.  She said she hoped that he would go to great schools, and go on to work for a company like eBay someday.

It’s the kind of story that sticks with you.  And it makes me a little sad to see that economic opportunity disappearing.

Pssst… Wanna Buy a PowerMac G5?

For sale this week on eBay:

A PowerMac G5 2×2.5Ghz with w/2.5GB RAM

All tricked out, with original packaging materials.  Only one problem…

… it doesn’t boot.

See below for the listing text, and feel free to bid on eBay:

Apple PowerMac G5 Dual-2.5Ghz Liquid Cooled Workstation
2.5GB RAM – No Hard Drive – ATI Radeon 9600XT – Airport Extreme – Bluetooth – 16x SuperDrive

This listing is for a used, Apple PowerMac G5 with dual-2.5Ghz processors, liquid cooling, and top of the line hardware.  You can read the full specs of this machine here on Apple’s website.

Before you go any farther, please note that this machine does not boot, and is being sold for parts.  The story of how this happened is a bit depressing, but read on and I guarantee you are about to be part of the deal of the year.  As they say, my loss is your gain.

I’m a former software engineer for Apple Computer, and a fairly active computer user.  I tend to demand top of the line hardware for performance, but I also strive to take care of my machines.  In fact, you’ll see that this machine is in almost pristine condition, despite regular use for over three years.  I even save the original box, manuals, discs and materials.  I’ve upgraded the hardware over the years, adding more RAM and a faster SuperDrive (16x) over the years.

One day, as I was just finishing an install of the latest Mac OS X Update, I rebooted the machine and… it hung.  It hung hard.  It sounds the boot chime, gets to the grey mac screen with the rotating lines, and then freezes.  Hard.

I’m no stranger to crashes and fixing Macs, I immediately tried booting off DVD, and external drive – you name it.  No luck.  Same symptoms.  I zapped the PRAM, reset the SMU, same problem.

I took it to the local Apple Store, and they kept the machine for a full week diagnosing it.  The good news – the power supply is good.  The bad news, they narrowed the problem to either the motherboard or the CPU unit, two expensive parts.

Now, normally, I would have ordered a new motherboard & CPU unit on eBay, swapped it, fixed the machine, and sold it for over $1000.   I then would have sold the extra good part as well, leaving just one bad part.  The problem is, with a busy day job and two small kids at home, I just don’t have time to do this right now.

So my loss is your gain!  You can buy a top-of-the-line PowerMac G5 that doesn’t boot, and you have the choice of either fixing it yourself, or selling it off for parts.   My guess is that you could likely fix this machine, put in a new hard drive, and sell it for between $1000 and $1500 today on eBay.  You also likely could sell the parts alone for over $1000, as they are extremely expensive.

To get this auction moving, I’m starting the bidding at just $0.99.  I need the money to compensate for buying a new machine.  This auction includes the following (full specs here):

  • Apple PowerMac G5
  • Dual-2.5Ghz processors with liquid cooling
  • 2.5GB of DRAM (4-512MB DIMMs, 2-256MB DIMMs)
  • Original box, manuals & discs (Mac OS 10.3)
  • Airport Extreme Card (802.11b/g) and Bluetooth (with antennae)
  • ATI Radeon 9600 XT w/128MB DRAM
  • DVI & ADC Ports
  • 16x SuperDrive (only 3 months old!)
  • 3 full-length PCI-X Slots, 1 8x AGP slot
  • 10/100/1000BaseT Ethernet
  • 56K Modem (yes, hardware internal)
  • 2 Hard Drive Bays, with SATA cables (empty)
  • Firewire-400 and Firewire-800 (IEEE 1394) and 3 USB Ports
  • Audio ports
  • Original Mouse, extra cables (DVI -> VGA, USB Extension, Phone Cable, Power Cord)
  • Original box & styrofoam!

The only things I have taken out are the hard drive and the keyboard.  Everything else is included.

Please feel free to ask questions. I’ve attached pictures to help show the quality of the machine, case, full SKU label.

Please bid with confidence – I have over 800 positive feedback, and I am a former Apple employee *and* a former eBay employee.  I will take care of you and your purchase.

Shipping. Shipping is a flat $35 through USPS Parcel Post.
Payment. I accept payment through PayPal only.  Please note that I cannot ship the machine until PayPal releases funds, which can take 3-5 days if you pay with eCheck.
Return Policy. If you are unhappy with the purchase for any reason, I will accept returns within 7 days for a full refund.  I will refun 100% of your payment upon receipt of the machine back to me in the original condition sold.

Happy Birthday, eBay Express

Birthday Presents

eBay Express

I’ve continued to shy away from posts about eBay and eBay Express in the past year.  Somehow, it feels inappropriate to comment too deeply about my former company.  But tomorrow (April 24th) is a special day for eBay Express, and I thought it would be wrong not to acknowledge it.

Happy Birthday, eBay Express!

On April 24th, 2006, eBay Express officially launched it’s beta site to the world.  In actually, the site had been running internally as of March 20th, but we officially made the DNS entry available outside of eBay for it’s beta debut.  (Actually, we originally thought it could take up to 48 hours for the DNS to propogate… it turned out to take 5 minutes, which led the site to actually go live during the launch party on Friday, April 21st.)

It may not be obvious from the outside, but eBay Express was exciting for a number of reasons:

  • Mission. eBay Express had a real mission – to build a best-of-class, retail buyer experience with the value & selection that buyers love about eBay, but with significant improvements in convenience & trust.  This high-level goal led the founding team to craft several principles which guided every decision and led to an incredible passion across the team and the company.   Principles like, “Always ask what’s best for the buyer.” and the concept of making the platform “backwards compatible” with existing seller business process, were kept consistent across the site.
  • Innovation.  Never before had eBay committed so broadly to investment in new technology & systems designed around a holistic end-to-end business & experience.  In each and every area, leveraging the principles of the site, we re-examined the best technology eBay & Paypal had to offer, and in many cases invested heavily to break through a number of long-standing roadblocks to platform innovation.
  • Entrepreneurship. eBay Express was an important experiment for eBay, which has a long history of acquiring new businesses, but less experience in building them.  eBay Express was a significant test for the organization and for the business.

It’s two years later now.  Much of the technology that we developed during eBay Express has informed new designs for technology for the core eBay business.  Many of the principles of eBay Express have now also been transferred to the entire eBay markeplace.  In fact, if you read through the transcript of Lorrie Norrington’s speech today, a vast majority of it echoes strongly with the original vision.  Of course, it differs in one important way: one of the basic tennants of eBay Express was that we were building a different site so that we didn’t have to change what buyers & sellers love about eBay.com.

One of the founding team’s greatest fears with eBay Express was the long term ability of eBay to invest in building a new business in a very tough market.  Amazon spent almost an entire decade interating on their model for third-party fixed-price sales on Amazon.com.  Of course, it is very successful now, but it’s easy to forget the amount of capital and the number of missteps that Amazon endured in the process.  I continue to be extremely proud of the incredible sales growth & volume that the team generated in just their first year (and even into their second!).

When I worked at Apple in the 1990s, one of the lessons I learned was that it is very hard for a large business to invest in new markets when it’s core business is suffering.  It seems like ancient history, but when Steve returned, Apple focused first on stemming the bleeding in its core Mac market with the Think Different campaign and the iMac years before it debuted the iPod & iTunes sensation.  To this day, Apple’s success is a pairing of its new businesses and its old.

eBay’s priority now has to be it’s core eBay marketplace business, and that’s why you see tell-tale signs of cutting back on investment in ancillary businesses.

There were plenty of lessons learned from eBay Express – things done right, things done wrong.  But that’s not really the purpose of this post.  The purpose of this post is to say “Happy Birthday” to the site while I still can, and give a brief shout out to the original founding team who got pulled off every other “top” priority at the time:

Special nod to MD, LR, AH, SM, RV, CF, RV & ES for their support, and to the entire Express team.  eBay Express will always be special to me.  And of course, there is the ever growing list of eBay Express alumni on LinkedIn.  🙂

P.S. Just in case she’s wondering, yes, Rebecca, 4/24 is first and foremost your birthday in my heart.  Happy Birthday, Rebecca!

Amazon Marketplace + DVDs + PayPal Shipping = Easy Selling

So, this blog post is about an experiment I did selling on Amazon this weekend.  Of course, it’s not the experiment I wanted to run, but that’s part of the story.

You see, I wanted to run an experiment using Amazon’s new For-Sale By Amazon and EasySell products, which Randy Smythe has been blogging about.  I’m interested in them, because, in theory, we often discussed on the eBay Express team what directions we would have to move in to support selling of fixed-price, new-in-season products in the future, and Amazon FBA looks an awful lot like one of those ideas.

In any case, I can’t tell you about Amazon FBA yet because a bug in Amazon’s seller on-ramp flow is preventing me from upgrading my account.  I contacted Amazon’s customer service by email, and got an incredibly poor reply.  Fortunately, Amazon now has click-to-call support, and that worked beautifully.  The Amazon customer service rep was very apologetic, and knew about the issue immediately.  It’s not fixed, but I’m confident they are working on.

(In case you are wondering, the bug is that when you try to upgrade to Amazon Marketplace 2.0 BETA, you get a login screen where someone else’s email address is pre-populated and not-editable – which pretty much locks you out.)

In any case, I can say one thing:

Amazon Marketplace + DVDs + PayPal Shipping is a pretty darn good system for selling DVDs.

Here is why:

  • Amazon listing process has the best elements of Half.com.  Type a UPC and condition comment, then pick a price based on Amazon current stats, and you are done.
  • Amazon has ample DVD buyer demand.  Something eBay has, but Half.com doesn’t.  (Something we tried to rectify by adding Half.com inventory to eBay Express).  So if you price at the low price, you sell in 24 hours, even for titles that aren’t particularly hot.
  • PayPal shipping makes fulfillment a breeze.  Just enter the sale data, and get a printed postage label ready to go, with tracking info!  All for a great price.

In case you are wondering, it is in-fact possible to print postage with PayPal on non-PayPal transactions.

It’s the same way eBay let’s you print postage for Half.com transactions – the base PayPal Postage form, available as long as you have a merchant account with PayPal.   I do all my shipping, both e-commerce & personal, with it.  In fact, I have a second tray in my laser printer, filled with peel-and-stick label paper, just so I can easily print and stick postage on my packages.  It offers Media Mail, First Class, Priority Mail, and Express options…

PayPal has a lot of features that they built specifically to support the eBay marketplace.  Historically, PayPal did not see these as a third-party opportunity – after all, what other marketplaces were there?  But 2008 is not 2003, and PayPal should expand their efforts around their marketplace products.  A lot of sites are adding transactional third party inventory, and PayPal has already solved many of the problems related to these transactions.

I would love a link from Amazon to just print postage with PayPal.  I would love to have the form pre-populated, and to be able to tap into the money from the sale to do it.

I’m not saying that Amazon would go for this, since they want to own fulfillment.  But the right integration between Amazon & PayPal could address those issues by linking Amazon’s fulfillment ecosystem to PayPal for supporting third party shipments.

In any case, I still use eBay for almost all my selling, and Half.com for textbooks.  But for DVDs, I haven’t been getting great prices lately on my auctions, and the listing process is just too long right now for individual items for something that’s only going to get $5-$10.

Now, if eBay finally starts showing Half.com DVD inventory on eBay.com, I’ll be back in a flash. 🙂

You Still Have a Mail Slot in Building 6…

Got this snapshot in an iPhone email from a friend of mine at eBay.  I don’t know why, but it brought a smile to my face.

ebay-mailbox.jpg

It has been just over 10 months since I left eBay for LinkedIn.  Really loving Linkedin – for the people, the product, the opportunity, and just to be a part of building a great, new company.

But it’s fun to see these little sign posts of the past that say, “I was there”.

Of course, there are a few others lying around.  Like this one.

Karl Wiley Joins Motif as President of US Operations

Caught this on my Google News Alert today from PRLog:

Motif, Inc., a leading global knowledge-based BPO services provider announced today that Karl Wiley has joined the company as President of U.S. operations. Mr. Wiley will be responsible for all of Motif’s U.S. based operations, including corporate strategy, sales & marketing, key account management and M&A. He will be focused on driving accelerated growth for Motif by attracting new clients, expanding into additional industries and service lines, and growing activity from Motif’s current client base.

Mr. Wiley joins Motif after more than six years as an executive with eBay. Most recently he served as the Chief Operating Officer of MicroPlace, eBay’s start-up initiative providing a retail investment marketplace in the Microfinance industry. Prior to that, he was the general manager of eBay’s $5+ billion Technology and Media categories, and led eBay’s B2B wholesale initiative. In these roles, Mr. Wiley was responsible for strategy, consumer marketing, product management and customer service, and managed eBay’s relationship with many major branded retailers and manufacturers.

Karl was one of the great eBay Category Managers.  I first worked with Karl when he was part of the Business & Industrial team, which turned out to be an incredible pool of leadership talent.  At the time, Karl was the primary driver & business sponsor for product support for wholesale lots at eBay. For me, it was one of the first projects where I felt like I was truly working on features that were driven by the eBay selling community itself, and not from just internal motivation.  I learned a lot from my efforts with the B&I team, and even after the category management for wholesale lots was disbanded, I still ended up leading the course on Buying & Selling in Lots at eBay Live in 2004 & 2005.  Packed rooms, both times.

Congratulations, Karl, and best of luck with your new venture.

One minor quip, of course, is that it’s time to update your LinkedIn profile

Milestone: eBay Feedback Score @ 800

Almost a small enough item to just Twitter.

Hit 800 feedback on eBay today.  Of course, I’ve accrued more than 800 positive feedback over the years, but the score only reflects positive feedback from unique users.

Most of my feedback is from selling, not buying, although I’ve done a fair bit of that too.  703 feedback items as a seller, 166 as a buyer, last count.

I was selling much more earlier last year, as I ramped up the sale of the new US Presidential dollar coins.  However, lately, I’ve been too busy to sell much more than my typical odds and ends, so the ascent to 1000 has been delayed.

I remember joining eBay in 2003 with a feedback rating of just 43, all selling.  As a product manager, I believe heavily in using and living your product as much as possible, which is why I scaled my eBay selling over the years, experimenting with different models that I learned from the eBay community and from old-hands within eBay.

Originally, my goal was that purple star at 500 – a rare commodity to be sure.  But once you hit 500, is 1000 really that far a way?

Here is what my eBay feedback page looks like now:

My first positive feedback on eBay is from December 15, 1998, and it’s from Mr. Eric Cheng.  This is back when you could receive feedback from anyone, not just people you had sold to.

“I’ve bought from Adam before — he’s honest, and everything went smoothly.” –echeng

The more things change, the more things stay the same.

eBay Rolls out Best Match

eBay has started rolling out Best Match in earnest on the core eBay.com site, and boy is it getting noticed.

First, here is the original post on eBay that announced the test of Best Match as the default sort in five major categories, dated January 16th. Just a few days ago, really.

I caught this blog post over the weekend from Randy Smythe, and realized that I had a few things to say about the launch of this test.

The first of which is congratulations to the eBay Finding team. The launch of this test represents an inevitable step towards the future of a search engine on the eBay.com site optimized for the best possible buyer experience. For all the back-seat driving and Monday morning quarterbacking that they receive, very few people understand the complexity of the problems that the eBay Finding team has to tackle.

The second thing I have to say here is get ready to drink from the firehose. This move is bigger than anything I can think of in the history of the eBay buyer experience, and it’s going to test eBay and the eBay community in new ways. There is no playbook for this type of change, there is no simple pattern match. There is going to be a lot of churn, a lot to learn, and lot of quick action & analysis needed to make this successful.

It might not seem obvious to outsiders how big a change this really is. But believe me, it’s huge. There is a $60 Billion economy that is all predicated on the way that hundreds of millions of buyers search through and find billions of items for sale on eBay. That’s roughly the Gross Domestic Product of the country of Vietnam.

To explain why this change is so dramatic, let me explain a bit of the background behind this change. Let’s start with how eBay search works today.

eBay search has a history of being extremely literal and transparent. Until changes were made in the last few years, eBay search would literally do only the following:

  1. Look at the keywords entered by the buyer
  2. Look at the title keywords of every listing on the site
  3. Return only the listings that had 100% of the keywords entered by the buyer
  4. Sort the listings by “time remaining”

When I worked on the eBay Finding team, it was always surprising to me how many active eBay users I would talk to, both buyers and sellers, who assumed there was “something more” to the way eBay returned items. In fact, I would sometimes ask potential product managers, interviewing at eBay, to describe how they thought the eBay search engine worked. I would get the correct answer less than 10% of the time.

This system had some clear and obvious benefits. It’s simplicity meant that it was transparent to sellers and buyers, at least, in theory. Sellers would, in theory, experiment over time to find the right keywords to use in their listings. Buyers would also experiment. Over time, assuming that eBay was a fairly efficient market, sellers would provide listings with keywords to match the keywords that buyers would use. Supply would meet demand.

Sorting by time remaining had some natural benefits too. For an auction that ending soon, the differences between zero bids, one bid, and more than one bid are stark. One bid guarantees a sale, two bids puts you on a fast path to an efficient price. There was inherent benefit for sellers and for eBay to see auctions that were ending soon get exposure to a disproportionate number of buyers.

So, if it’s not broken, don’t fix it, right? Well, the good news is, the search system was good enough to grow eBay to the giant it is today. The bad news is that it had some fairly obvious shortcomings that became unsustainable over time.

There were a few obvious ones that almost anyone who used eBay ran into. Inexperienced sellers, just casually listing, had no idea what keywords to put in their titles. Pitty the poor seller, trying to sell their $1500 PowerMac G5, if they instead called it a “PowerMac G-5”. Inexperienced buyers also had no idea that searching for “Apple Macintosh” would bring back radically different results than “Apple Mac”. eBay didn’t know how to match keywords to categories. A search for “DVDs” wouldn’t just take the buyer to the DVD category – it would literally return all listings that had “DVDs” in the title. eBay didn’t even understand plurals! “DVD” would bring back very different results than “DVDs”.

eBay started addressing these issues in earnest about five years ago. They slowly rolled out improvements like transliteration (plurals), as well as some experiments with “generic keywords” like DVDs.

Why slowly? Well, the problem is, tinkering with a multi-billion dollar economy is, to lack a better word, scary. It’s scary because you have millions of sellers who have already adapted to the old search engine. You have billions of dollars of purchasing at stake, which means a 1% blip in finding efficiency can mean the difference of tens of millions of dollars in revenue for the company. And last, but not least, it’s scary because it’s hard to objectively find a measure of success that everyone can agree on.

How do you measure the success of search? When a buyer does more searches, is that a good thing or a bad thing? If a buyer views more items, does that mean you’ve done a good job showing them relevant items, or a bad job because they have to click through a lot of items to find one they want?

This gets even more complicated when you take into account the financial relationship between eBay and its sellers. eBay gets paid basically two ways: fees paid up-front when listing the item, and fees paid when an item sells. As a result, sellers pay eBay an up-front amount assuming a certain amount of visibility for their item. eBay does not guarantee impressions, clicks, or sales, but over time, sellers get used to the rough economics of their activities on eBay. They learn which keywords, which categories, which items get them enough clicks and sales to make their business works. That’s how they decide when and where to pay eBay it’s fees.

In any case, those changes merely affected the results that were returned by eBay’s search engine when the buyer performed a search (Step 3). It didn’t affect the sort order, which determines which items are on the first page of a buyer’s search results.

Unfortunately, changing the sort order was just a matter of time. “Time Remaining” is a very good sort for auction items, but it is almost meaningless for fixed price items. Over time, as eBay grew, more and more items on eBay were fixed price. In fact, if you include eBay Stores, eBay has had vastly more fixed price items than auction items for some time. What’s more, all the Step 3 changes mentioned above added more items to the search results, making it even less likely that you’d get good results on your first page.

If you are familiar with internet search, then you know sorting your items to provide the best possible results on the first page is incredibly important. And a meaningless sort for a majority of your listings is just not going to be sustainable without sacrificing a significant amount of your buyer experience and sales.

So, this rollout of Best Match is a big deal. Best Match does not change the results that are returned by eBay for a given keyword, but it does change what appears on that first page. It is a new way to sort items. And that, by itself, is huge.

Not surprisingly, sellers have noticed. Randy’s blog post quotes a seller who has purportedly seen a 40% drop in sales. It’s certainly possible. Best Match will alter the amount of time that listings will have at the top of results. Some sellers might see no change in their activity. Most will see small changes. But there will be a few who see huge swings from their existing metrics.

Most interestingly, it is practically impossible to predict what the outcome will be for any particular seller. To be sure, eBay will guide Best Match to increase overall sales for the site. That means, more items will receive bids and be bought. The economic pie will be bigger for the eBay selling community. But there is no known way to effectively simulate what the outcome will be for any particular seller with their existing listings.

This is a fundamental challenge for eBay. eBay has stated they will focus on improving the buyer experience. eBay will also continue to manage the marketplace to a greater number of sales. However, that won’t change the fact that some sellers will do better under this new system, and others will do worse.

Don’t be surprised to see sellers start to dissect public patent applications for clues on how eBay Best Match works. This is their lifeblood, as much as Google PageRank is the lifeblood for content websites. There is huge economic value in “cracking the code”, and one thing is for sure, the eBay community is full of entrepreneurs who will try to harvest some of that value. Like Google PageRank, Best Match is designed to be opaque. As a result, eBay will make no guarantees about how it functions, and they will actively change it over time to improve it and to prevent abuse.

Also, don’t be surprised when sellers are, in the aggregate, upset about this change. This adds uncertainty to their business, and even though every other site out there is based on relevance sort, they hold eBay to a different standard, and for good reason.

The version of Best Match that eBay is rolling out now has gone through more testing than any new piece of functionality that eBay has ever released. They have gone through numerous versions of the technology, numerous experiments with different factors and systems, and elaborate economic experiments to ensure that it results in higher sales for the marketplace and happier eBay buyers.

And now the real test begins. The eBay Finding team will need to listen, learn & react more in 2008 than they ever have before. It will not be easy, for anyone. But then again, the most important changes never are.

Update (1/24/2008): It looks like this post was picked up in the internal Weekly Gazette inside of eBay. I am, of course, flattered to be highlighted. Of course, I am not an unbiased source, since it was on eBay Express that we first discovered the need to move away from “ending soonest” and “lowest price” sorts, and launched the very first, crude version of Best Match.

Amazon Beat eBay in Holiday Traffic

This is a surprising piece from the New York Times:

For years, eBay ruled the e-commerce roost. Each holiday season, more visitors spent more time and looked at more pages on eBay.com than on any of its rivals, including Amazon.com. It made sense; eBay is a wide open forum for every kind of seller and item, while Amazon has traditionally pushed a selection of products through its network of physical warehouses.

But all that is now slowly changing. Amazon has opened its site to independent sellers, while eBay’s auction model is running into problems with fee-fatigued sellers and buyers wary of fraud and counterfeit items.

Now the latest audience figures from Nielsen Online confirm that the e-commerce traffic crown has changed heads. For the month of December, for the first time, more Americans clicked over to Amazon.com (59,624,000) than eBay (59,374,000).

Despite the slim margin between the two companies, eBay’s visitor count is particularly alarming. According to the Nielsen data, the number of visitors to eBay.com dropped 10 percent from December 2006 to December 2007.

The full article is here.

Now, in all fairness, Amazon’s rise in traffic isn’t all good news for them.  After all, the GMV (gross merchandise volume) on eBay is much higher than on Amazon, which means Amazon is far less efficient at converting traffic into dollars of sales.  In addition, given Amazon’s overall profit margins, it also looks like Amazon takes more traffic to generate a dollar of profits than eBay, by quite a bit.

Still, this is a really significant milestone for Amazon, and a significant warning sign for eBay.  Amazon’s ability to grow into categories through it’s seller marketplace is now hitting it’s stride, and it’s pretty clear that as e-commerce matures, it will be fixed-price e-commerce, and not auctions, that dominate the market.

eBay has a tremendous amount of fixed price capability at its disposal, but the fixed price market is about trust and convenience, not just about selection and value.   Merchandising and product promotion is also crucial, and these are areas eBay will need to invest in heavily.

Here’s hoping 2008 is a year where eBay hits some new milestones of its own.

Wow. Goodbye Spoons, Hello Hooters!

Sorry, but this was too good not to post.

Across the street from eBay’s “South Park” (the original 8 buildings that have eBay HQ in San Jose) there is a Spoons restaurant.  It’s right across Bascom avenue from Building 0, “Toys”.  Many an eBay employee has jaywalked across Bascom (very dangerous) to get to an after-hours Spoons run.

Well, thanks to Nate Etter, I found this pointer on Valleywag.  The Spoons is being replaced by Hooters.

Now the question is, will they still honor the 10% discount they gave to eBay employees with a badge?  Lunch special?  Spoon tacos were one of the cultural favorites at the eBay South campus.

eBay Top Sellers & Detailed Seller Ratings (aka Feedback 2.0)

I’ve been pretty good about not commenting too much on eBay-related topics in the press over the past year.

Since I left eBay in May 2007, I’ve tried to be careful here on this blog with regards to eBay.  It’s hard sometimes, when you read a column online that is wildly off base, to not want to jump in and “set the record straight”.  Of course, when you work for the company, you tend not to do this because it’s hard to separate a personal rebuttal from an official company response.  Ironically, when you leave the company, you also really aren’t free to respond, because it now isn’t your place to fight those battles.

I read an article this week, on Auctionbytes, about the new Detailed Seller Ratings and the relatively low ranking of the Top 25 eBay Sellers, and I felt I had to comment.

In case you are unfamilar, eBay rolled out new “Detailed Seller Rankings” to their feedback page last year, in one of the biggest enhancements to the feedback system since it’s debut.  These detailed ratings allow buyers to rate sellers on four additional dimensions, from 1-5:

  • Item as described
  • Communication
  • Shipping time
  • Shipping & Handling charges

Seems like an obvious improvement to most buyers.  However, no part of the eBay ecosystem is simple to modify, and there has been considerable angst and discussion among top sellers about this new improvement.

I’m not going to get into the debate and issues that sellers have raised with the new system.   I’m not an expert on the system, and I haven’t read all the arguments in detail.  The fact is, the original feedback system did not gather any structured data about the end-to-end service offered by eBay sellers, and this system is definitely a first step in attempting to gather that data.  For a company that wants to focus on a great buyer experience, this is absolutely necessary.

Instead, I want to comment on the article, largely because of its conclusion:

A study of eBay’s top sellers reveals they rank poorly in terms of the detailed ratings left anonymously by their customers, with most falling in the bottom 25 percent of all sellers for such ratings.

… It’s troublesome to see that eBay’s top sellers perform poorly with DSRs, and AuctionBytes believes the data indicates eBay needs to reevaluate the new rating system and reconsider its decision to use DSRs to punish and disadvantage sellers. It should also provide much more information about the results – on an ongoing basis – so sellers have a better understanding of how the new system is affecting purchasing decisions and sales.

(BTW The article looks at the Top 500 sellers, according to Nortica.)

Fundamentally, I agree with this line:

It’s troublesome to see that eBay’s top sellers perform poorly with DSRs

But I disagree with the resulting conclusion:

AuctionBytes believes the data indicates eBay needs to reevaluate the new rating system.

In response to this, let me ask the following question:

What if the top sellers on eBay, as measured by feedback score and/or sales volume, actually are not offering the best customer experience to buyers?

Too often at eBay, I would see these two things confused together.  There was an assumption that the top sellers, always measured by GMV (gross merchandise volume) or Feedback score got that way by being the best for the end customer, the buyers.  However, in order to believe this, you have to believe that you can only build GMV and Feedback with a great customer experience.  What if that’s not true?

What if the DSRs are telling us that eBay’s “top sellers” are actually offering buyers a below average customer experience?

Well, I’m a just an eBay seller now myself.  I don’t do huge volume, but I have almost 800 feedback, and I flirt constantly with being a bronze PowerSeller.  I have an eBay Store, and I use eBay’s Selling Manager.

My DSRs to date are (based on 81 sales with ratings):

  • Item as described: 4.9
  • Communication: 4.9
  • Shipping time: 4.9
  • Shipping and handling charges: 4.7

So it looks like I’m in the Top 25% of buyer experience on these ratings (well, above median for S&H).

What if these DSR’s are saying that buyers have a better experience buying from me than when they buy from one of the eBay Top 500 sellers?

Historic Change at eBay: Semi-Persistent BIN (Buy It Now) Goes Live

A small announcement from eBay last week.  Most people probably didn’t notice it, given the news around Q3 earnings, Skype, and 100 other stories that people were tracking.

Here is the AuctionBytes article:

eBay Moves to Longer Lasting BIN Auctions

Actually, eBay began testing this back in July, but just recently expanded it to quite a few more categories.  Here is the original note from Sohil Gilani, the Product Manager who has spent a lot of time over the past two years studying and implementing this change:

Hi everyone, I’m Sohil Gilani with our Buyer Experience team. Over the years, we’ve routinely been asked why the Buy It Now option disappears from a listing when the first bid is placed. Our reason has been concern that it would create a confusing experience for a buyer, who could place a bid on an item, but then have someone Buy It Now (BIN) out from under them before the end of the auction. That said, we’ve done some extensive research that suggests keeping the BIN option available on a listing longer will increase the chance that a buyer wins the item and that it will close at a higher price for the seller. As a result, we’re looking at ways to change how BIN works that balance both buyer and seller needs.

In case it isn’t clear, let me explain the problem:

Ever since eBay launched the ability to add a “Buy It Now” button to an auction, it has disappeared as soon as anyone placed a bid.  So, for example, if you were auctioning a cell phone with a starting bid of $0.99 and a Buy-It-Now price of $99.99, a single bid of $1.00 would make the Buy-It-Now price disappear.

The idea is that a buyer has the chance to “snap up” the item for a fixed price set by the seller, or place a bid to try to win it at auction.  Usually, the motivation to place a bid is the belief that the bidder will get it for a lower price.

The problem is, once the Buy It Now button disappears, every future potential buyer is deprived of two things:

  1. The ability to immediately buy the item, without waiting for the auction to end
  2. The ability to see what the seller thought a fair “fixed price” was for the item

Many people, for a very long time, have asked why eBay makes the BIN button disappear after one bid.   Usually, they focus on issue (1).  After all, the need to wait for an auction to end is a major disincentive for a potential buyer.  eBay is likely losing quite a few buyers to the fact that useful BIN buttons are disappearing.  Sellers are also losing the ability to close a sale quickly, for a fair price that they have assigned.  Even worse, sellers actually pay eBay a fee to place that BIN button there in the first place.

The problem lies with issue (2).  As a former employee, I can’t reveal the actual number, but you would be shocked at how many auctions actually close at a price higher  than the original Buy It Now price.  This happens for a couple reasons.  First, sellers may not be very efficient at setting their own fixed prices – auctions are likely much better at fairly pricing the item.  Second, the original bidder who “knocks out” the BIN button is not likely the one who bids above that price.  Every future bidder has now lost that information, and as a result, is free to bid whatever they think is fair.  Apparently, in a large minority of cases, bidders end up with a price that is higher than the seller expected.

So, eBay has a dilemma:

  • If they keep the disappearing BIN button, they are likely losing sales AND velocity (the time it takes to close a sale).  They are also encouraging sellers to use a higher starting price (to avoid losing the BIN quickly), use reserve prices (to keep the BIN), or to not use BIN at all (which is a fee-generating feature) – all bad things that hurt the likelihood of a sale.
  • If they make the BIN sticky, aka “Persistent BIN”, they might actually decapitate the final selling price on millions of auctions.  That would hurt both eBay sellers and eBay itself, since both make money based on the final sales price.

The solution that eBay is testing finally allows eBay to gain some empirical data in real situations on how to best control the way the BIN price disappears.

  • Do you let the BIN button stay until a fixed dollar amount?
  • Do you let the BIN button stay until a fixed percentage of the final price?
  • Are the results different in different categories?  For different starting prices?

Well, all I can tell you is that, as an eBay seller, I was tickled pink to see this on my latest cell phone auction this week:

As you can see, I start all my auctions with a starting price of $0.99.  Normally, I lose that BIN button very quickly.  But in this case, the BIN button stayed, even after a bid of $0.99.  In fact, the button stayed until the bidding reached $50.00, giving buyers ample opportunity to buy my phone for fixed price.  The difference?  Literally 6 days of BIN button goodness were added, since my auction didn’t clear that price until the 7th day.

(Wow, that sounds like a biblical reference.  It was evening and it was morning, and the BIN button worked for 6 days and 6 nights, but on the 7th day, the BIN button rested…”)

Anyway, I’m glad to see eBay continuing to push its understanding of one of its most popular formats.  And a big congratulations to Sohil for seeing this effort through to live-to-site.  Count me as a big fan.

BTW If you are wondering why I bother buying the BIN feature on my auctions, even though it disappears so quickly, it’s a fair question.  In my selling experience, adding the BIN button not only increases the chances of my auction selling quickly, I also tend to set it for a higher-than-average price based on my research.  The way I see it, a buyer who wants it right now tends to be willing to pay a bit more for the privilege.  If not, they can always bid.

New eBay Guide: The Native American $1 Dollar Coin Program

Yes, despite my lack of support for the initative, I have documented what information I have available about the new 2009 $1 dollar coin program in this eBay Guide:

The Native American $1 Dollar Coin Program

It now joins my other four eBay Guides:

Interestingly, these four guides have accrued enough positive  votes to make me one of the “Top 1000” reviewers on eBay.  In fact, I’m currently ranked #275 as of the writing of this post.

If I get to the Top 100, I get a different badge by my user ID, and you know, I’m all about eBay badges.  So if you have an eBay account, vote “yes” on my guides to recommend them.  If you don’t like them, well, don’t vote “no”.  That hurts my ranking.