eBay’s CEO: Retailers finally are responding to the commerce revolution

April 9, 2013 04:19 PM

Two or three years ago, eBay Inc. CEO John Donahoe said, the big retailers he met with were scared.

“Oh my god, are we being disrupted? Is that big bad company in Seattle going to Wal-Mart us?” Donahoe said, in one of several references to No. 1 web retailer Inc. today at a gathering of 1,500 technology developers, retailers and others at the annual Imagine conference of Magento, the e-commerce technology company owned by eBay.

What’s changed, Donahoe said, is that retailers are adapting to the way consumers shop today, moving easily from smartphones, tablets and personal computers to stores and back again. Retailers, he said, are “embracing new experiences with their consumers, integrating their mobile experience with their store experience. This is a very exciting period in retail.”

While Donahoe did not give specific store-based retailers, he said some merchants are experimenting with screens in store windows that let consumers shop at night when the store is closed. They are also testing other ways to use digital screens in stores to engage customers. He told Internet Retailer later that eBay will work this year with retail chain Kate Spade New York—a client of eBay subsidiary GSI Commerce—to experiment with touchscreens in one or two stores that will let customers finds items not available in the store they're in.

In a sign of eBay positioning itself to work closely with retail chains—many of them increasingly fearful of eBay rival Amazon—Donahoe emphasized that, despite eBay’s online roots, he doesn’t believe bricks-and-mortar stores will disappear. “A lot of people really like shopping,” Donahoe said in an interview. “It’s entertainment, a social experience. I don’t believe in the demise of the store. There may be segments that go to stores less and less and less. But there are other shoppers who love going to stores.”

He added that eBay’s acquisition of GSI Commerce, whose clients are mainly retail chains that sell online, was a sign of eBay’s commitment to retailers that sell via stores as well as online.  “We partly bought that business to clearly communicate to the retail world that we are committed to, and desirous of, partnering with them,” he said. “We’ve since made a lot of other acquisitions to fill in the toolkit for doing that." EBay made use of some of those mobile acquisitions last fall when it worked with two big retail chains—Macy’s Inc. and Best Buy Co. Inc.—last fall on mobile apps that customized offers for shoppers in those retailers’ stores.

Donahoe said the revolutionary change in retailing focuses on four battlegrounds: mobile, local shopping, global opportunities and retailers’ use of data.

EBay itself has seen a big impact from mobile commerce, as $13 billion of its $70 billion in global sales last year came from mobile devices, an amount which Donahoe says will increase to $20 billion this year. What’s more, Donahoe said, consumers who shop eBay across multiple screens—for example, starting on a PC and completing a purchase on a phone or tablet—represent 21% of customers but 45% of eBay purchasers. “Consumers engaged on multiple screens are buying twice as much,” he said. “They’re twice as valuable.”

He also noted that eBay has bought 20 technology companies in the past few years to build out its e-commerce capabilities in areas such as mobile commerce, social media and data analysis. Those include Milo, which shows consumers products available in local stores; RedLaser, a mobile price-comparison app; and, a mobile app that lets consumers scan a credit card with the camera in a smartphone, tablet or computer.

As an example of its local initiatives, Donahoe pointed to a test in certain parts of California where consumers can use a mobile app to order smoothies from chain Jamba Juice, pay with PayPal and pick up their drinks at the time they set without waiting in line.

In terms of global opportunities, Donahoe reiterated points he made last month in a presentation to investors that emphasized that the number of Internet users will grow from 2 billion to 4 billion in the next three years, with 90% of the new users coming from the four BRIC countries—Brazil, Russia, India and China—and emerging markets. Already, Donahoe said, 20% of eBay’s business is from a consumer in one country buying on an eBay site in another.

Turning to data, Donahoe explained how the new design introduced last year lets consumers customize how the home page looks to show products in categories they’re interested in. As new products are added to eBay’s 400 million listings at any time, Donahoe said the page is refreshed with items the consumer might like. He said customers who use a customized home page buy more than those who start by entering search terms on, though he did not provide details.

Throughout the presentation, Donahoe and other Magento executives emphasized their commitment to help retailer clients succeed, not compete with them. Although they did not mention Amazon, the implication was clear. “We will never compete with you. Not everyone can say that,” Donahoe said at one point, drawing applause from the audience.

Donahoe also acknowledged that eBay needed revitalization when he took over five years ago from longtime CEO Meg Whitman.

“Five years ago eBay had lost some its innovative mojo,” he said. “Part of that was a function of success. We’ve worked hard to reinject innovation, to have that kind of agility, flexibility and paranoia you have to have to continuously innovate.”




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