Interview With eBay's John Donahoe, Possible Next CEO

The FT interviews John Donahoe, eBay’s president of marketplaces, who is finally addressing an issue that eBay has ignored for a decade: its buyer experience. Just as important, the FT suggests that the former Bain consultant will be Meg Whitman’s eventual successor.  We believe it’s time for a change at the top of eBay, so we regard it as good news that observers have begun to talk succession plans.

Key Points, Annotated:

“A year ago, we had 14 per cent of global e-commerce, we’re the largest e-commerce provider, and our home page still looks like a flea market,” he says. “The world around us had changed. In particular our buyers’ experience hadn’t kept up.”

Thank goodness someone at the company noticed. Fixing this problem will likely involve additional investment (read: margin pressure). This investment, however, should increase the company’s long term value proposition.

Mr Donahoe has been on a mission to bring Ebay up to date, and he claims more changes for the site in the past 12 months than the previous four to five years combined… The changes to come in 2008 could prove more significant, and show Ebay grappling with some of the new realities of its market. Ebay is looking at moving away from its traditional initial listing fees and instead taking a bigger commission on a sale.

The FT doesn’t mention this, but we believe the listing fee change is being driven by seller complaints.  Competitors such as Amazon are offering lower up-front fees in exchange for higher final-value fees. eBay must make this change to compete.

Will that risk a repeat of the sort of [fee change] disruption that occurred in 2005? The earlier debacle, Mr Donahoe suggests, reflected a management failure: “We rolled out this change globally with no testing.” This time, thorough testing is being carried out in advance.


The second part of the overhaul will address one of Ebay’s fundamental challenges: how to put only the most relevant products in front of buyers, and make sure they are from the most reliable sellers.

Also smart, but will likely annoy small sellers who don’t have extensive reputations and will therefore get screwed in search results.

Some Ebay buyers have already complained about changes this year, which they say have penalised them unfairly. Mr Donahoe is betting, though, that finding ways to bring more buyers back is the most fundamental issue that the company needs to address.

Agreed. And a big change from a decade of eBay corporate culture, which has focused on sellers.

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