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The Continuing Evolution of eBay

02 March 2010

Todd Alexander, Author, eBay Head of Strategy & Customer insight discusses the ongoing evolution of eBay...

eBay’s Evolution
2009 was a water-shed year for eBay.com.au. Not only did the online marketplace celebrate 10 years in Australia, it also introduced significant changes to its pricing and search structure. In essence, what eBay wanted to achieve was an improved selling environment for businesses with brand new products they wanted to sell at a fixed price. It was the first time eBay made a conscious effort to differentiate between business and consumer sellers on the site and was a starting point in a new growth strategy for eBay.com.au. Now, as eBay positions itself as an important online channel for Australian etailers other changes are helping Aussie businesses find more customers online.

2009 Price Changes
Up until September 2009, eBay sellers across the board were charged the same fees to list and sell their items. It did not matter whether you were an individual selling a second hand item or a business selling tens of thousands of branded, new in-season fashion items – the fee per item remained the same.

From September, however, businesses were incentivised to increase their depth of range on eBay.com.au by listing up to 100,000 identical items for a flat up-front fee as low as a 10c (regardless of the quantity available). In reducing up-front fees eBay shifted the balance of its fees to when an item is sold or the final value fee. The re-balancing of fees lowers the up-front costs of selling and means that both eBay and the seller share in the success when an item sells.

The new price structure is available to sellers operating a store on eBay and is based on a tiered, subscription based model. In summary the tiered packages are aimed at delivering lower fees to sellers with larger stores and sales. (Click for eBay’s pricing structure)
The changes were also aimed at making things easier for buyers. By encouraging sellers to consolidate identical items into one listing buyers are less likely to scan through multiple identical listings in order to find different products. The response from sellers was overwhelming with at least a 20x increase in items available on the site.

2009 Search Changes
To accompany the pricing incentive, eBay also updated its default search algorithm. Previously defined as “time ending soonest” (an equation that naturally favoured auctions), the new search is known as Best Match. Best Match shows buyers the most relevant and popular products from sellers with the best service history. Furthermore, Best Match enforces a moderated mix between auction and fixed price to ensure that buyers can more easily find items sold in their favourite way. (Fixed price sales growth has been significantly outstripping auction growth in recent years).

2010 Plans
Recently, eBay announced very similar pricing changes to the US site eBay.com – a move that signifies the global trend to incentivising businesses to continue selling on the site, and encouraging them to list their entire inventory.

In 2010, eBay will be introducing other changes to eBay.com.au to further enhance the business selling experience. First among these is AdCommerce, a bid-based advertising system similar to Google, where businesses can bid on relevant search terms to have their listings and eBay Stores promoted in search result advertising. AdCommerce revolutionises the way eBay sellers expand their exposure on the site and unlike set price promotional features, is a success based cost-per-click model.

Shortly a new team of Australian-based Business Development Managers will be tasked with identifying the business needs of eBay.com.au sellers and providing expert advice to assist with sales growth and expansion strategies. This is a very exciting development for Australia which we believe will help grow sellers to meet their true potential.

Summary
The absence of large Australian retailers having a meaningful ecommerce presence is not slowing Australian consumers’ appetite to shop online. Australian etailers had a strong year in 2009. We also saw that with more than 7 million Australians vistiting eBay in December 2009 (Nielsen NetRatings//Netview). According to IBISWorld the strength in the sector is set to continue in 2010 with Australian online sales predicted to grow 2.7% and reach $20 billion making the sector one of Australia’s top 10 growth industries.

The strong Australian dollar has also opened the Australian market to offshore etailers based in the US and UK who are targeting Australian shoppers with free postage and other assorted promotions. These trends underpin the importance of eBay making changes that help keep eBay.com.au sellers at the forefront of the exciting and evolving ecommerce industry.

	Todd Alexander has worked for eBay for eight years. During that time he has been responsible for category management, seller development and onsite search. He is currently eBay's Head of Strategy and Customer insight. Todd is the author of the best selling book "How to Use eBay / How to Use PayPal" and the current release "How to Make Money on eBay"

Written by: Todd Alexander

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