Meg Whitman last week announced plans to step down as CEO of eBay Inc., the online auction that went from wobbly startup to multibillion-dollar household name in her 10-year tenure. But the incoming CEO already has big plans to revive the company's core auction and fixed-price e-commerce businesses.
John Donahue, who has been running eBay's main e-commerce businesses three years ago, plans to shift eBay's emphasis from auctions to fixed priced listing, which promises to make the experience of buying on eBay more like sites such as Amazon.com.
"Auctions will always be the core of the core of eBay, it's what makes eBay unique," Mr. Donahoe told The New York Times. But he noted that fixed priced sales now account for 40 percent of eBay's marketplace revenue. “We are following our users. They like convenience so what we are simply doing is putting a more explicit focus on that."
Other changes will include a new fee structure that will see cheaper upfront listing fees but more expensive final sale fees, paid when an item is sold. Changes in its pricing formula will cause earnings to fall about 12 percent this year.
Some analysts feel eBay's struggles reflect growing competition from Amazon.com along with what one analyst calls "buyer fatigue" following years of revenue leaps.
"Whitman wasn't as innovative as her counterparts at Amazon and elsewhere...They definitely need a bit of a change of direction," Aaron Kessler, an analyst at Piper Jaffray, told CNET News. "The biggest challenge is buyer activity. There's been buyer fatigue in the last year or so, with fewer people coming to the site and coming less often."
Tim Boyd, an analyst at American Technology Research, told CIO Today that Ms. Whitman stood against letting sellers list auctions for free like some of eBay's competition. But eBay is expected to make this transition under Mr. Donahoe's watch, a huge change of a historical practice.
"Donahoe has a reputation as a doer and a fixer, and he'll be making some changes that needed to be made a long time ago. eBay is playing catch-up," Mr. Boyd said. "At the end of the day, eBay needs to become more like Amazon in terms of only requiring sellers to pay for performance. That's basically where eBay is going."
One critical measure of Mr. Donahoe's success will be how the typically vocal members of the eBay community handle the coming changes. eBay observers said the community is likely, at least, to embrace new leadership.
"If you look at Meg Whitman's tenure through the appropriate lens, it was an incredible success," Scott Devitt, a managing director at Stifel, Nicolaus & Co. told The New York Times. "But as the business matured, there have been significant requests for change on the site and the constituents have not been satisfied. Getting a fresh face and a different perspective will be viewed positively I think."
Discussion Questions: What do you think needs to be done for eBay to regain momentum? Do you think more emphasis on fixed pricing vs. auctions is a good move? What will history say of Meg Whitman's legacy at eBay?