Jan
29
eBay’s Smart Search: A Peek into the Future of Best Match
Filed Under Best Match, Industry News & Analysis | 1 Comment
eBay recently acquired the internet start-up Positronic and brought aboard the firm’s two founders, Christopher Payne and Dane Glasgow as Vice President of Search and Vice President of Engineering respectively. This move provides some indication that eBay’s recent and significant changes to their search and sort algorithms are but the tip of the iceberg. eBay is obviously committed to expending additional resources and energy to search in the future.
Both Payne and Glasgow were executives involved with the production and fielding of Microsoft’s Live search engine prior to leaving a couple of years ago to found Positronic. According to Wikipedia:
A positronic brain is a fictional technological device, originally conceived by science fiction writer Isaac Asimov. Its role is to serve as a central computer for a robot, and, in some unspecified way, provide it with a form of consciousness recognizable to humans.
This although it is not entirely clear what Positronic was specifically working to create, the firm’s name indicates their purpose was the development of artificial intelligence and “working in the areas of data mining, machine learning, and predictive models, all applied to search.”
Indeed, previously the Positronic web site had the following statement displayed on their home page (It now has a statement indicating the firm has be acquired by eBay):
Are you inspired by Isaac Asimov’s vision of thinking machines? Ever pondered how and when the break-through will come to make it possible?
Wow! That’s heady stuff! eBay’s management has obviously been “inspired by Isaac Asimov’s vision of thinking machines.” According to the corporate blog, “eBay has acquired Positronic to help with efforts at leveraging machine learning to provide a more predictive and compelling customer experience.”
Here’s some personal predictions on the future of eBay search & sort…
Prediction #1
eBay will monitor, track and store users browsing and shopping activity on the site in order to provide search results sorted in a manner relevant to the individual based on that person’s past actions.
Here’s a hypothetical example. Accessories compatible for a Dell XPS M1130 laptop computer will be listed at the top of the search results when I conduct a search using the query “laptop battery.” This is because the site will remember that I purchased that particular model on eBay a few months ago.
Or perhaps the smart search and sort algorithm will note that I have a penchant for the original Star Wars comics series published by Marvel vice those published more recently by Dark Horse comics. The algorithm will know this because I click on listings for Marvel Star Wars comics and ignore those from Dark Horse. So, in future searches, the algorithm will determine that Marvel comics are relevant to me (or anybody using my User ID) and sort them at the top of the search results accordingly.
Something like this is already happening on eBay. On the main page, the site displays a collage of listings it considers similar to one’s you’ve viewed recently.
This, of course, will raise all kinds of privacy concerns and will be difficult for eBay to implement without causing a ruckus.
Prediction # 2
Completing the Item Specifics form will become required when listing an item for sale. This is currently optional.
Item Specifics are the details sellers have the opportunity to provide when they list their product for sale on eBay. For example, a listing in the Book category might provide the seller the ability to enter details such as hard cover or paperback; new or used; fiction or non-fiction; year published; etc. The Item Specifics function varies by category and may duplicate information the seller has included in the listing’s description. This data allows eBay’s software to know specific information about the item in a format the site can use to help potential bidders find a listing.
Currently all eBay has to determine the relevance of a product associated with a listing are the 55 characters in the title and the details included in the item’s description. Since there is no standard format for details included in the description, eBay can’t effectively use that information to ascertain the details associated with a product.
But, then again - Positronic was working on data mining, so I could be dead wrong here. Therefore my revised prediction is Item Specifics will be required, then abused by sellers (much like meta keyword tags were in the early days of search engine optimization). Item Specifics will then fall out of favor, to be replaced by the data mining techniques introduced by the Positronic folks.
What are your predictions for the future of Best Match and eBay’s Smart Search?
Jan
22
eBay Needs To Stick With It’s Core Competency: Auctions
Filed Under Industry News & Analysis | 1 Comment
In yesterday’s quarterly earnings announcement, eBay revealed that the company experienced its first-ever quarterly revenue decline (16%). This after John Donohoe, the CEO, decided when he took over last year to basically abandon the firm’s core competency – online auctions – and compete directly with Amazon in the marketplace of fixed-price consumer commodity products. eBay blamed “a weakness in consumer spending and strength in the U.S. dollar, which reduces the value of overseas sales,” but it seems that Amazon (which announces earnings next week) was unaffected. In December, Amazon reported its most successful Christmas ever, selling 6.3 million products during the holiday shopping period.
eBay needs to sit down an think deeply about the company’s core competency. According to Wikipedia:
Core competency is something that a firm can do well and that meets the following three conditions:
A core competency can take various forms, including technical/subject matter know how, a reliable process, and/or close relationships with customers and suppliers.
The core competency that led to eBay’s success was the online auction marketplace model. Acquisition of PayPal fundamentally supported that model. Branching out into and an eventual focus on the fixed-priced marketplace in the name of continued growth has caused eBay to stray from their core competency – with dire consequences. (Who knows where Skype fits in?)
It’s time for eBay to get back to its roots. Re-focus on the auction format. Make selling fun again. Sellers are actively looking for an alternative to you eBay – something that reminds them of how you used to be. Don’t be afraid of transforming yourself into that alternative for us. Remember Coke Classic?
Oct
1
There’s been a buzz in the blogosphere regarding the eBay listings falling out of the natural search results lately. Scot Wingo speculates it’s because eBay has changed their site in a manner that it makes it difficult for the search engines to crawl them. Some folks even suspect that Google is kicking eBay while they are struggling through their “disruptive innovation” period.
Here’s another theory. Perhaps Google is putting the smackdown on eBay for keyword stuffing some of their pages?
Pass the tinfoil please…
Jul
31
eBay: Long Tail Marketplace or Commodity Exchange? Part 1
Filed Under Industry News & Analysis | Leave a Comment
eBay is in a transition period. The auction sites early success was that of one of the world’s first “Long Tail” markets. eBay’s corporate vision seems to think that greener pastures lie in the realm of what is basically a commodities exchange marketplace.
What’s the difference?
A Long Tail market describes a niche strategy of business in which the market offers a large quantity of unique items in relatively small numbers. Chris Anderson coined the phrase, and published an influential book on the subject entitled, The Long Tail: Why the Future of Business is Selling Less of More.
This Long Tail concept in a nut shell is that there is money to be made in selling obscure goods to niche markets. The graph below provides a pictorial representation of the Long Tail concept. The vertical axis represents the popularity or mass market appeal for an item. The horizontal axis represents a particular product. For example’s sake, let’s call them DVD’s. The “Head,” the part of the graph that is shaded green, represents the popular, mainstream movies. This is where a significant portion of the market is concentrated - but not all of it.
Traditional markets typically are constrained to the Head (green area) because of physics:
- How many products can the merchant stock in a limited amount of space?
- How many customers in the local area are willing to pay for those products?
The niche strategy of business seeks to break these constraints by selling a large number of unique items.
The Long Tail
The yellow part of the graph represents the Long Tail. These are the movies that not everybody is interested in, but there are niches of people who would like to own or rent those particular titles. Your neighborhood Blockbuster is going to devote their limited shelf-space to the more popular titles in the green portion while, in aggregate, Netflix rents more videos from the Long Tail portion of the graph than the green portion.
The factors that keep most business models in the green section of the graph above deal with search, storage, and distribution. I’ll discuss these specific topics in greater detail in a future post, so let it suffice to say for now that the costs involved with marketing to small niches, storing the goods until they are sold, and distribution were so prohibitive for most entrepreneurs that most didn’t consider it a viable opportunity before the internet existed in its present form.
eBay’s early success has been in providing a marketplace for the Long Tail. The company provided a central location and a search mechanism for consumers interested Long Tail products to buy them, and a venue for Long Tail merchants to sell to this market.
The Consumer Commodity Exchange
Now eBay is heading away from their roots and focusing on becoming a venue for products that have a mass-market appeal. Even while more and more of the internet is becoming aware of the value of the Long Tail market (what Chris Anderson describes as “selling less of more”), eBay is focused on becoming what is essentially a consumers commodity exchange.
Economists define a commodity as something of value, of uniform quality, available in large quantities by different producers. Do a search for iPod or WebKinz on eBay and you’ll soon understand that these are basically a commodity.
The price of a commodity is universal and fluctuates based on supply and demand. There’s little profit for sellers of commodities unless they control some aspect of the supply or can successfully predict fluctuations in demand. Therefore, the sellers who will be able to compete successfully on the new eBay are not necessarily those who were able to compete successfully on the old eBay.
Why is eBay moving from the Long Tail market to the consumer commodities market?
- More consistency over who sells in their market and what’s selling. (Does this open them up to more piracy and counterfeit risk?)
- They think that’s what the consumer wants. (Didn’t Coke make the same mistake 25 years ago?)
- The think they will make more revenue. (After all, Amazon is growing.)
It’s worthwhile to remember that it’s the commodity brokers that make the most money in the commodites markets. They make a commission whether the market is going up or going down. The commodities traders (the new eBay sellers) are open to constant risk when they play the market - and are usually encouraged by the brokers.
Are you ready to play the market on the new eBay?