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?
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One Response to “eBay Needs To Stick With It’s Core Competency: Auctions”
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Auction format has been dead for over 10 years. It doesn’t generate the income. When the web was a place of wonder and amazement (it was fun and new to people), auction was thrilling. But the thrill is gone. The excitement of the auction has been replaced by the convenience of online shopping. What’s causing eBay to die is that they are not moving fast enough to fixed price with all the conveniences of a fixed priced shopping. Where’s my shopping cart? Where’s my direct credit card checkout? Honestly, I’m sick of complaining about eBay. I’ve resigned myself to just selling and going with the flow. I lost hope for eBay a long time ago… they don’t listen.