The Auctiva blog had an interesting juxtaposition of articles this week regarding eBay buyers, the much-hallowed “Buyer Experience” and use of PayPal to stem the exodus of shoppers whom eBay insist are the “not a retailer” company’s customers, rather than those of the retailing customers who use the company’s platform.

In an article entitled “eBay Buyers jump ship” they stated – “Buyer attrition from eBay appears to be on the rise, despite the company’s focus over the past year on building a more predictable retail-like marketplace. eBay shoppers are buying on Amazon more frequently than they did a year ago, according to research conducted by a Web analytics company.”

Whilst “eBay Aims to Reward Loyalty” posed that “As eBay looks for ways to keep its customers happy, the auction site is considering offering a loyalty program to reward PayPal users.”

That second article reported -

“At a high level, eBay is trying a lot of different things around loyalty,” says Sara Gorman, a PayPal spokeswoman. “You’ll hear about various programs and offers over the next several months.”

The loyalty program would reportedly extend to all PayPal purchases, not just those on eBay.

This would fit with the focus of news from the recent Analyst’s day.  Donahoe and Co apparently having all but given up on knowing how the marketplaces division should be run, and now thrashing around like epileptics on methamphetamines in their policy directions to stem the haemhorhaging of revenues.

However, the PayPal program also displays the total disconnect of eBay Executive logic towards what is fundamentally flawed in their planning and policies.  Buyers will not stay on a site reputed to have everything available, as long as the site is driving towards narrowing choice and reducing opportunity to find bargains.

Main Photo - Crewmen of the R.N.L.I. Inshore Rescue Lifeboat from Seahouses (Northumberland UK, home village of my family), rescue a disoriented dolphin from inside the harbour – echoing the action of “lifeboat venues” for disoriented eBay sellers and “DSR Dolphins”.
All lifeboat photos – courtesy of http://www.seahouseslifeboat.org.uk/Pages/Photo%20Library.htm
Please support your national lifeboat service, they perform dangerous work without pay.
The UK’s R.N.L.I. service is supported by public donations.

“Lifeboat venues” have been springing up all over the Internet for the last couple of years.  It could be argued that more public online sales channels have opened in the few years that John Donahoe has been a senior eBay executive, than in all the years before that, back as far as Tim Berners Lee inventing the concept of a world wide web.  Perversely, many of those venues have been created by successful sellers that eBay policy disenfranchised.  The company continues to fail to learn from it’s worst mistakes – that alienating their best sellers will cause competition to appear and erode their user base and market share.

eBay have systematically destroyed the opportunity to sell with minimum overheads, leading to surging price-inflation boosted by enforced shipping costs within product price (losing perceived access to multiple purchase shipping discounts) and the online and offline media is now awash with reports from independent analysts that eBay is the most expensive venue on the Internet.

In attempting to counter this, eBay insanely chase a policy of increasing their own cut from a sale, while whipping sellers into dropping advertised prices.  For a bunch of MBAs and business analysts they seem to have completely absconded from “Profitability 101″ while at college.  The only way for eBay to have a future and a chance of reaching those 2011 targets, is to return future-security profit margins back to their remaining sellers.  But they seem to have not thought of this at any point.

Marketing 101 teaches that it is cheaper to retain an existing customer than to acquire a new one.  Marketing 102 teaches that satisfied customers are the cheapest form of advertising, and Marketing 103 hammers home that Marketing is “the practice of providing what customers want, profitably”.

eBay was making huge profits already, prior to Winter 2005-06, and sustaining unprecedented growth compared to all other dot coms, yet they then decided they did not have a winning formula and we have been subjected to three years of self-destructive tinkering.  It is costing them dearly as their Q4-2008 results proved – Amazon and many others thrashed them decisively in results – yet the asset-strippers who are now in charge are oblivious.

For over two decades, the UK has “proudly yet derisively” thrown around the phrase “doing a Ratner” with regard to misdirected executive policy.  America never had anything that came close in meaning, until the arrival of John Donahoe at eBay.  Now Americans can stand stooped beside their British buddies and throw into conversation that “he’s Donahoeing that company” … and everyone will know exactly what is meant.

Gaz