Table: eBay: Of the People, by the People, for the People
From its start in September, 1995, most of eBay's features were suggested by users or created as a direct result of their activity on the Web site. That has paid off for eBay in lower support and marketing costs, higher loyalty, and quick pushes into new markets
Swamped by e-mails from people asking for help, founder Pierre Omidyar creates an online bulletin board for users to share tips. Since then, more than a dozen forums and chat rooms, with 100,000 posts a week, have sprouted up, creating a community of eBay loyalists.
RATING ONE ANOTHER
After watching customers discuss ways to gauge the trustworthiness of other buyers and sellers, Omidyar sets up a way for people to give each other ratings on every transaction. Result: Sellers with good ratings stay on eBay, helping it keep its online auction share at 80%.
Users constantly e-mail founder Omidyar with suggestions. During the day, he answers them. At night, he makes changes to the software to incorporate the suggestions. That makes users eager to offer advice--keeping support costs down.
Following complaints about fraudulent buyers and sellers, the company sets up a Safe Harbor program that offers services such as fraud reimbursement and identity verification. Today, less than 0.01% of auctions involve fraud, vs. an average fraud rate of 0.09% for credit cards.
eBay convenes its first "Voice of the Customer" group, flying 10 users from around the country to eBay's San Jose headquarters. Formed every few months, the gatherings serve as ongoing focus groups to help eBay improve the site.
Noticing a one-month jump in several miscellaneous categories, eBay spots a surprising reason: auto sales. So it creates a category for sales of used cars and car parts. EBay Motors now accounts for 16% of the company's gross merchandise sales--an annual rate of $1 billion.
eBay acquires Half.com Inc., which hosts sales of books and CDs at half-price or less. It's a first step toward satisfying sellers who want to charge fixed prices to appeal to more buyers. eBay's fixed-price sales have shot up to 16% of gross merchandise sales, from almost zero a year ago.
BACK TO SCHOOL
After sellers clamor for training to improve their auctions, eBay offers classes. Called eBay University, the program has attracted more than 20,000 people in 19 cities. It's a great marketing tool as well: Within a month, these users double their activity on eBay.
A few months after noticing that sellers were listing homes for auction, eBay creates a real estate category. Although it still accounts for under 1% of eBay's overall sales, about 25 properties a day sell on eBay.
BUY IT NOW
Several months after a seller suggested giving buyers a way to end auctions faster, eBay tries out a Buy It Now feature that allows buyers to stop the auction with a bid at a set price. Today, 40% of listings feature Buy It Now. That has helped close auctions in an average 6.1 days today, vs. 6.9 days at the end of 2000, so eBay gets paid faster.
OPEN FOR BUSINESS
After a year of requests, eBay allows sellers to open storefronts on the site. eBay hopes this will prevent sellers from using eBay simply to drive buyers to their own Web sites. Some 30,000 merchants have signed up. In January, they will begin paying $9.95 in monthly "rent."