EBay's John Donahoe on E-Commerce and Mobile Payments' Future

Donahoe says that in the not-too-distant future his company will let its customers shop in actual stores and pay restaurant tabs without hailing a waitress

Photograph by Mark Peckmezian for Bloomberg Businessweek

What’s the next set of goals, beyond returning to growth?
In the eyes of the consumer, e-commerce and retail are now one. It’s just shopping, right? And that’s why you see us taking steps to get more involved in the full commerce environment. An example would be EBay doing one-hour delivery. You buy online, but you get it delivered to you from an offline store. Another example would be PayPal being accepted by offline merchants.

A tenet of the strategy has been to partner with offline stores. This summer you’re making your debut in Kate Spade stores in New York, where there’s an interactive wall. Why does partnering with these very offline brands make sense?
Consumers want a seamless experience. If you’re a retailer or a merchant of any size, you’ve got to address that. We’re partnering with retailers. They’re looking for a technology partner in many cases, be it for payments, be it for commerce. And we will never compete with them. So the fact that we’re a technology platform that’s not a retailer, and never will be a retailer, is something that a growing number of them are finding compelling.

You mentioned the same-day shipping service, which you announced last year. What have you learned so far?
We’ve learned on the consumer side that it’s not for all their transactions. It’s for some: I just landed in New York, and I forgot my iPhone charger. I don’t want to have to find a store to buy it. I want it delivered to me so I can get my phone charged. Second, once they experience it, they really like it. And third, they’re looking for predictability. Then on the delivery side, we’ve learned that running a delivery marketplace mobile-to-mobile allows enormous efficiencies. You’re actually delivering right to a mobile device, so you don’t miss where the recipient is. If the recipient walks across the street, the delivery person knows exactly where they are.

Are you convinced it’s economical?
I think it’ll be an economical service to offer. There’s a lot of excess delivery capacity in every city.

Bike messengers or delivery vehicles?
Newspaper trucks.

Well, they may not be around for too long.
We’re starting with our own people. But we’ll continue to learn from there. And we’re willing to partner with anyone. We’re trying to give consumers choice in their shopping experience. Do I want to go try it on in a store? Or do I want to buy it and just swing by the store and pick it up? Or do I want to buy it and have it delivered to me today?

Are you concerned that Amazon and Google are willing to spend ruinously, without regard to short-term economics, to build this next wave of same-day delivery services?
More money is rarely the answer to innovation. The best innovations actually come from a world of scarce resources. And we have plenty of investment capacity.

What’s on tap in terms of more mobile innovation?
The impact of mobile on our lives is just beginning. The next phase you’re going to see using the mobile device—I’ll call it offline existence. So an example will be, you’re in a store and you want information about a product. Or PayPal Check-in is another example—how you can alert a merchant that you’re coming ahead of time. And so when you come in, they can greet you by name and give you personalized service.

You’re going to be able to access the Web from more places. You know, that’s what the Kate Spade example does. Wow, storefront windows: It’s kind of crazy that when stores close, no one can buy from the store. What if, when the store’s closed, someone can buy using a touchscreen on the storefront?

One reason mobile payment has been a little bit slow to develop is that the point-of-sale experience isn’t all that broken, right? Often times, paying using PayPal or another mobile payment solution takes more time.
When PayPal came to mobile, the reason we had $20 billion of mobile payments was, when people wanted to buy something on a mobile device, the one-click PayPal button was safe and convenient. The way we’re thinking about the offline world is, what are consumer pain points? No one likes standing in lines. Whether you’re at a Jamba Juice or a coffee shop, if you can order ahead or order when you walk in the store, pay and go around the line—the merchants like that, and consumers like that. When you’re in a restaurant, having to wait until the waiter brings your check: What if you could pay from the table? That’s a second-use case we’re experimenting with.

So how do you get big merchants to overcome their concern about a technology company standing between them and their customers?
PayPal is only a technology that enables that connection.

When are we going to see some of the biggest retailers, like a Wal-Mart or a Target, working with you guys?
We’re starting in smaller neighborhoods, and we’ll learn and learn from it. So we’re not trying to start with a big national rollout.

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