I found the most peculiar article regarding Ebay’s motion for change in the Wall Street Journal. Geoffrey A Fowler and Scott Morrison discuss the steps Ebay’s trying to take to close the gap in technology with their competitor, Amazon. The article ties in technology and design changes to Ebay’s website that are supposed to be happening sometime around the Holiday season. Ebay hopes to build a product catalog for the products sold on eBay. As already seen on Amazon, they want to have recommendations based on prior searching of products with a feature of the most popular items currently being bought.
If they didn’t make this switch, they would have continued to lose market share, which leads to losing more revenue. After looking on Hoovers.com, I learned that eBay’s main competitors are Amazon, Google and Yahoo Markeplace. I also researched when eBay’s competitors became tech-savy. I found an article on Amazon in Business Week, (http://www.businessweek.com/magazine/content/03_51/b3863115_mz063.htm), dated all the way back to 2003. This means eBay doesn’t only have to step up with their information technology, but if they want to get things up and ready by holiday season, they better have a timeline mapped out to narrow a 7-year gap within two or three months.
In my opinion, I’m surprised Ebay is still in business. I’m surprised that “sales on eBay were twice as much as those on Amazon last year” (WSJ Article). I think Ebay was too dependent on its old technology that the company didn’t realize the impact the technology could have on its earnings. The shocking part is that they waited 4 years to finally make the change. Technology is constantly changing, and for them not to understand the impact is truly sad. In the article, it also states about this ‘revamping’ starting around 2008. It’s hard to think about it taking two years to recode the software.
The problem with Ebay is that they didn’t know how to use or what its resources were prior to 2008. The article stated that its system involved “25 million lines of inflexibility, soon becoming a liability”. They had a problem with matching the product with the model. This clearly shows a disorganization problem. I think the most important step they took was hiring a new chief technology officer. If the CEO had kept with their current one, I think they would be in a declining state and I don’t believe anything would have changed. The new chief technology officer knows a better way to tackle risk (instead of simply ignoring change). He hired over 100 engineers and purchased Poisitronic Inc. He didn’t stop there, he proposed changing Ebay’s search engine, building a catalog so the company could organize their listings, and steps to help buyers shop more efficiently.
The disappointing part in the article is about how much of Ebay’s inventory is truly in its catalog. They have a goal to “increase the size of catalog to 40% of inventory by the end of next year”. In my opinion, I think by the end of next year another new database or software will have already been developed and they would be late in acquiring it as well. I don't think it's downhill for Ebay, I just believe they're too late in trying to catch up with its competitors.
As a pioneer in Information Technology, eBay Incorporated was created in the late 1990s, it was built to let mom and pop merchants sell all sorts of goods in an auction setting. All merchants had to do was type in details about the products they were selling and start an auction. The consumer then could log on to their eBay account and search for what they wanted. This was a great tool for people who wanted to find products at an affordable price. The only thing eBay lacked to its competitors for example Amazon was organization, eBay had only a few ways to sort and organize listings other than by which auction was ending soonest. This made consumers search through pages and pages of different auctions to find the specific product they wanted. Organization is something that Amazon and other competitors of eBay did focus on, Amazon sells their merchandise at a fixed price but they use organized catalogs. Organized Catalogs lets the online retailer keep track of what it was selling. What this does is create the ability to cross-sell products and recommend other merchandise. This has been working out well for Amazon because “while sales on eBay were twice as much as those on Amazon last year, Amazon in October of last year moved ahead in U.S. traffic” (Wsj.com). This certainly has brought up some caution flags for eBay who does not want to lose market share because although their prices are affordable their website is to unorganized that customers just get fed-up and start shopping at Amazon.com and other online retailers.
ReplyDeleteeBay has targeted the holiday season as a time to launch their new and improved website that provides recommendations based on previous searches and features a list of the hottest items. Also in recent weeks, consumers looking for DVDs, MP3 players or GPS devices have begun seeing a single page for each model of a product, consolidating the sometimes thousands of different listings by sellers and highlighting the best deal at the top. All these new features eBay is adding will help them retain their market share and who knows maybe add a few clients. This is why I will have to disagree with author of this article on this blog because I cannot see eBay underperforming with a new organized website and new systems. I do not see eBay letting a problem of outdated technology happen again. The only reason it happened in the first place was because they were the pioneers of online shopping and did not foresee this problem. Now that eBay has recognized this as a problem they will plan accordingly to not let it happen again.