John Paczkowski

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EBay CEO John Donahoe at D8: More Mobile Shopping and Payment Options

John DonahoeA few years back, John Donahoe’s position was an unenviable one. As incoming CEO of eBay, he was taking the reins of a company that, while the clear leader in the online auction space, had seen growth stall amid increased competition from formidable rivals like, as well as from upstart auction sites like Etsy. And his first efforts to reinvigorate the company’s business by tweaking its marketplace and auction listings to be more like Amazon’s met with some vociferous blowback from eBay’s core sellers.

But much as they irritated, those changes seem to have had a positive effect on eBay’s business. In its most recent quarter, eBay (EBAY) showed modest growth, narrowly beating analysts’ estimates thanks to some impressive growth in its PayPal online payment business. Add to this Donahoe’s unloading of most of Internet calling service Skype, a much criticized acquisition engineered by his predecessor, Meg Whitman, and his revamp of the company seems to be gaining momentum. But is it enough to reinvigorate eBay’s business and fend off Amazon (AMZN)?


11:31 am: A first question from Walt. You’re viewed by people as a sort of Web 1.0 company, and you’re all about auctions. Today you seem to be morphing into more of a no-haggle auction store, a buy-it-now venture.

Donahoe: We’ll never be a retailer. Initially, eBay started selling long-tail inventory and they sold it in an auction format and that made sense at the time. Today, eBay is 30-35 percent auctions. A lot of the inventory on eBay today is brand new. Now they’re not necessarily the same items you’d get in a retail store….But what you have on eBay that you don’t have anywhere else are items that have been returned or refurbished, items that are cheaper. EBay gives you a choice of inventory.

11:36 am: Walt–Do consumers get that? Do they understand that you’re only 30 percent auctions now?

Donahoe says they do. “I think perception does lag reality; I think there’s more inventory than people are aware of, but we’re correcting that….What eBay is very good for is if you have bulk inventory, we’re a good way to get rid of it.”

11:37 am: Walt asks about eBay’s other businesses: PayPal and Skype. Skype seems to be bigger than ever these days. Why couldn’t you make that work?

Donahoe says Skype is a fantastic business. But the challenge was one of focus. “In the Internet today, you can’t be all things to all people….And we didn’t have synergies with Skype…so we sold a portion of it.”

eBay's John Donahoe.

Walt–Well if there wasn’t synergy, why did you buy it?

Donahoe says that at the time eBay made the purchase there appeared to be synergies and the company hoped to make good use of its technology, but that didn’t quite pan out. “I’m not sorry we made the acquisition,” he said. “And I’m not sorry we divested it either.”

11:41 am: What’s the point of PayPal, asks Walt.

Donahoe: What PayPal’s done is to provide consumers with a safe way to make purchases online.

Walt jumps in and notes that it’s just as easy these days for people to use their credit cards. So why bother with PayPal?

Donahoe notes that things like cash and credit cards can be lost. PayPal cannot. “It’s a digital wallet,” he says, adding that he expects mobile payments to come into broad use within the next three years.

11:44 am: Continuing his riff on PayPal, Donahoe talks about the PayPal iPhone app, which allows people to “bump” payments to one another. “I think the idea of the digital wallet will facilitate digital commerce growth and PayPal’s growth as well.”

11:46 am: Walt–How big is your phishing problem? I get emails fairly often warning me that my PayPal account is in trouble for some reason. You are the target of a lot of phishing, aren’t you?

Donahoe: Phishing was an issue for eBay a few years ago. But over the last five years, we invested quite a bit of money fighting it, and I think we’ve done a good job.

11:48 am: Walt–So who’s your main competitor?

Donahoe says the usual suspects–Amazon, Etsy, Wal-Mart (WMT).

EBay's John Donahoe.

11:49 am: Donahoe–Wal-Mart is the largest offline retailer in the world. Costco (COST) competes in the exact same segment with the exact same business model very successfully. So does Target (TGT). The same thing can happen online. Amazon can be successful and eBay can be successful, too.

11:50 am: Is the iPad another big platform for you, Walt asks.

“I think more devices are becoming part of the shopping experience,” says Donahoe. The line between online and offline is blurring and I think these new devices are enabling that. He adds that he thinks eBay’s iPad app is the best eBay experience he’s seen to date.

11:52 am: A quick poll of the audience–Who has an iPad? Quite a few folks, evidently.

11:53 am: Walt–You say the iPad app is the best eBay experience, but this is a new device. You’ve been on the Web for years. Why isn’t that the best experience.

Donahoe: The core eBay Web experience–in the last few years we’ve gone from a [score of] 2 to a 4. But we’ve still got a long way to go, and we’re still focused on making it the best eBay experience in the world. But these new devices allow us to start over and make new customized applications that help us serve users in the way that they want to shop.

11:55 am: Why so much focus on fashion?

Donahoe says eBay is the largest seller of fashion in the world. What we’re doing is driving more vertical shopping experiences on eBay, he adds. We’re trying to offer more customized experiences in different categories.

eBay's John Donahoe.

11:56 am: Walt asks about StubHub. There’s a lot of controversy over the secondary ticket market.

Donahoe: StubHub is a marketplace. It never buys tickets. What it’s doing is enabling season ticket holders to resell the tickets they aren’t using. Sometimes for above-market prices, sometimes for below-market prices. What StubHub has done that the scalper market never could, is that it’s completely transparent. You know who the buyer is, who the seller is, and StubHub guarantees every purchase. It provides complete transparency.

Q & A

Q: Can you talk about PayPal’s role in paying for content?

A: Digital is going to be a big opportunity for PayPal. If you go on Facebook, you can buy game credits with PayPal. In the media world, we’ll have payment solutions such that content providers can have a PayPal button on their content and people can use it to purchase it. It will provide a seamless experience inside the content itself. Digital’s going to be a big opportunity.

Q: What do you tell sellers who feel they’re being nickel-and-dimed by eBay’s many fees?

A: I think for years, eBay was nickel and diming. But over the past few years, we’ve restructured our fees. Today, consumers can list for free and businesses can list in the fixed-priced format. We’ve tried to simplify and streamline our pricing. We’re still cheaper than Amazon.

Q: Why do my PayPal purchases default to my bank account when I’d like to use my credit card? Will you move toward a model where consumers can choose how they pay through PayPal?

A: Consumer choice is important to us, says Donahoe, adding that the vision is to offer multiple means of payment.

A note about our coverage: This liveblog is not an official transcript of the conversation that occurred onstage. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations written and posted to the Web as quickly as possible. It is not intended as a transcript and should not be interpreted as one.