eBay after the data breach sees mobile and China as opportunities
- Summary:
- The eBay data breach earlier this year meant getting millions of users to change passwords. For Doug Wenig, president of eBay Marketplaces, that job remains a challenge.
[sws_grey_box box_size="690"]SUMMARY - The eBay data breach earlier this year meant getting millions of users to change passwords. For Doug Wenig, president of eBay Marketplaces, that job remains a challenge. [/sws_grey_box]
For you and me, the biggest pain point of the eBay data breach earlier this year was the irritation of having to change our passwords. For Doug Wenig, president of eBay Marketplaces, it was of course a somewhat bigger headache:
It's a commendably more pragmatic and reserved response to a crisis than that espoused by eBay CEO John Donahoe in July when he decided that the whole situation of 145 million customer accounts being exposed to hackers had been made worse by the European media off on a privacy tangent!We required 150 million customers to reset their passwords, which is not a simple thing for an e-commerce company to do. But, to keep our flywheel turning, we engaged in a lot of tactical marketing, couponing, promotions, things like that. And we continued to grow through that period. It obviously created a divot, and we are still seeing a bit of a headwind from that data issue.
Speaking at the Citi Global Technology Conference in New York last week, Wenig admitted that getting everyone onto a new password remains an ongoing issue despite 87% of users having now taken the necessary action:
Still, there are 300,000 people a day who are going through that password flow. So we are not done. There is still a bit of a headwind.
We have seen very, very few account closures, so that to me is a good sign that we haven't permanently damaged the business through the brand.
I don't like to lose any users, but we haven't lost very many. The total number of account closures that's been less than one quarter of 1%. And that was almost all in the three weeks after the breach was announced. So we're not seeing any meaningful account closures any more, it's less than a trickle.
Adding to the complications is a simple human problem: forgetting your new password. (Guilty!) This creates situations where customers find themselves going through the mandatory key change, then having to do it all again, says Wenig:
There are groups of people that may have had an eBay password for 10 years. Now they have a new one and they forget it. And they are going through [changing password] again. In some of our biggest countries we have seen, 14% of the user base go through more than once.
But he insists that this is not impacting on spending patterns:
What we've seen for our core users is once they're through and maybe some of them have gone through twice, their spending patterns are back to where they were. We haven't seen very much difference at all. That to me again is why I'm not worried that we've done permanent brand damage.
I think we've got a couple quarters more of a decreasing, but still a drag. But it isn't because customers that have gone through and now are stable or spending less. It's because we still have a scale of users that haven't gone through because not everybody comes back to eBay at one time. That's how come we still have 300,000 people a day that are doing it.
Mobile focus
Away from the hangover from the breach, eBay is planning more dedicated efforts to build and support its brand. Wenig explains:
To that end, emphasis is being placed on the mobile customer experience:I think in e-commerce, everybody is perennially stuck in the first innings because that's such a rapidly evolving industry. But, I think if you look at the acceleration in our user base, we have made a fair bit of progress. I do think there is still a consumer perception gap.
I think that the eBay that's perceived is different than the eBay that is. We are going to take some steps beginning this fall to try to close that gap down by stepping up our brand efforts. So that will start this fall.
I hadn’t wanted to do that until I was confident that the product and customer experience was ready. I don't like going out and screaming about your business if it's not ready for prime time. I now think the product and business is ready to begin to close the perception gap.
I think people say ‘oh, yes, I know what eBay is’, then they go to our site, where they go to our mobile app and they are very surprised. It's a simpler experience. It's a more engaging experience. We've hired some of the top product executives in the world who have been working on this over the last few years.
When I bring people to my site or my mobile apps, I feel really good that I could turn that person into a user and that's whey we have seen accelerating user growth throughout the three years. We have seen really healthy mid-teens user growth which to me really is the most important metric of the health of an Internet business. I think you got to grow your user base. And we have grown it pretty quickly. So to me, it was the product experience. Now, that the product experience is ready for prime time, I think we can talk about that story more frequently.
Another core strategy is to make it easier to bring on board new sellers and often bigger brand names, says Wenig who states eBay’s goals being to:
Make it easier to list, make it easier to sell, make our policy simpler.
We have grown the seller base just as we have grown the consumer base over the last three years. A lot of our emphasis has been retail and brand. We brought over 140 big retailers or big brands into the eBay marketplace in the first half. If you are familiar with the eBay story, you know that's been an expansion of our business. But, if you are not you say that's interesting, I can buy from Best Buy or Target or hundreds of others.
What I point to as a really good example of where we are going is, just a month ago we launched something called a Fashion Designer Collective and we have now got 30, 35 of the world's best fashion brands selling in essence in our mall. It's a really nice beautiful branded experience and you’ve got the world's top fashion brand selling on eBay.
That certainly is the direction. We know our consumer base likes choice. We know they like everything from our long tail of 600 million items for sale all the way up to the world's top brand. And that's the direction where we are moving in.
Chinese puzzle
Coming up soon is increased competition from Chinese e-commerce giant Alibaba as it prepares to go public. Wenig concedes that the competitive landscape is evolving, but argues that eBay might well take the fight to its rival's home turf:
It's going to be an interesting couple of years. What people forget is that we have a very, very large China business, in fact, the world's largest in China export. So our business is exporting tens of thousands of Chinese merchants around the world and we have a great demand flywheel, not just in the United States, but across Asia and Western Europe. And that business is having one of its best years ever, this year. So that demand flywheel, that export business continues to turn. We have very little domestic business and Alibaba’s business is really a domestic Chinese business.
I suspect over the next few years all of the big e-commerce players are going to continue to globalize. So we certainly have designed to take our business and our export business into domestic China. There is a long history of eBay failing in that market, but we're not done trying. China is too big and too important for us to say we're going to pass on that. It hasn't been an early priority other emerging markets have, but what I'd say is, stay tuned. It's definitely part of our plan to be relevant in China over the next, let's say, three to five years.
There are other potential partnerships,there are other potential ways that we might enter that market. I don't really want to say more about it right now than that. But as some of those players globalize and come to the United States and Europe, we'll probably take our business into markets like China.
My take
OK, hand up - I am that eBay customer that changed password, then forgot what I'd changed it to.
I'm not an inveterate eBay user by any means, but to me the service is clean, efficient and easy to use - all factors that bring me back on occasion to make a purchase.
Quite how the firm will fare once Alibaba's IPO is underway is another question entirely. It will be, as Wenig notes, an interesting couple of years.