Online ecommerce giant eBay is making a concerted effort to become more experience-driven, a significant change from its previous focus on selection, according to its Australian and New Zealand Managing Director, Tim MacKinnon.
Speaking at the Australia Israel Chamber of Commerce Retail Lunch in Sydney last week, MacKinnon also revealed the motive for the introduction of eBay Plus, the online marketplace’s premium subscription service.
“It’s not enough to be the site that has everything. People expect you to deliver a great experience,” MacKinnon said during the panel discussion.
The marketplace giant is now focussing on guaranteed delivery, price comparison features and customer loyalty rather than it’s traditional one-stop-shop approach, according to MacKinnon.
He said the selection strategy had worked well and helped establish eBay as the clear online marketplace leader. More than 60 per cent of Australians bought something from eBay in the past year and 80 of the top 100 retailers operate on the platform, MacKinnon said.
However, as price competition intensifies and international competitors like Amazon move in, eBay believes providing an experience will be the difference maker in the future.
“The changes that we are seeing [mean] having selection in a marketplace is not enough. Those that are winning are really in the top quadrant where you are able to offer mass selection and deliver a great experience.”
In May this year eBay unveiled eBay Plus, a premium subscription model that includes free shipping, guaranteed delivery times, and special pricing events. The hope is that the service can create excellent customer experiences and foster customer loyalty.
The return for eBay, in addition to subscription fees, is a more motivated and engaged customer, according to MacKinnon.
“Once you pay for something you feel like you’ve got to earn it back,” MacKinnon said in reference to eBay Plus.
“It’s really critical. You have to get people to pay [for a subscription]. You never ever give away free subscriptions. You have to get [customers] to invest in the program so then they feel like everyday they’ve got to get a return on that investment.
“That’s what drives the incremental spending.”
According to MacKinnon the early data on eBay Plus suggested the approach worked and the more people “paid up” for subscriptions the more they were inclined to spend.
Ebay Plus is similar to Amazon’s successful subscription service, Prime — although Amazon Prime customers receive a media service as well as the shipping perks.
When asked about the influence of Amazon on the Australian market, MacKinnon noted both price and ship time had come down since the American commerce giant’s launch last year, the latter by around 10 to 15 per cent. While he did not attribute the improvements in price and shipping directly to Amazon, MacKinnon said there had been a marked change in the behaviour of Australian retailers in the last 12 months.