The Catalyst Code

EBay reported 22% growth Wednesday, exceeding Wall Street expectations. While a number of factors are involved in its strong showing, eBay’s new CEO has recently implemented a number of changes to the site to make it more competitive with sites such as Amazon.com.

EBay was one of the first successful online catalysts, bringing together buyers and sellers in a way not possible before the internet. The Catalyst Code book describes how EBay grew to compete with venerable auction houses like Christie’s and Sotheby’s. Recently, however, eBay has faced competition from other online catalysts, like Amazon with its expanding inventory of goods and affiliate Marketplace merchants.

In response, eBay has implemented a variety of changes, including lower initial fees but higher charges on sold goods. EBay has also announced a change in its rating systems – sellers will no longer be able to rate buyers. The changes have drawn a range of responses and complaints, including some sellers boycotting the site. Any change is going to upset some members of a community, yet a catalyst site like eBay has to constantly balance the interests of multiple stakeholders, accepting that some people will leave but that the resulting balance will be stronger overall.

Despite the user outcry and boycotts, CEO John Donahoe said the changes are here to stay, and more are likely coming. EBay is betting that losing a few sellers won’t impact the balance between buyers and sellers, and that improving the both buyers’ and sellerers’ experiences will keep the catalyst going. As Jonathan Garriss, executive director of the Professional eBay Sellers Alliance, noted in the New York Times,

… they are doing a lot of things they never did before, like treating their biggest sellers like their customers and giving more things to their better customers. Any business does that.”

Their sellers are their customers – just as their buyers are. Keeping the right balance of each is ongoing task in the volatile online world. We’ll be watching as eBay continues to evolve.