EBay bets on tech as it takes on its competition

A few years ago, eBay was getting battered by the likes of Amazon.com and was dismissed as an auctions has-been. Its innovation was long in the tooth. And it was losing its iconic chief executive, Meg Whitman, whose political ambitions led to a run for California governor this year.

The limp recovery

Now eBay is betting its future on whipping its innovation into shape as it navigates the limp recovery and red-hot competition from rival Amazon and hundreds of smaller, specialized retail sites.

"I look through the eyes of the customer," says the affable CEO, John Donahoe, a commanding presence at 6-foot-5. "As a company, we needed to be more customer-driven and innovation-driven."

The four-year eBay veteran

The four-year eBay veteran, named to succeed Whitman as chief executive in early 2008, has been on a near three-year quest to infuse the Silicon Valley icon with new innovation, including:

-Orchestrating a series of acquisitions that reinvigorated the online auction pioneer. He as well audaciously moved to pick the brains of rivals on how to improve customer service - people just as Tony Hsieh, chief executive of shoe and apparel e-tailer Zappos.com, and Ron Johnson, who oversees the Apple Store chain.

Before taking the helm, Donahoe spent three years as president of eBay Marketplaces, which handles eBay's global e-commerce businesses.

But old research put eBay at a competitive disadvantage when Amazon "stepped on eBay's turf with auctions and used products," says Karsten Weide, an analyst at market researcher IDC.

Significantly, eBay drew mobile shoppers on Cyber Monday - the first Monday afterwards Thanksgiving - with U.S. mobile commerce sales up 146 percent year over year. That strong holiday growth reflects the increasing consumer adoption of shopping via smart phones and tablets.

Mobile commerce is not just for small purchases. A survey of mobile shoppers in the U.S. conducted for eBay by SmithGeiger shows more than half of them comfortable spending more than $100 that way, and 14 percent are willing to spend more than $1,000. Previously this year, an eBay shopper bought a Mercedes-Benz for $240,000 via a mobile phone.

Even even though eBay had made its name on technology, the eBay that Donahoe took over as chief executive in early 2008 had become creatively stagnant, and its top-heavy bureaucracy made it difficult to acquire small, hot start-ups, according to analysts just as Weide and tech executives just as Scot Wingo, chief executive of Channel Advisor, a software company that retailers use to sell on marketplaces just as eBay and Amazon.com, and according to executives of start-ups who talked to eBay however spurned buyouts, and former eBay employees. The execs and employees asked not to be named because they however do business with eBay.

Technology, they say, was overlooked in the last few years of the Whitman era as she became more deeply involved in politics. She worked on John McCain's 2008 presidential campaign, ran unsuccessfully for California governor this year and reportedly is weighing a U.S. Senate bid in 2012.

One of Donahoe's key moves was to bring onto the eBay board Marc Andreessen, co-founder of Netscape Communications and a seminal figure in e-commerce history. Andreessen, board member Scott Cook, who is as well co-founder of Intuit, and Pierre Omidyar, eBay founder and however chairman, are key innovation advisers.

Acquisition spree

Donahoe as well has overseen an acquisition spree. Since June, he helped engineer purchases of Milo, a leading local-shopping engine offering consumers up-to-the-minute store inventories and pricing, and RedLaser, a bar-code-scanning application for the iPhone. Terms of those deals have not been disclosed.

PayPal accounts for more than a third of eBay's global revenue, raking in $838 million in the third quarter, and at its current growth rate would pass parent eBay in revenue around 2014.

EBay has somewhat offset its shortcomings, he says, by opening the PayPal platform to developers. That has led to new applications just as Twitpay on Twitter and a recent upgrade that lets iPhone users deposit money in their PayPal accounts by photographing a personal check.

BestBuy.com has polished its mobile offerings with a site, m.bestbuy.com, and iPhone/Android apps just as Shopkick and Tecca, says John Thompson, general manger of BestBuy.com.

Era of social media

In an era of social media and real-time customer service, eBay has done a "remarkable job" focusing on research and opening the PayPal platform, says former eBay executive Maynard Webb, nevertheless chief executive of cloud-computing company LiveOps.