eBay Creates Neighborhoods to Cash In On Community By Nicholas Carlson
October 16, 2007
In last week's eBay Watch, we highlighted the auction company's plan to jump into the social commerce game with its introduction of Neighborhoods. In this story, Nicholas Carlson of InternetNews.com provides an overview of what the industry and Wall Street is saying about the move.
Despite lingering woes from its troubled Skype integration, eBay is again hoping to capitalize on a hot online trend. This time, the target is social networking, with the company unveiling a new area of its site called eBay Neighborhoods.
Like the auction giant's earlier purchase of Skype — seen as an attempt to integrate the popular voice-over-IP firm's technology into eBay's product listings — Neighborhoods is aimed to help the site take advantage of the booming interest in online community.
It also may help to support the sense of community among buyers and sellers on which eBay has long prided itself.
"On eBay, people who are passionate about certain brands, trends, celebrities or products have been discovering and trading with one another for years," eBay executive Jamie Iannone said in a statement. "We hope that eBay Neighborhoods makes this even easier by combining commerce, communication, and community in a way that enhances traditional online buying and selling."
eBay Neighborhoods is designed as a collection of micro-communities focused on specific interests. At launch, company has built over 600 communities covering interests ranging "from Beyoncé and Battlestar Galactica, to Webkinz and Weddings," according to a statement.
Within a Neighborhood, eBay members can access a discussion board dedicated to the community topic, upload and share photos related to the topic, and peruse reviews, guides and blogs. Sales, of course, remain a chief focus of the effort, with each Neighborhood showcasing current eBay auctions that hawk products related to group's topic.
The Neighborhoods launch comes as part of a broader effort by eBay to boost usage, by simplifying portions of its site while adding new features and a sleeker interface. For some time, the company has been offering a sneak peak of some of those features, which include "one-click" bidding, a streamlined My eBay page, and eBay Desktop Beta, a desktop widget for viewing listings without using a Web browser.
An eBay spokesperson told InternetNews.com the company realized about a year ago that its auction site hadn't quite kept up to the standards of "what people expect when they come online these days." Neighborhoods, the spokesperson said, represents the first of many steps toward resolving that issue.
Such moves may go over well with Wall Street. Piper Jaffray analyst Aaron Kessler said in a report yesterday that the company needs to spruce up its site.
"We would like to see: 1) the core eBay demonstrate signs of increased buyer activity; 2) an enhanced site experience such as improved search and an improved user interface," Kessler wrote. "We believe that an improved buyer experience which could lead to increased buyer activity in 2008 could serve as a catalyst for shares."
Efforts like those in place could contribute to an increase in the expected number of items for sale on the site. That, in turn, could beef up revenue. In his report, Kessler raised his expectations for the company's third-quarter revenues, from $1.845 billion to $1.862 billion, and raising its share price target from $37 to $42.
In the meantime, eBay's new community and user experience investments may help to offset its grim news earlier this month, when the company admitted its failure to fully integrate Skype's VoIP technology into its listings.
That failure meant eBay would pay about $1.4 billion in third-quarter charges to conclude its acquisition of the VoIP firm and establish a more realistic valuation for Skype's long-term usefulness.
"eBay needs to find a way to better monetize Skype or may be better off selling it," he wrote. "eBay-Skype synergies have never really played out."
This article by Nicholas Carlson originally appeared on InternetNews.com on Oct. 10, 2007.
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