Can Ebay and Skype improve the online shopping experience?

There has been a great deal of debate both in the popular press and in the classroom about Ebay’s acquisition of Skype, a VoIP technology. While most of the initial debate centered on Skype’s business model and the exorbitantly high purchase price they were paying, there were rumblings of strategic fit, which seemed to me to be of even higher concern.

At first glance, I was a bit confused as to why Ebay would be venturing into the telecom space, given their lack of expertise in this arena and thought this opportunity seemed more appropriate for Google or Yahoo. Skype didn’t seem like a compliment to Ebay’s current business and the very stage of the acquisition target made me wonder whether Ebay was planning on using this for its own operations. Was this for diversification reasons? Was this the result of a maturing business losing focus and trying to jump on the latest technology bandwagon? Was this case of Ebay not knowing what it was truly good at or was this the move of a visionary company attempting to improve its customer experiences?

Rather than debate the financial merits of the deal, I think it is interesting to speculate on the impact having VoIP integrated into Ebay’s current offering might have upon the customer experience.

Ebay’s business model is rather simple. It is a forum in which buyers and sellers can come together to exchange goods. By providing liquidity to a market that otherwise never had it, Ebay has been able to build a highly successful company and a powerful online network. They have leveraged the internet to its fullest capacity to aggregate the marketplace into one large store. Ebay helped pave the way for online retailers by allaying consumer’s fears about shopping over the internet making it natural, predictable, exciting and acceptable.

What is unique about Ebay is that it had to create a means by which the transaction-oriented nature of its business is protected against fraud. The anonymity that e-commerce provides is a potential hindrance because some semblance of trust must be established between the buyer and the seller in order for frictionless transactions to occur. The ratings system Ebay introduced, as simplistic as it is, is the means by which buyers and sellers police themselves. And through this system, the anonymity that e-commerce provides is counter-balanced by the power that the buyers and sellers have in maintaining discipline within the marketplace.

When looking closer at the Skype acquisition I began to question why it is that Ebay would want to acquire this firm:

1) Ebay has been moving more towards selling higher end items (e.g. automobiles, fine jewelry, and furniture) that inherently have more risk from the buyer and seller’s standpoint.

2) Ebay is increasingly becoming global in scope and not all cultures are as comfortable nor capable of conducting transactions via the computer.

3) VoIP technology strongly benefits from a large number of users. If there is any firm that has taken advantage of the power of the network effect in recent time, it is Ebay. Therefore, beyond integrating Skype into Ebay’s current offering, there is a potential for Ebay to help Skype establish itself as a leader in communication, not just VoIP.

Therefore, by introducing VoIP into its system, Ebay is hoping that it will allow users that wish to have a more “traditional” consumer experience, will be able to do so. This may enable Ebay users who are not comfortable with transacting with an anonymous party to have the ability to inexpensively and relatively unobtrusively have communication with each other. Moreover, as the transactions become bigger and more complex – it is increasingly necessary for people to communicate directly.

But what about anonymity? Ebay is hoping that VoIP will help bring buyers and sellers closer together, which will simply strengthen the community further and encourage those who were weary of buying or selling over the net to join the Ebay community. Will this be appealing for everyone? In a world where identity theft is increasingly becoming a problem, having strangers have access to your computer, not just your email address, is risky. Additionally, there are other logistical considerations to consider (ie. time zone differences and hours of operation). Would sellers be required to establish times when they could be reached by buyers? Would this new service eliminate the 24 hour nature of these auctions? If a seller opts not to conduct business via the phone, will buyers take this as a signal that the buyer has something to hide? Will a seller receive poor feedback because he wasn’t responsive to the buyer? Will introducing this technology become a hindrance in conducting what should be rather simple transactions?

VoIP is a nascent technology that is difficult for many to understand and connections get interrupted and lost, and the quality of communication is severely hindered. Will introducing VoIP create technical issues that will take away from the Ebay experience?

Much of the success of blending VoIP into Ebay will be in how Ebay pushes the service onto its customer base as well as how Ebay masters the technology and services its customers. Is it going to simply be another way in which to bring those together who choose to interact that way? Or will it be a device that will end up polarizing the Ebay community into users and non-users? Will it frustrate people as they attempt to use this relatively new technology or will this application drive the adoption of this new technology? It is impossible to say at this juncture.

Regardless, this is a bold move Ebay is making and a risky one given the fact that it might “cannibalize” the very online shopping experience it has pioneered in favor of traditional telephone-like communications. Just as consumers become comfortable with the new way of doing business through the internet, Ebay is changing the process again. Either way, this development indicates that Ebay wants to be recognized as more than just an auction business. Only time will tell if Ebay, the master’s of networked communities, will be able to master another medium.

joie de vivre

Europeans say that Americans don’t know how to enjoy life…that we live to work instead of work to live. Could the trend towards an experience based economy validate this observation? Are Americans in need of pleasure to such an extent that businesses have stepped in to provide this missing sensory experience? Is our Puritan heritage rearing its ugly head?

If you look at some of the biggest entrepreneurial success stories in the last decade, you can see a trend among these businesses. They differentiate themselves by providing more than just a product or service but an environment.

Starbucks is an excellent example of a company that has led the way in experienced based offerings. If you research the history of this company, you will uncover the concept originated out of Italian coffee bars not out of American diners. Howard Schultz, after experiencing the neighborhood feel of the local Italian coffee bars immediately understood the personal relationship Italians have with coffee and its social aspect. He decided to recreate the authentic Italian coffee bar culture in America by making his coffee bean store into more of an extension of one's own home or porch – a place where people could gather for camaraderie and coffee. In his book, Pour Your Heart Into It, Howard insists he “couldn’t foresee the success Starbucks is today. But I felt the unexpressed demand for romance and community. Italians had turned the drinking of coffee into a symphony, and it felt right.”

Coffee isn’t the only area of the food experience that is revered by Europeans. A book written by Mireille Guiliano, author of the bestseller French Women Don't Get Fat highlights the differences between Americans and the French when it comes to food.

"In America, you look at food as bad and guilty," she says. "In France, we love food and we enjoy food; food is pleasure." Mireille says that she always sets out to truly savor her meals, even during that forgotten midday meal so many of us rush through. "For 20 minutes I don't take calls," she says. "I don't work on my computer. I enjoy my lunch."

Whole Foods is a company that’s showing Americans how to celebrate food. Its newest flagship store is more like an amusement park than a grocery store. For some it’s the chocolate fountain display, but for me having come from the Midwest where bread is NOT a flour tortilla, I nearly cried when I first went to this store and witnessed the “bread ride”. The variety, the presentation, the creativity all makes for a wonderful experience even if you don’t go to buy groceries.

Why do Americans have such a need for experiences?

Ultimately I believe it is a result of our Puritan heritage. The idea that hard work reaps rewards and the notion of delayed gratification has permeated the culture of this country since its founding. We are a country of achievers, but this has come at a cost. Today, in order to maintain that level of success we have been forced to specialize in our careers. While specialization has increased our efficiency, it has limited our exposure to a variety of general activities that we once used to explore. Cooking, a skill that once used to be essential for women to possess is no longer taught to young girls or boys for that matter. No one has time for non-essential tasks. Today if you want a home cooked meal, you hire a personal chef - someone that has chosen to specialize in the culinary arts as a career.

It’s not just that we are highly specialized, but it’s also that we seek to compartmentalize our lives as well. How else would you explain the proliferation of “yogis” in this country? Yoga has become a way for people to exercise and to have spiritual growth and personal time all in one. Poof…now you have freed up time to do something else.

It seems to me that for Americans life isn’t about enjoyment but about accomplishment. While this provides security it doesn’t provide fulfillment, which is why we see the proliferation of personal service companies looking to capitalize on American’s need for pleasure, and enjoyment in their daily lives.

In France they have a saying, joie de vivre, which actually doesn't exist in the English language. It means looking at your life as something that is to be taken with great pleasure and enjoy it. Until we figure out how to live in perfect balance and develop an appreciation for the fine pleasures of daily live… no amount of caff`e lattes will suffice.

Airline Travel ... From B A D to W O R S E

The worst in a long line of bad customer service experiences lands me in another area of the travel industry -- the airport. It is hard to believe that people once looked upon air travel as a luxury, that young girls coveted the lifestyles of stewardesses, and people dressed up to travel. Today, I contemplate wearing even one extra piece of clothing that isn't an absolute necessity. Tennis shoes, albeit comfortable for long days running between departure gates, are sacrificed for flip flops because I don't want to fiddle with tying my laces after being required to remove them before going through the metal detectors. Of all the accessories that one might consider in their wardrobes, belts certainly are more utilitarian than most, but in the eyes of homeland security...they are a threat. I am just waiting until the day that bras are considered a threat and women are expected to de-robe in line. A few years ago, my mom and I were returning from a cruise to Mexico. Standing in the Fort Lauderdale airport, I witnessed security personal essentially harass an elderly couple that had to be at least in their eighties in order to make sure they had 100% traveler search compliance. Neither had the physical strength to walk without assistance and they certainly did not have the ability to remove clothing and shoes without sitting down, yet the guard made both of them take everything off, while the line behind them grew. If this couple was a threat to national security, then we all should live in fear of our own grandparents. This is how absurd this entire issue has become.

My most recent experience was on a return flight from San Francisco to Austin. I had the privilege of a pat-down after my jeans (belt removed), cotton T-shirt, socks, and underwear set off the metal detector. Its bad enough that I was forced to wait in an excruciatingly long line with my bare-feet exposed to the dirty airport, holding my pants up, while I try to keep a watch on hundreds of dollars of electronics and all my personal identification slowly move away from me and potentially into the arms of any opportunistic traveler, but then I get singled out to endure the fondling and total invasion of my personal privacy. Is this the type of experience that keeps customers coming back? I would have to argue NO!!!! With all of the turmoil that the airline industry is going through, is it any wonder that airline travel is down? I dread going to the airport. I detest being there 2 hours early to ensure I get through the horribly inefficient security lines. I hate checking my luggage, because it never ends up in the same location as me. I have come to expect bad service and no matter what the airlines do to make check-in easier (ie e-tickets, kiosks, and other ticket-less travel options) that is only one small aspect of the total travel day. It’s the whole package that counts. Even with gas prices at $3/gal, I would choose driving to flying any day of the week. I can not be alone in my plight. So, why isn’t something being done about it. At the bear minimum, why don’t they buy more metal detectors and hire a few more airport security staff to alleviate the security line bottleneck?

Platinum card holders, frequent flyers, it doesn’t matter who you are anymore… everyone gets treated like cattle. I think airlines might be interested to learn how customers feel after going through these experiences. Do travelers desire comfort and luxury even more, so they rush to the private flight clubs or has their whole experience already been tainted to the point that no amount of pampering will improve it?

In the end, do we really need another reason to buy a private plane?

When I was younger, the end of the summer was always marked with a family vacation to Florida. With my dad in the driver seat, we set off in the middle of the night on a 12 hour journey that would hold more than a lifetime of memories. We experienced local Americana at its finest. Although I have never been able to recreate the magic of those vacations, to this day- road trips still mean the chance to learn about one another and see the world from a new perspective.

As I embark on the journey to acquire better "customer insights", I am reminded of the immortal words of my, then, eight year old sister..."P U this country stinks."