SAN FRANCISCO — EBay was growing so fast early in its history that Meg Whitman, its former chief executive, liked to joke that “a monkey could drive this train.” John Donahoe, her successor, still has the company on the track, but eBay’s competitors are moving a whole lot faster.
Three years into the job, Mr. Donahoe has made only modest progress in improving growth at the online retailer. He has given the Web site a cosmetic makeover and recast it as an outlet mall where retailers can unload last season’s merchandise, instead of being an all-encompassing auction house. “I think we’re turning a corner,” Mr. Donahoe said in an interview last week.
But while eBay’s marketplace revenue grew just 8 percent to $5.7 billion last year, eBay is still losing market share to its rivals, as global e-commerce sales increased 18.9 percent in 2010. Amazon.com widened its lead last year, while Groupon, the daily deal service, and a number of specialty retailing sites like Etsy began nipping at eBay’s heels.
Mr. Donahoe says he plans to tell Wall Street securities analysts on Thursday at the company’s analyst day that eBay can now “go on the offensive” by building on its early momentum with mobile shoppers and that it will better integrate sister products like PayPal, the online payment service. But he is not expected to announce any major new products or services.
Analysts and eBay’s investors have continued to pressure him to deliver on an earlier promise to match the growth of overall global e-commerce this year. But being able to achieve that goal — J.P. Morgan forecasts e-commerce will grow 18.9 percent again this year — is hardly guaranteed.
“While they’ve made some nice initial progress, there are quite a number of problems left to address,” said Scott Kessler, an analyst with Standard & Poor’s.
EBay’s troubles were a long time coming. It managed to annoy many of the people who sold goods on eBay and those who bought them. Buyers complained of clutter, irrelevant search results and fraud. Sellers grumbled about what they saw as excessive fees and eBay’s favoritism of big retailers over small merchants.
Growth in sales volume, the value of merchandise that changed hands on the site, excluding automobiles, started to flatten in 2006. After the recession began, the volume declined — even though eBay used to brag that it thrived in tough times because users emptied their closets and attics for extra cash.
Kristin Brandt, a soap maker from Ogden, Utah, is among the many sellers who left eBay for other sites. Making a profit on “Feebay,” as she and others sometimes refer to the site, was impossible because of the money eBay extracted for listing products, posting photos and making a sale.
“You end up paying more than you intended to sell something that wasn’t worth it in the first place,” Ms. Brandt said. She now prefers to sell on Etsy, where there is less traffic but the fees are lower.
Mr. Donahoe has been shifting eBay from its roots as an online flea market. He recruited big retailers that needed to sell out-of-season, refurbished and liquidated merchandise. He pressed for more fixed-price sales so that impatient users — eBay had 94.5 million active users at the end of last year — could buy products without having to bid and wait to see if they won.
It was part of a broader strategy to make the company, which is based in San Jose, Calif., more competitive with Amazon, a one-stop shop for nearly everything. Amazon’s reliability, discounted prices and growing mall of third-party retailers have given it a big edge in the rivalry. Amazon reported a 40 percent gain in revenue, to $32.4 billion, last year.
After countless tweaks, eBay’s marketplace Web site now has a noticeably cleaner design to keep buyers focused on the merchandise. Mr. Donahoe also invested in improving eBay’s search engine so users could better sort through its more than 200 million products.
Giving various product categories a custom look, rather than a generic design, is another way eBay is trying to compete. EBay thinks users shop differently depending on the kind of product they are looking for, and catering to that translates into more sales.
In the fashion area, users can browse images rather than text. A shopper who finds a black purse she likes, for example, can click on “see more like this” to reveal others in similar style and color. More custom looks are planned for later this year in the auto parts and home and garden categories.
Despite all the effort going into sprucing up eBay’s marketplace, half a dozen buyers and sellers interviewed recently did not notice any cosmetic changes. But they cited a few other upgrades that they said made buying and selling easier.
James Chen, owner of Audio Images, an audio equipment store in San Francisco, said he stopped selling on eBay because of excessive fees around three years ago and instead set up shop on Amazon. But in December, he returned to selling on eBay and discovered that eBay automatically suggested product descriptions — a feature introduced last year — so that he did not have to write them himself. “I’m very happy with things,” Mr. Chen said. “Buyers are just buying.”
Mr. Donahoe lavishes praise on eBay’s efforts in mobile shopping, which have shown early success. This year, eBay expects its customers will buy at least $4 billion in merchandise using smartphones, twice the amount spent in 2010.
EBay’s RedLaser app, a bar-code scanning service it acquired last year, lets users compare prices for a product on a store shelf with those online. Another acquisition from last year, Milo, helps users find local stores that have a particular product in stock.
“We are absolutely on our front toes and going after this,” Mr. Donahoe.