New Delhi: John Donahoe, the 50-year-old global chief executive of shopping site eBay Inc., is not perturbed that social networking site Facebook Inc. could soon overtake the e-commerce behemoth in market valuation.
Instead, Donahoe is betting big on integrations between the Internet giants. On a visit to New Delhi, he spoke in an interview about India’s importance to eBay and how mobile solutions can enhance e-commerce in the country. Edited excerpts:
How often does India figure in eBay’s boardroom conversations? How well has this market performed?
India is enormous for any company due to its great potential. E-commerce is taking off more slowly here but India is on a cusp of a significant increase. It’s currently growing at 30%, and eBay itself is growing at 60%. We’re selling a product every minute in India. We expect to do about Rs150 crore in export this year from India. We have gone from one million users to 2.5 million in India in the last four years. Globally, around 1.5 million people make their primary or secondary living through eBay. In India, that number is around 13,000. We hope to see these trends pick up.
How does it compare to other emerging markets? Which of the Bric (Brazil, Russia, India and China) markets is the most exciting for eBay?
The China market, the largest of the four Bric nations, has explosive export growth. The Chinese domestic market is also picking up. We have a joint venture there and we hope it’ll grow more with higher access to broadband.
Hard sell: eBay chief executive John Donahoe says the company will provide SMS-based solutions to buyers in India without Internet access. Pradepp Gaur / Mint
In Brazil, we have a good cross-border market and we own 20% of the business there (run by Mercadolibre.com). Payments are a real friction point there. In Russia, we have an eBay import site but the postal system and payments are impediments.
In India, eBay is seen mostly as a retailing platform for small and medium businesses more than an auction site. Is that a global trend?
We view auctions as just another way to sell. A few years ago, auctions did what we call price discovery. Today, however, 60% of eBay transactions globally are fixed price, so eBay is not just about auctions.
You mentioned growing export volumes from India. Is the reverse happening as well, through eBay India’s Global Easy Buy programme?
At last count, there were about 18 million items on Global Easy Buy that are available for Indian buyers—items you’d be hard-pressed to find. We don’t have similar figures for the import as for exports but the business is seeing traction.
What kind of items are imported the most by Indians?
Home decor is popular. Then there’s apparel—branded and unbranded. Accessories are big, as are technology products like laptops.
Is eBay worried by the sudden popularity of social networks? People are already using sites like Facebook to buy from like-minded people.
Not at all. I see them as complementary to our business. Facebook has done a phenomenal job on social networking and eBay is a very social shopping site. We have already implemented the Facebook Like buttons on eBay in the US and we’re integrating Facebook Connect.
Very few Internet companies are good at more than one thing. You have to be really good at one thing and then integrate with the others. So eBay is great at e-commerce, PayPal is great at payments, Google is good at search, Facebook is good at social networking and Skype is good at communication. I sold Skype because I didn’t see any synergies.
What are the biggest technology trends that eBay is focusing on now?
If I were to pick two trends, I think the most significant force will be payments through PayPal and mobile (phones). PayPal makes it easy to pay anywhere, and mobile increases access.
There is also social shopping and social search and discovery linked through social networking sites. Digitisation, if you will, of books, films, video games—that’s important too.
How will the impact of mobile phones pan out in the future?
It’s going to be profound. The iPhone was launched about two years ago and we launched an iPhone eBay app. In its first year, it did $700 million (Rs3,283 crore) of volume and this year it will do $1.5 billion to $2 billion. Around 11 million people have downloaded it. People are buying everything from cellphone covers to $250,000 Lamborghini on their iPhones.
We did $60 billion of volume last year globally and mobile was about 1% of that. This year it will be 2-3%. The iPhone is explosive in the countries it exists. Android is now rapidly growing. We have seen that people who buy on iPad buy items that are about 30% higher in price than people who buy on the iPhone or PC.
Are you betting on mobile solutions to increase e-commerce in India? How are you approaching problems of access?
India is like a retail business. You have items listed by small businesses or entrepreneurs. eBay helps even out distribution inefficiencies.
It also provides a great sense of improving price through value.
These are fundamental propositions for e-commerce to take off here. That leaves access, which will improve with mobile broadband and 3G networks. That’s why we’re building both Web solutions as well as mobile solutions for India. And for folks who are not connected to the Web through mobile phones, we’re going to provide SMS-based services. We already have one for car pricing. You SMS the name of the car, location and year of manufacture, and the service gives you an estimated fair price range.
E-books have emerged as a huge e-commerce opportunity. Is eBay looking to enter that space?
I think the place we will participate most in... is payments. The publishers are the ones who will determine where they will want to sell; there’s no secondary market because of digital rights management issues. Right now, e-books are tied to devices like the Kindle or iPad. I think you’ll see some efforts with Android and Google, and others who will create a more open system. When it’s a more open system, eBay may find ways to participate in that.
PayPal has had a bit of an uneven ride in India. How will you integrate that into your domestic services?
PayPal’s starting point was cross-border transactions. Over 20% of PayPal globally is cross-border. We are continually working with regulatory authorities to make sure we’re compliant with local laws. In India, we have a system called PaisaPay. In the future, we hope to make PayPal the domestic payment solution along with PaisaPay, but we are not in any rush to do that.
Do you receive a lot of complaints from the Indian consumer?
What I like about this market is that Indian consumers are very demanding. They want good prices, service and safety and security. We have 1,400 people in our global development centre in Chennai, which is the largest development centre outside of our global headquarters. We are a company that is not afraid to invest or make acquisitions in India.