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Bloomberg interviews Meg Whitman
Changes Needed to Placate Sellers

July 3, 2007, Bloomberg News -- EBay Inc., the world's largest online auction company, will upgrade its Web site to placate sellers and revitalize the company's slumping sales growth, Chief Executive Officer Meg Whitman said.

"You'll see more changes in the next 12 months on our site than you've probably seen in the last three or four years," Whitman said in an interview. "EBay was so successful that we did not keep up with the user experience that was required."

Sellers have complained that EBay allowed the site to become cluttered with too many listings, resulting in fewer sales and driving shoppers to other retailers including Amazon.com Inc. The company has adjusted fees to try to increase revenue, which rose in the first quarter at its slowest pace in at least eight years.

"People come to EBay for fun, for value, and for those popular and pleasing and weird and wonderful items," Whitman said in the interview on "Conversations with Judy Woodruff,quot; which airs on Bloomberg TV tomorrow. "And we got a little bit too much commodity-oriented"

Shares of EBay, based in San Jose, California, fell 18 cents to $32.15 at 1 p.m. in Nasdaq Stock Market composite trading. They are little changed since the end of 2003.

One reason for the stagnant share price is that investors are worried about slowing growth in larger markets such as the U.S. and Germany, said Whitman. First-quarter auction revenue rose 23 percent, less than half the rate three years ago.

Tough Time

"Shoppers are not using EBay as often and as confidently as they used to," said Jonathan Garriss, executive director of the Secaucus, New Jersey-based Professional EBay Sellers Alliance. "Buyers have a tough time finding what they want. If you're looking for an Apple iPod, you're going to get 5,000 search results, and most will be accessories"

To address this, EBay last year imposed higher fees to reduce the number of fixed-price listings because buyers couldn't find the items. The goal was to increase the number of completed sales, boosting revenue for the company and its sellers, Whitman said.

Merchants on EBay can offer items that are sold through auctions or a more traditional store format, similar to most other retailers.

The move was successful, though Whitman acknowledged more changes need to be made. EBay said last month it temporarily will cut selling fees for its cheapest items and freeze fixed- price transaction prices.

Vocal Community

"The community is very vocal,quot; Whitman said from the EBay Live conference in Boston. "They have never been shy, even from the earliest days of this company"

Founder Pierre Omidyar started the auction site in September 1995. Whitman joined the company in early 1998 from Hasbro Inc.

Nine of 10 auction visitors go to EBay, according to data from Nielsen/Net Ratings. The company has expanded to 26 countries and now receives about half its revenue from overseas.

Acquisitions, including online payment service PayPal Inc. and the Internet telephone company Skype Technologies SA, have allowed EBay to diversify away from auctions. The company, through an investment in online classified site Craigslist and the acquisition of ticket seller StubHub earlier this year, is also looking at different ways to bring buyers and sellers together.

PayPal

PayPal, which EBay bought for about $1.5 billion in 2002, is now worth as much as $20 billion of the company's $44 billion market value, Whitman said. "PayPal is one of the great all-time acquisitions," she said.

EBay doesn't allow users to pay through Google Inc.'s rival Checkout service on its sites because only one in seven Checkout users were "pleased" with the service, Whitman said, citing an EBay survey.

"That has to get higher,quot; said Whitman. "We will continue to look at Google as a payment mechanism on the EBay marketplace"

To contact the reporter on this story: Danny King in Los Angeles at dking19@bloomberg.net

  
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