CEO of eBay notes major changes ahead for retailers
CHAMPAIGN — Retailers can expect to encounter changes in the next few years as massive as those experienced recently by the newspaper and movie industries, eBay CEO John Donahoe said.
"There will be more change in how consumers shop and pay in the next three years than in the last 20," Donahoe told an overflow crowd of students at the University of Illinois on Tuesday.
Donahoe said the introduction of the iPad in 2010 greatly transformed how media is consumed.
Now the same is about to happen to retail, "and the thing driving it is smartphones," said Donahoe, whose San Jose, Calif.-based company is a giant in both the retail and payments world.
In half of all retail transactions, the consumer goes online for some aspect of the shopping experience, often using technology to compare prices, he said.
"Retailers were in charge," Donahoe said. "Now it's flipped. The retailer knows you're in charge. ... The consumer is in charge, and the retailer must try to figure out how to keep up."
That means providing consumers with what they want, when they want it and how they want it, Donahoe said.
And he figures his company can help retailers compete — with apps that enable "connected commerce."
In the last few years, eBay has bought 20 start-up companies, many of which have devised new technologies eBay can employ in e-commerce.
Donahoe, who joined eBay in 2005 and succeeded Meg Whitman as its CEO in 2008, gave three examples of how technology is changing retail:
— He said 25 percent of iPad usage is done in front of the TV, and use of "dual screens" is becoming more common. As a result, apps have been developed that search for merchandise related to the show you're watching on TV.
— A mobile app from PayPal (a subsidiary of eBay) allows customers to pre-order a product — say, a smoothie at Jamba Juice — and pay for it, so it's available for pickup without standing in line. What's more, global positioning capabilities enable the retailer to greet the customer by name upon entry, personalizing the sale.
— Changes in technology are eliminating the need for consumers to type messages into their smartphones, he said. Instead, smartphones will increasingly use voice recognition — and visual recognition of photos — to recognize and convey what the consumer wants.
In delivering the Hallene Lecture at the UI's Business and Instructional Facility, Donahoe spoke not only to the 300 who packed the Deloitte Auditorium, but also to dozens of others who watched a video feed in an overflow room.
He told students that eBay has targeted 10 universities for recruiting employees and the UI is one of those.
A native of the Chicago area, Donahoe grew up in Wilmette and Winnetka, got a bachelor's degree from Dartmouth and an MBA from Stanford. He became a consultant and worked for Bain & Company for 20 years, becoming its worldwide managing director in 1999.
Whitman recruited him to come to eBay in 2005 by having him meet company founder Pierre Omidyar, whom Donahoe described as "the most unassuming guy I've ever met."
Omidyar told Donahoe he wanted his company to affect hundreds of millions of lives around the world and for that effect to last for decades — a vision that Donahoe said "spoke to me."
Donahoe said eBay, a technology darling in the late 1990s, was "starting a slow, steady decline" similar to AOL, Netscape and Yahoo when he arrived in 2005.
But eBay's recognition of the importance of smartphones and Web applications re-energized the company.
This month eBay was featured in Fortune magazine. Now, Donahoe said, he's a bit "afraid of the Fortune jinx."