By  on November 3, 2010

With 90 million worldwide users, eBay Inc. chief executive officer John Donahoe knows it’s impossible to please all the people all of the time.

The user base of the giant shopping and auction site is becoming increasingly fractured. Diehards think the company should stay exclusively in the auction business as it was a decade ago when all sales were done through auctions. Today, bidding involves just 30 percent of sales. The kind of merchandise sold on eBay is also changing from “things people had in the back of their closets” to new merchandise sold at a fixed price, Donahoe said during a presentation Tuesday at the WWDCEO Summit. The latter accounts for 65 percent of sales.

One area that’s getting a lot of the company’s attention is fashion.

“We understand how to connect sellers of fashion — like you — to buyers all over the world…and we do so literally every second of every day,” Donahoe said. “We’re clearly committed to giving [fashion to our users], whether it’s new, vintage, brand name or designer.”

EBay is the world’s largest marketplace for clothing, shoes and accessories, with a $5.45 billion annual apparel business GMV (gross merchandise volume), worldwide.

As a result, Donahoe made a pitch for fashion brands to team with eBay to launch outlet stores on its site. The brands would dictate the look and interface of the online outlets, while eBay would operate them. Donahoe, in pressing companies to team with eBay, pointed out that a dress is sold every six seconds on the site and a pair of shoes every eight seconds. The eBay fashion customer “is mainly a value shopper,” looking for deals but increasingly eager to buy new merchandise.

Donahoe stressed such outlet sites don’t eat into a brand’s image, nor does it disrupt the brand’s existing online operations. He gave the example of the Savile Row site eBay operates in the U.K. for the British brand; the site sells year-old merchandise that the brand otherwise would not be able to dispose of.

A key hurdle eBay faces is the long-running battle between the online marketplace and brands over counterfeits sold on the site. Donahoe admitted that several years ago eBay ignored the issue, but now is proactive in fighting counterfeits. It works with brands to identify fake products, immediately removes them from the site and bans the vendor from selling on eBay. The Web site also is working more closely with law enforcement officials.

A major theme throughout Donahoe’s presentation was the need to change. EBay didn’t recognize the need to change a few years ago, he admitted, and as a result its business suffered. But now it sees the need to adapt to the changing nature of online auctions, and is moving rapidly to change. “So what I would say to all of you is to embrace change, don’t run from it,” he said.

One way the site is changing is its rush to sell on devices other than computers. “Devices such as mobile phones and iPads have forced eBay to start over and come up with simplified applications targeted toward different consumer segments,” Donahoe said. “We weren’t in social media such as Twitter or Facebook that can bring social tools into shopping. Facebook just passed 500 million users globally. The ‘Like’ button is driving business at eBay and for our mobile apps.”

“Mobile is on fire…and it’s blurring boundaries,” Donahoe said. “The iPhone changed everything…smartphones will account for 40 percent to 50 percent of Web access in a couple of years. Consumers tired of multiple accounts and multiple checkout experiences and unnecessary friction, and we’re responding. [When] we launched eBay Fashion, we moved from one-size-fits-all to a tailored experience. As you all know, shopping for clothes is not the same as shopping for auto parts or collectibles or diamond rings.”

Miriam Lahage, who was hired in August as the company’s first chief fashion officer, is an example of its commitment to fashion, Donahoe said. EBay has created a platform for established and emerging designers and brands. Narciso Rodriguez and Norma Kamali have launched exclusive eBay lines. Last week, Derek Lam said he’ll introduce a line in the spring that will be the first crowd-sourced collection, for which Lam will design a range of products and ask consumers to vote on their favorites that will go into production.

“With our fashion applications, we’re trying to serve a segment of users the way they want to shop,” Donahoe said. “We’re driving more vertical shopping experiences. The Fashion Vault has a very visual shopping experience.”

There’s also Daily Deals, which lists auctions ending in the next 10 minutes.

The company on Monday launched Group Gifts by integrating eBay with PayPal and Facebook. With Group Gifts, family and friends chip in on a gift for someone in their circle using a Facebook friends list. Other examples of social media affecting shopping include flash sale notifications delivered via Twitter and Groupon, which enables crowds to source deals.

PayPal, which is owned by eBay Inc., announced the availability of Mobile Express Checkout, a secure two-click checkout on a mobile device. Starbucks will use Mobile Express. PayPal, which offers apps for the iPhone, Android and BlackBerry, expects more than $700 million in mobile payments to go through its system by the end of 2010.

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