Former Country Manager at Airbnb and Director at eBay, APAC
Sam has over 20 years experience running online marketplaces. He is the former Country Manager of Australia and New Zealand at Airbnb where he scaled the platform to over 250,000 listings from 2014-19. Sam was previously the General Manager of Australia for Dollar Shave Club and spent 5 years running eBay Southeast Asia from 2000-05. Read moreView Profile Page
Sam, great to have you with us today. Can we start by diving into your core lessons from running the marketplace, at eBay?
Obviously, it was very early days, back in 1999, when eBay, in Australia, was the first international operation for eBay. eBay, even though it had already gone public, as a company at that time, a big part of setting up their first international office was really how you were able to build on the core marketplace tenets of supply and demand, in a new market, but plugging that, effectively, into a global marketplace. It was really building the marketplace from scratch. You really needed to start with the supply and I think that’s a key learning for marketplaces, in terms of, it is pure economics; it is supply and demand and what needs to come first. I think you need the supply for there to be a marketplace. Of course, the demand will drive where the marketplace goes, but you really need to have the supply, in the first instance. It was really about building supply.
Some of the other things we learned are, purely about the economics of supply and demand. It was also about the network effects that you’ve got, when you’ve got a two-sided marketplace and the benefits you get from both sides; both from the supply side and the demand side and where that can come from. Particularly on the demand side, it can come from various places that you may not have been looking for. Another key part was the role that merchandising plays. It really is, thinking about the shelves in a supermarket or even going a step further, on aisles in a supermarket and what is the supply that you put on the different shelves. Then how you arrange or rearrange the products on those supermarket shelves. It’s such a really important part of a marketplace. It’s interesting how those offline lessons can be applied to the online world. I know, in early days, wherever the eBay marketplace was, the global marketplace, the US, parts of Europe, or even in Australia, it was really important to look at the categories, which could be used as an analogy for aisles in a supermarket or even shelves, that where you might go from a one or two lane supermarket to an online marketplace that has more than 50,000 categories. So the merchandising that you do and the seasonality of that, you apply the same offline learnings that you would to the online business.
Just taking the first point you mentioned, about supply, what was the biggest challenge in recruiting new vendors and supply, to the marketplace?
Of course, in its early days, the heart of eBay was the collectables business. People and communities all around the world, were coming together to trade collectables. Much was made, originally, of Beanie Babies and whatnot. Collectors provided a ready-made source of supply, for the eBay community. I think it was in 2001 that eBay introduced fixed price. With fixed price, you provided the opportunity for professional businesses and retailers to really come onto the platform and sell in that format. In terms of managing supply, that provided the opportunity for eBay to, effectively, go out and find the type of supply it needed, as opposed to it being more organic and just organizing the shelf space.
It was a matter of identifying where there was excessive demand in the market, whether that was where you saw the conversion rates on products or the average sales price of products increasing, in particular categories. But then, that provided the opportunity to go and engage with either existing sellers or, potentially, new sellers, that you could bring onto the platform.
What sources of demand were you most surprised about?
From a demand side of things, the opportunity that you have with the marketplace is to tell the stories of the buyers and the sellers and how that connection was made, through a platform or a marketplace, such as eBay. One of the interesting things about eBay is when it became part of popular culture conversation. By sparking those instances and shining a light on interesting items that were maybe available on the marketplace and the transactions that were taking place and maybe even the personal connections, from someone around the world that was connecting with someone else, that was a really interesting way of driving demand. I think it would be fair to say that those stories are amongst the most interesting. What that does is then provide the opportunity for eBay, in this instance, to amplify those stories and tell those stories, in the media and that certainly benefited, significantly, from a demand point of view.
Just returning to the point you made on merchandising. Clearly, online marketplaces, 50,000 categories, unlimited shelf space. How did you transfer the learnings from offline, organizing aisles and shelves, to the online marketplace?
Certainly, eBay benefited from a significant amount of talent that came and was attracted to the business. We had a number of really great merchandisers, from their past lives, when they came to eBay. They did a really great job of instilling the discipline and how you use the data to help organize the marketplace. Whether that was Meg Whitman, from her merchandising experience, to folks like Jeff Jordan, who was leading the US business of eBay, at the time. Then onto other folks, like Michael Dearing, another good merchandiser who took their offline experience into some other online ventures and then to eBay and instilled the discipline that was required to grow a business. Then you would have other merchandisers and other people that ran categories. Folks like Dan Neary, from the collectable side of things, that knew what they were doing, or Geoff Iddison, from the Sotheby’s business, into eBay at the time. How did they run businesses?
We launched eBay Sports, with Bob Hebbler. Folks that bought their offline merchandising and retailing experience, into eBay and that was a really important part and I think a really great way of getting things organized.
How were the categories organized, in the early days, as you did scale the marketplace?
At the outset, eBay was born in collectables, whether they be coins and stamps or comic books. Ultimately, it moved far more to practical things. Clothing, shoes and accessories was one of the first billion-dollar categories on eBay. The motors business was a business unto itself. It really just began to mirror the offline world. As those categories grew, you needed to create shelf space for them and then you needed to organize that shelf space. If there was a particular product or a category that was more popular than another one, then you elevated the merchandising of the category and the products within that. Sometimes, that would be seasonal. If you moved into the summer months, what are the goods that folks are requiring, in the summertime. eBay was a barometer for that.
When looking at organizing and showing certain categories at certain times, to different people, throughout the year? What was the biggest challenge in terms of organizing inventory or merchandising, on marketplaces?
Certainly, one of the challenges for eBay, is that the marketplace had become so big, that it became all things to all people. It got to a point that that size was, perhaps, its own worst enemy. As shopping experiences online continued to evolve, bidding or buying at fixed price, on eBay, may have been a sub-optimal shopping experience, compared to a category specific retailer, that may have entered the market. As an example, buying shoes, it was maybe a better shopping experience on Zappos, than it was on eBay. Or if you were buying a fashion item, it might have been better to buy on Nordstrom.com, than it was on eBay. Or when buying a computer, you may have had a better shopping experience elsewhere. So one of the challenges that eBay had, with its size, which was its greatest strength was starting to become its greatest weakness. It couldn’t recreate a marketplace specific to a category and it needed to break what was its greatest strength.
That’s what you see today where, arguably, eBay are getting picked off in certain verticals, for specific marketplaces or e-commerce offerings, to sell the category?
I think that what eBay had been able to achieve, through a long period of time, is that it became the destination for you to go online and purchase something. Of course, others have caught up now. We have seen the incredible growth that Amazon has had, in terms of how they’ve established their own marketplace and the things that they’ve done and was eBay able to do those sorts of things at the time? Perhaps it just wasn’t able to.
What metrics did you focus on at eBay, versus Airbnb, as a manager of a marketplace?
At eBay, one of the things we did was, we had access, very early on, to really great data sets and really good data scientists. They were certainly amongst the smartest people, within the organization. The metrics that really drove the eBay business, was gross merchandise value, which is the product of the number of listings times conversion rate times average sales price. Understanding the impact that each of those components had and the role they played, in driving growth and overall GMV of a category, was really important. That was really the focus.
On the demand side, having the number of users, very early on, was certainly a big part and how we were able to acquire new people and new demand, into the marketplace. Then it was, effectively, listings and different components of that and, also, how we monetized listings in different ways, became a significant part of the eBay business. But it was really listings, conversion rate and average sales price.