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BY ayman alhakami

eBay: An e-commerce success story


Vincent Wee Fri, Nov 17, 2006 The Business Times

THE one area in which online retail commerce seems to have been a success is eBay. Almost everyone who has made a transaction on the Internet has used the global online marketplace that trades just about everything, either for thesale itself or to compare prices. This is something that excites Jim Griffith, dean of eBay education. As an instructor for the training organisation known as eBay University, Mr Griffith travels the world spreading the message of how to use eBay to best advantage and ultimately generate more users of the site. In a recent interview with EL, he spelt out some of the trends in the online world at the moment. These mirror those seen in Internet commerce here as well. For example the observation that younger Mr Griffith: There are still obstacles that people, aged from 18 years to their mid-30s, hinder the growth of retail e-commerce. are more inclined to buy online. It is definitely a Photo/ EBAY global phenomenon, with a generation that has grown up with the Internet and is comfortable with it. In an interesting parallel development, many people who are middle-aged or older are becoming sellers on eBay. These are typically people in their second or third careers, and they are avid students at the eBay University. They have discovered the power of selling on the Internet and are keen to use their business skills and backing to do well at it. The exponential growth in the range of products available on the site is the other main factor that is driving growth, Mr Griffith says. 'eBay has changed so much over the past 10 years.' People's perception of the site especially has changed with the times. In the '90s, eBay was seen as a niche exchange for quirky goods like Beanie babies and other collectibles, says Mr Griffith. It is now thought of as a much wider marketplace with unmatched price-matching. While the future holds much promise, Mr Griffith says there are still obstacles that hinder the growth of retail e-commerce. Chief among these are infrastructural weaknesses, differences in payment systems, and culturalobstacles. The first issue is much less of a problem in Singapore where our IT and logistics infrastructure is among the best in the world. But in some places even gaining access to the Internet can be difficult and delivery systems arestill running at a pace not in line with the new economy. This affects Singapore in that paying for and receiving goods ordered in even countries as developed as the US remains a problem. Obviously the more inconvenient thebuying process is, the less likely people will be to use it. Payment systems and cultural barriers to online commerce are the intangibles that are a little more difficult to overcome. Here, the problem is quite complicated because there does not seem to be a particular pattern even withinAsia, for example. The Internet commerce figures clearly illustrate that in certain Asian countries such as the Philippines, South Korea, Japan and India, people trust strangers enough to carry out transactions with them. But in other places, such as Singapore, Hong Kong and Italy, this level of trust seems to belacking This is seen by the response one often gets that people here are quite happy to sell things on eBay but are rather more reluctant to buy them. Overcoming the human software issues

as well as sorting out the logistics impediments on a global scale will be key to the further growth of retail Internet commerce.

T H U R S D A Y , J UN E 1 2 , 2 0 0 8

The failure of eToys.com in e-commerce and its causes

EToys.com is one of the websites which sell toys via e-commerce. EToys.com was founded by CEO Toby Lenk, COO Frank Han and Bill Gross in 1997. Etoys seemed like a very good idea for busy parents. It provides them a chance to order thousands of toys category from the comfort of their homes. The most popular sections of eToys.com Babycenter and Parentcenter which provide articles and newsletters for new and expectant mothers had formed a loyal customer base. However, eToys.com suffered a black eye after it failed to achieve one of its initial goals speedy and reliable during the Christmas in 1999. Thousands of customers complained that their orders were either late in arriving at their destination or contained the wrong merchandise. This event had seriously destroyed the first image of eToys.com for new customers and made many worry of using the site again. Unfortunately, Etoys.com was gone into another crunch when Toys R Us and Amazon.com formed a partnership in August 2000. Etoys.com faced a major competitor during the 2000 holiday shopping season. In order to avoid the shipping missteps of 1999, the company spent heavily to build two large warehouses to handle inventory and delivery. Nevertheless, the total $ 120 million income of sales for the 2000 season was just half of the companys expectation. Short of money and other funding options exhausted, eToys.com filed for bankruptcy finally in March 2001.

How Intel turned failure into success


Intel's shake-up of top-level management marks the final stage in a major transformation of the company's strategy. It is one that started nine years ago with a failure that threatened to derail the career of Dadi Perlmutter, the very same Intel executive who has been just been promoted to managing product development for all processors. Indeed, he has now seen as a leading contender for chief executive, once Paul Otellini steps down. That failure was Timna, a design that evolved under Perlmutter's leadership at the turn of the century in Intel's development center in Haifa, Israel. Perlmutter hoped Timna would put the center on the map. Which it did, but not in a good way, at first. Timna was a system-on-a-chip (SoC) design, which combined a processor with some of the other components necessary to build a PC. SoC in itself is no bad thing, and the key integrated component of Timna, a memory controller, is a very good thing to include on the same silicon as the processor itself. How a processor uses memory is absolutely key to its performance: AMD has made a lot of hay by putting its HyperTransport memory circuitry on-chip. There are a lot of performance benefits if that integration is done right. It is also cheaper to make single chips, and cheaper to design them into computers. Timna, however, had issues. There were three major flaws with the design two conceptual, one practical. The biggest one was a gamble that went wrong: Intel predicted that a new high-performance memory technology, RDRAM, would become popular and therefore cheap. The full story of RDRAM is for another day: it is enough to note that while it had plenty of technical promise, some very questionable business decisions by the technology's owner left it high and dry and overpriced long enough for other, more mainstream memory designs to catch up. By the time Timna was coming to fruition, it was becoming clear that RDRAM was not going to be anything like competitive enough for the low-cost sector. Then there was Timna's positioning. Timna was intended to strengthen Intel's hand in the low-end PC market, where it would compete mostly with Intel itself. That is a decision which is very hard to make, and just as hard to stick to. In general, it takes an outside force to make such moves happen, even in a company such as Intel that has some history of making market-changing moves on its own initiative. If RDRAM had proved to be a potent, cheap technology, and Timna had given Intel a unique foothold in cheap, high-performing PCs, then the decision would have been seen as a bold move to forestall the external competition. Without those results, it became an exercise in killing the company's own margins. Which brings us to the third terror of Timna: it did not work properly. The memory controller was reputedly flawed, and flawed in a way that could not easily be fixed. The systems worked after a fashion by the time Timna was canned in October 2000, there were already motherboards being shown off, and preparations for launch were well underway. Intel has never talked about exactly what happened: the most persuasive rumor is that with RDRAM failing to take off, the system had to work well with more standard parts, and part of the design just wasn't cutting the mustard. It was designed to be high performance and thus took a lot of power but did not deliver. Instead, the company looked at the market, looked at the chip, and decided that enough was enough.

Which was bad news for Haifa and Perlmutter, who suddenly saw their future as just another satellite of Santa Clara. But Intel is at heart an engineering company, and good engineers learn from their mistakes. The design team mulled over the lessons from Timna, in particular those about picking a high-margin market and designing for high performance at low power, and made some bold predictions. Then they went into negotiations with Otellini, a process vividly described four years ago by Intel manager Shmuel Eden, also part of the push. "We did it the Israeli way; we argued our case to death," Eden is quoted by Bloomberg as saying. "You know what an exchange of opinions is in Israel? You come to the meeting with your opinion, and you leave with mine." Two years later, they delivered Banias, the first proper notebook processor and the building block for the hideously successful Centrino platform. It was also the start of Intel's strategic move from speed demon to a company with an appreciation of efficiency. This move had long been mooted, but was harder to act on than accept. The move now looks a company lifesaver. The lessons learned from Centrino have been absorbed into the mainstream Core 2 design and have seen their most extreme evolution in the Atom. They are now key to all of Intel's target sectors, from embedded systems through netbooks to high-performance server parts. And just in time: with ARM starting its assault on servers, and the mobile revolution gaining pace, the world is mutating faster than Intel's roadmaps and it's low power all the way. No wonder Perlmutter's star is in the ascent.

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