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March 22, 2009

Did they just start using their own product?

Heinz ketchup has a little foil cap on the inside between the bottle and the cap. For many years it was completely flat, just simple airtight lid. It was phenomenally hard to remove. You could not remove it with your bear hands. The dual layer aluminum plastic material was too tough to pierce with a plastic knife, as many a public picnicker has discovered. You had to punch it out with a metal knife, inevitably leaving behind a mess of cap remains. Then one day, Heinz started attaching a small foil tab to the end of the cap. Now you could cleanly remove the cap without tools. One day at the dinner table my father pointed this out, and he noted that the many years this improvement took was a bad sign about Heinz management. He wondered if they even used their own products. He simply thought that no one who used ketchup and had the power to change the packaging design would had tolerated such a interface for so long. Some combination of managerial incompetence, failure to use their own products, or not caring because of enormousness dominance in the ketchup business (Heinz’s U.S. market share remained stable through the 1980s and 1990s with 43% share in 1998) must have caused this neglect. It is interesting to note that after packaging improvements put in place in 1999 their market share rose to 60%.

So it was through the lens of Heinz ketchup packaging that I viewed a persistent problem with Ebay. For as long as I could remember Ebay only allowed you to search for prices based on the current bids. You could not include shipping information. When Ebay was primarily for US customers selling to other US consumers, this wasn't a big deal. Most people charged the actual cost of shipping and packaging, and so the bid price was representative. That hasn't been true for a while now. Major resellers list much if not most of what is sold there. Huge overseas sellers provide a discounted product, but often with much larger shipping charges than American sellers would. And of course, knowing that many customers would not look carefully (or couldn't because of the Ebay interface) they lowered their reserves and buy it now prices to sell at a mild loss and make their profit on the shipping.

So I wondered, what is it, market (about 17% of online sales and about 95 percent of auction listings) giving it near monopoly) power, managerial incompetence, or was it just a failure to use their own products. It is hard to imagine Ebayers not using Ebay, but if Heinz's experience is an indication, your monopoly can still do better with a better product.

As I mentioned once, this shipping price annoyance is why I like Cooqy. That's a Flash application that I can use to view Ebay listings with the total price (bid + shipping) as well as other special searches like product color and country of seller origin. However, it is slower and generally speaking not as good a user experience as the Ebay website.

The other day I read that EBay Moves to Recharge Its Auctions. I didn't really know what this was going to mean for the customers. There weren't any details. But I noticed one thing when checking Ebay this morning,

You can now search based on price including shipping. Ebay just implemented a simple change that made their product much better. This is a sign of good things happening in that company. Their management is now awake.

Posted by OneEyedMan at March 22, 2009 12:54 PM

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