Twenty-three years ago this month I was living in New York and the world was all a twitter over "new" Coke. Coca-cola had built a brand, and a unique taste that had lasted through two world wars, and spread to nearly the entire world. Then they decided to tinker with the product. If you remember those days, you'll remember it was a big deal. eBay should take some lessons from what happened back then - I know they won't...but work with me here - I can dream can't I?
The Cola Wars
In the years leading up to 1985 Coca-cola was losing market share. People seemed to like the sweeter taste of Pepsi. Back then you could go into a grocery store in the U.S. and there would be a little stand inviting you you to take the "Pepsi Challenge" - blindly comparing a small sample of Pepsi (product "M") and Coke (product "Q") to see which you liked best. (I always picked Coke.)
Well, Coke figured they'd better do something, even if it meant tampering with a legendary formula that had been nearly unchanged for a century. They did research. They spent over $4,000,000 on research and conducted over 200,000 taste tests. All that served as the basis for the launch of a new, sweeter Coke on April 23, 1985.
The world went mad. Seriously. The launch created a public outcry, Coke headquarters received over 40,000 letters of complaint and over 6,000 calls a day to the company's 1-800-GET-COKE number. A psychiatrist Coke hired to listen in on phone calls to the company hotline, told executives some people sounded as if they were discussing the death of a family member. (Sound familiar eBay people?)
87 days later, on July 10, 1985, the company responded to the public demand and re-introduced the original Coke formula as Coca-cola CLASSIC. ABC News' Peter Jennings interrupted regular programming to share the news with viewers. On the floor of the U.S. Senate, David Pryor called the reintroduction "a meaningful moment in U.S. history".
What went wrong?
Coke spent a considerable amount of time trying to figure out where it had made a mistake, ultimately concluding that it had underestimated the public impact of the portion of the customer base that would be alienated by the switch.
The Aftermath
By the end of 1985 Coke CLASSIC was outselling Pepsi three-to-one. It put Coca-cola back in the number one spot over arch-rival Pepsi. (Some conspiracy theorists have even suggested the whole fiasco was a cleverly planned stunt to put Coke back on top. But Coke President Donald Keough answered all speculation by saying "We're not that dumb, and we're not that smart", as Coke Classic was reintroduced.)
Lessons for eBay
eBay's changes over the past year have had obvious effects on sellers in the trenches. The executives can talk about all the research they've done, they can try to spin the New eBay as better for everyone, they can say (which they regularly do) that "this is what we hear you want." But they have underestimated their customer's emotional attachment to eBay. Sellers are leaving, and for those that are staying - it will affect you too.
For sellers who stay on at eBay and say, "Go ahead and leave grouchy sellers, it will just mean more for us!" Consider your local shopping mall or (God forbid) flea market...are you more likely to spend time shopping at a marketplace with LOTS of vendors or just a few? We've all been in those malls on the edge of town that only have a couple of second rate shoe stores and a lot of closed stores - after a time or two of not finding what you came for, you don't go back right?
In examining the aftermath of the "new" Coke fiasco - it was discovered that there was much more to the story than just taste. The Pepsi Challenge was a sip taste or CLT (central location test). The Coke people made their decisions based on this small test. But often the CLT is blown away when a person does a home-use test. In other words, if people took a case of Pepsi home, they may not like it more than Coke.
eBay is doing something similar. They add or change little bits here or there, and they say it's what customers want. But are they actually asking "customers" to look at the whole, new eBay? or just one-off features and changes? Once the customer gets the whole product, with all the changes, they don't seem to like it.
Those Coke executives lost site of the fact that people don't drink soda "blind." They associate the drink with the brand. They have emotional connections with that Coke logo. Coke focused exclusively on the product, and left the brand behind. eBay execs have done the same thing. They're ready to throw out everything that made eBay - eBay in pursuit of a "better product." It seems eBay is trying to be more like Amazon just as Coke wanted to be more like Pepsi.
eBay is letting loyal, emotionally attached customers slip away. eBay was fun, certainly more fun than Amazon, but decision makers at eBay are dispensing with fun. Malcolm Gladwell points out in his book Blink, "Coke's problem is that the guys in the white coats took over." eBay's problem is that the MBAs took over. They don't understand people, and they're losing to Amazon.
Coke is once again the number one soft drink. What would have happened if they had not listened to their customers? Well, it's a pretty good bet you wouldn't be reading this.
PS - Just to make the point - TASTE is not what drives listings like the ones below, it's all emotion for a brand. How are the eBay collectibles doing?
 Vintage 40s 50s Round Coca Cola Button 24 Coke Sign US $624.50 |
 Authentic Coke Coca Cola Advertising Tip Tray 236 P US $455.00 |
 Original 50s Enamel Projecting Coca Cola Coke Sign US $373.47 |
 1920s 1941 Gilbert Store Coca Cola Coke Clock Rgltr US $356.26 |
 Antique 1940s Coke Coca Cola Airline Cooler Airplane US $350.00 |
 Coca Cola Coke Door Push Antique Vintage US $449.00 |
 Coca Cola Lgb Starter Set 72428 New In Box Coke US $450.00 |
 Original Coca Cola Sign Things Go Better With Coke US $185.00 |
 Rare 40s Coca Cola Coke Selmix Fountain Dispenser Exc US $170.49 |
Popularity: 10% [?]
{ 1 trackback }
{ 8 comments… read them below or add one }
You know, this is probably the single best analogy I’ve seen for the whole “New eBay” situation. One can only hope that eBay sees the light before it’s too late.
Great post Steve!
eBay was always more than a place to buy and sell, it truly was a social phenomenon. For years whenever people found out that I taught entrepreneurs how to build a business on eBay their response was always the same “I LOVE eBay!”
Not “I shop on eBay” or “I buy things on eBay” but I LOVE eBay.
What other company inspired that kind of reaction? But it was the individual buyers and sellers collectively who made the magic of eBay happen.
eBay shouldn’t be Amazon. We have an Amazon. eBay should be the best IT can be and take what has always been special about the site and embrace and enhance it.
Great post. Thanks for encapsulating the zeitgeist with a spot-on analogy that sparks an “a-ha” moment.
“eBay the brand” is much bigger and more valuable than current revenue trends would suggest. Yes, the brand still has to grow and adjust, but all the B-School formulas in the world can’t replicate the magic of the simple notions that started eBay and led consumers to love the brand.
Back to basics, eBay – and watch the brand equity and stock price go through the roof!
I was one of those people that wrote Coke a letter, I didn’t rant or rave about the loss of my favorite soft drink. I just said, my coffee has to be perfect, fresh ground and old fashioned drip, my tea has to be brewed in a teapot with loose leaves, and my soft drink has to be coke. Please do not take away one of my favorite drinks. They sent me a very nice reply, telling me that my grocery store will still have the coke syrup and can serve the old coke in the deli, and they sent me a years supply of coupons for the classic coke when it comes out. I call that class, it only took 85 days for them to realize a grave mistake, the nuts at eBay, will never admit to making the biggest mistake in E selling history.
I’m not sure if there is a translation for “We screwed up.” in Disruptionese.
Steve,
Great article, very insightful and well thought out. I have always seen the parallel between eBay and AOL but this is a very good alternative history lesson.
Keep up the great work!
Scott
Nice analogy. I think the move towards an Amazon flavoured eBay is what the execs think Wall St want to see but I’m not convinced that eBay can beat Amazon at it’s own game.
With Amazon you have a different (in the main) set of sellers working to a uniform path. eBay, and part of its initial charm, is that it’s path to success is so so different. That’s what made eBay successful in the late 90s and the strength that I think it needs to play to for future growth.
The verb “to eBay” seems to be disappearing and that needs to be won back by appealing to the hearts and minds of the collectors and aficionados that are the underbelly of eBay’s sales. Yet that has to be tempered with developments in the platform. When it comes to fraud, eBay was forced to be ahead of the game and streets ahead of the competition. The problems of rouge traders and the like will beset other sites if they grow and become beacons for commerce. I don’t expect any to overtake eBay by any great strides.
As for the MBA comment. Well as an ex eBay employee that did make me chuckle!
I’m an Ebay buyer for several years, and I don’t like Ebay today. I find a great deal smaller selection, and those “best match” searches irritate the daylights out of me. I find bigger variety of merchantise on Amazon now, which was not true when Ebay had so many sellers. Now Ebay gives me a general impression of a police-state…I can’t fully explain this, but it’s my gut feeling…and I don’t like feeling it each time I’m on Ebay’s site, so I don’t go as often.