eBay and New Coke - Lessons Lost

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?

Ad51 Red Green Coca Cola Coke Iron On Patch US $.80

1960 Coca Cola Calendar W 1959 Santa Coke Vintage US $31.00

Coca Cola Limited Edition State Of Origin Nsw Coke US $4.86

Nice Collectible Coke Coca Cola Wrist Watch Bottle Nr US $2.99

Coca Cola Can Cookie Jar Canister Coke US $29.01

Vintage Enjoy Coca Cola Classic Coke 80s T Shirt M US $61.00

Coke Coca Cola Red China Olympics Aluminum Bottle US $12.49

Coca Cola Fridge Magnet Coke Bottles And Ice In A Pan US $.99

2 Free 20 Oz Coca Cola Products Coupons My Coke Rewards US $1.54

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