Tinkering with the core mechanisms of the world's busiest e-commerce site is not to be undertaken lightly. Yet John Donahoe, head of Ebay's marketplace division, is preparing an overhaul for early next year that amounts to a major revamp of Ebay's core business.

If successful, it could revive the company's flagging growth while also strengthening his own standing as the likely eventual successor to Meg Whitman as Ebay's chief executive.

A former managing partner of Bain, the consulting firm, who joined Ebay nearly three years ago, Mr Donahoe has cast an outsider's dispassionate eye over some of the site's practices and found them wanting. During an interview at Ebay's headquarters in Silicon Valley, he talks with the clear and untroubled certainties of the consultant, and he has the prescriptions to match.

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"A year ago, we had 14 per cent of global e-commerce, w're the largest e-commerce provider, and our home page still looks like a flea market," he says. "The world around us had changed. In particular our buyers' experience hadn't kept up."

To catch up, Mr Donahoe has been trying to change some of the company's basic mechanisms - the balance between buyers and sellers, the way the community polices itself, its fundamental pricing formulae.

Changes like these can have unpleasant consequences. Nearly two years ago, when Ebay changed its pricing formula to encourage merchants to list more fixed-price goods, the market was quickly flooded with items that were often not priced at attractive levels. "Our system got overwhelmed. The ecosystem got out of balance," Mr Donahoe says. This change, he adds, had "massive reverberations", as some buyers turned away.

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Since then, Mr Donahoe has been on a mission to bring Ebay up to date, and he claims more changes for the site in the past 12 months than the previous four to five years combined.

These have included new ways of searching for items, to downplay the flea market feel, as well as the first overhaul of Ebay's much-copied rating system. Rather than a simple five-star ranking, Ebay now lets buyers rate sellers on a number of measures, while making the process secret so they no longer fear retaliation for giving a bad ranking.

The changes to come in 2008 could prove more significant and show Ebay grappling with some of the new realities of its market.

One of those realities is that auctions, while still the largest part of its business, are no longer so dominant. In the past three years, fixed-price sales have risen from 28 to 41 per cent of the total, Mr Donahoe says.

To adjust, Ebay is looking at moving away from its traditional initial listing fees and instead taking a bigger commission on a sale.

Will that risk a repeat of the disruption that occurred in 2005? The earlier debacle, Mr Donahoe says, reflected a management failure: "We rolled out this change globally with no testing."

The second part of the overhaul will address one of Ebay's fundamental challenges: how to put only the most relevant products in front of buyers and make sure they are from the most reliable sellers.

In the field of relevance, Mr Donahoe admits that Ebay is a novice. Until last year, he says, the company did not collect the data needed to analyse and understand its users' behaviour. With that information, it should be easier to return the best results for any given product search, much as a search engine does.

To try to weed out fraudulent and inefficient sellers, Ebay hopes to use its new buyer ratings system to greater effect and deliver tougher policing. A change to the site's search engine is likely to give buyers the power to hunt only for items from top-quality sellers.

Some Ebay buyers have complained about changes, which they say have penalised them unfairly. Mr Donahoe is betting, though, that finding ways to bring more buyers back is the most fundamental issue for the company - and that this will, in the long run, benefit everyone in its markets.

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