posted on July 19, 2001 11:41:18 AM
eBay vs. Everyplace Else and the Missing Ingredient
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eBay works. Not as well as many of us would like but it does provide the opportunity for a large number of profitable sales.
Everyplace else doesn't work. Sure, some people do some business elsewhere but no other site offers a large number of sellers the opportunity to sell a wide range of products on a continuing bases with acceptable profit margins.
What's the difference?
It's not hardware and software. Other sites certainly have adequate capacity and ebay isn't renowned on this criterion.
Customer Service? I won't even "go there" in discussing eBay's service but other sites certainly are attempting to provide good service.
Support Services? ebay certainly has a number of useful tools but many are transferable to other sites or easily replaced by choosing among independent providers (eg - BillPoint/PayPal).
Sellers offering a wide variety of competitively priced items? YAHOO, Gold's and Bidville are examples that sellers will show up almost overnight to stock the shelves of any site that holds some promise.
So, what is the difference? Buyers!
ebay has them coming to their site in large numbers to shop.
No one else has them or, if they do have customers as Amazon does, they have a narrow focus like books and are not easily transferred into becoming shoppers for a wide variety of items.
Customers look at the marketplace and choose between eBay or one of the thousands of smaller sites.
If the "other" sites cannot build sufficient traffic themselves maybe they will have to take a different approach.
Locally stores band together into Malls or communities and advertise for customers to come to the shopping location and not just a specific store.
If online sellers could develop a Mall and give customers one large alternative choice of destination for shopping it might bring better balance into the marketplace.
Easier said than done.
Wal-Mart crushes small local businesses but Malls compete with Wal-Mart.
If online sellers and smaller venues could group together into a Mall they might start to provide a competitive alternative. And if the sellers also had some ownership in the Mall they might protect their own long term interests and be willing to make a greater commitment to it's success.
Dissatisfaction among independent sellers is an opportunity.
How that opportunity is dealt with will be our future.
What do you think should, could or will happen?
PS. You might find this Wash. Post story, published today, of some interest.
posted on July 19, 2001 01:46:04 PM
Hi, Ray. Thanks for the link. It will be interesting to follow eBay's success in retail markets. A good part of the article discussed JC Penny's sales. They noted the pair of pajamas that went for "half of retail" as a success. It may be that eBay offers retailers a good way to liquidate old stock.
I am kind of skeptical about whether this can succeed in any significant way. Liquidation items may sell on eBay at half off, but each sale requires a LOT of bookwork, and that pair of pajamas requires record-keeping, shipping and of course the obligatory feedback. Is it worth it to Penny's just to make a $5 sale? If they're going to sell for half off, they could just place a big bin in their store and save themselves the headache.
Also, buyers will be paying additional shipping fees, and then there is the wait involved in buying mail order. A collector may be willing to wait a week or two to receive their item. But for an item available in any downtown department store?
It may be that Penny's and other retailers will create their own eBay stores, and if they are willing to combine shipping, they might succeed. But that is still a lot of work just to liquidate old stock for half off.
Some retail items may be better suited for eBay. For example, Sun's computers are pretty pricey and Sun doesn't have its own retail stores. Sun could sell their older (or even current) stock on eBay and the name alone would carry a lot of weight. Disney collectibles don't have their own store, so perhaps for them eBay is a good alternative. But any retailer selling inexpensive, closeout items will face the same problems we all do: slow sales, listing fees, customer support, etc.
I disremember the name, but Half.com partnered with a big bookseller this week and the number of listings jumped from 15 million to 50 million. That is probably the scenario we are looking at with eBay, so it will be interesting to see how the Half.com changes play out with buyers and sellers. Also, not only are final value fees down by 1/3 over last year, but completed sales are way down. I think pretty soon sellers will be moving to the free listing sites just to stay in business.
I think one thing is clear. eBay has been pivotal in combining the "age of connectivity" with merchandising. The result is a glut of items available at the click of a mouse. Prices for everything but the most unique items are way down and probably won't go back up. (Sellers waiting for the competition to dry up and blow away will probably wait a long time!) eBay is the perfect application for the new business Internet.
. Internet Pioneers
posted on July 19, 2001 03:48:18 PM
Ray: You make some good points.
I'm going to be very careful what I say in this post because I don't want to it to be promotional in nature.
However, just to share some thoughts...
I have been on eBay a long time - almost since it opened. (My name is not Wedgewood there, just for the record.) I too am extremely dissatisifed with what is going on at eBay and have watched and tried many of the other sites looking for a viable alternative, or at least a half-way viable alternative. All have their pluses and minusus but all lack the critical mass of buyers.
I have also watched with great interest in your work on behalf of a co-op site. While I applaud your efforts, I for one do not see a co-op as a viable alternative for me. (Another whole topic here, which I will not go into a this time.
However, there is a new site entering the game that for the first time has tweaked that inner voice in me that says "this is what I have been waiting for." Yes, there are no bananas there yet, but they will come. Bookmark this post and if I am wrong, in a year's time I'll pay the piper - you name the price.
Now from your post above, let me sincerely ask you to re-evalute this statement that I will quote here:
[i]So, what is the difference? Buyers!
ebay has them coming to their site in large numbers to shop.[/i]
Why is it that eBay has the buyers? It's because eBay has the sellers!
I think sellers have collectively, to date, not found another site that can hold a candle to eBay, even with all the not so nice things that are going on there now.
Now, how to say this without seeming promotional is going to be difficult, but I, for one, have found a site that has earned my respect, support and confidence. I found it here on Auction Watch in the Other Auctions section and that site is carnaby.com
The internet auction scene is still in its infancy. I think this site will blow the others out of the water in short order once it gets into high gear.
I am not in any way affiliated with this site. I simply REALLY like what I say there and am anxious to get started, prepared to weather the start-up lags and whatever.
If quality sellers start to list on quality sites, I think the buyers will follow. There will always be an eBay, but there will soon be some excellent alternatives. For, me, I have the feeling that I have "come home" on this new one.
posted on July 19, 2001 04:20:55 PM
I've also been on eBay for years. eBay, unless incredibly stupid will always crush the competition because of sheer size. Want a widget, the "new site" has none, eBay has 50. The "new site" will never make it unless it has a fraction of the users eBAy does.
What WILL happen though is eBay will shrink when the novelty finally goes. Right now in most major categories people bid more than they can buy an item for retail!
eBay started out as an auction for collecters and where you could put up that piece of junk you were going to throw away an actually SELL it!
Now most of these pages are filled with retail sellers who complain about not making money. These sellers yearn for the days when people thought they were playing a video game. No seller has ever explained to me how they can sell, not take CC, Paypal, etc, wait around to ship, and be more expensive than retail! Virtually everything I buy I order in the afternoon, get the next day, get a warranty, and pay less than eBay! This I think is why the manufacturers and big retailers are looking at eBay. To lap some gravy before it all collapses!
posted on July 19, 2001 05:51:49 PM
eBay loves the image of easy money to be made in sales. It loves nothing more than millions of junky items listed over and over again. The sellers know this isn't good for their businesses.
But as eBay moves from the "virtual flea market" format that was so popular, into business-to-business sales, I think the buyers as well will become dissatisfied. The problem is, there's nowhere else to go.
But already alternative specialty sites are popping up. Vintage Cooperative Marketplace came online this week, and another vintage collectibles co-op I believe has almost finished filing papers. Sellers want a change, and buyers will follow once the long-favored eBay categories begin to dry up. This isn't like a small town with a Sears store and no other options. Buyers can click through to a specialty site as easily as eBay, and universal searches will facilitate the movement. Once customer loyalty is established, for many users eBay will become second choice.
"Free for now" sites offer some respite, but after five years buying and selling online, and after watching prices and fees increase across the board at the beginning of this year, those sites don't seem like a realistic option. Any site that succeeds will follow eBay's model, go for the money ... and why not? After all, the model of cutthroat competition is the one we all know and love, right?
Co-ops work differently. Not only do they offer members an equal voice in the operation of the business, but they also promote principles such as mutual self-help. So, as a simple example, instead of 10 potato farmers competing with each other to drive prices down, the farmers combine their crops to sell them for the best price. The organizational aspects are not that difficult, though it does take some getting used to.
Another important thing is that co-ops promote other co-ops. By buying from an (online auction) co-op, you are promoting your own business. So as new co-ops emerge, the customer base is already there and increasing. Next Christmas, if every co-op member buys 10 items from their auction co-op, they can count on making 10 sales themselves.
Any co-op worth its salt must consider both philosophical and economic aspects. No one is expecting an online co-op to topple eBay overnight. First sellers must see the inherent problems with eBay, with eBay's managers making billions of dollars, while maintaining poor equipment, unfriendly policies and offering poor sales. Yes, eBay does have the momentum and the market share. That will continue as long as workers grumble about the conditions at "the mill" and then go back there every day.
Already the small sellers are being squeezed out. Next year it will be the mid-level sellers. And then eBay will find itself on very shaky ground.
. Internet Pioneers
posted on August 8, 2001 01:09:27 PM
hi reston and amy - good points...as you have, we've been on ebay for several years. But this year, we've begun to notice buyers migrating (we do a very informal Q&A with buyers after the sale) and found many are 'trying - tentatively other sites'..
that's how we found bargainandhaggle. later I read about it here...
i've never seen any advertisements or any promotions... just guessing.. but, its probably somewhat of a part-time operation. Yet, responses are quick, site is clean and although fvf somewhat higher, there's a longer shelf-life so to speak...
maybe an alternative... time speaks better than i do
posted on August 8, 2001 02:38:51 PM
imo, what would go a long way in allowing another site to fully establish is a sort of 'google' for auction sites. it'd have to come to have name recognition as an auction buyer's tool.
the biggest problem, as a buyer, is being able to do good searches. if i'm able to find what i want, and my searches are starting to consistently show that what i want is on newbiesite.com, that's where i'll go. and eventually, stay.
i wonder if it's possible for a site to have specific entries within a listing that would make searches better for buyers. boxes that list condition, size, era (if applicable), whatever details buyers would be most likely to use to narrow down their searches. if that information were cataloged in an auction search engine, and the engine began to get name recognition, i think that site would end up giving ebay a real run for its money.
posted on August 8, 2001 04:10:34 PM
I've been buying on eBay for several years...only started selling about 6 months ago. As a part-time second-income seller, I am perfectly happy with eBay, maybe because I don't know any better (ignorance can be bliss). I don't do any off site selling so none of these rules about links affect me, and I don't find the fees out-of-line or burdensome. I can see, however, how frustrating it would be to full time sellers who have a lot more invested in this process than I do.
As a buyer, searching eBay is always frustrating. One thing I wish they would do is make the keyword search more flexible. RIght now you either search one category or you search them all. I'd like to see eBay allow me to do one keyword search in multiple categories of my choice. Anything that makes it easier for a buyer to connect with a listing that interests him has to be good for the sellers too, right?
And a pox on those "Secrets of eBay" CDs and "Big Bubble Wrap" listings that seem to be listed in every single category on ebay...and multiple times. Just clogs things up.
Gerald
"Oh but it's so hard to live by the rules/I never could and still never do."
posted on August 9, 2001 05:01:52 AM
Two things bring the buyers. One is a volume of sellers with millions of items. And remember that the majority of buyers have no idea what sellers are going thru, thus no reason to leave ebay.
The other is advertising. Literally everywhere I go on the net, I run into ebay advertising. And then on TV to boot.
It's on AOL (and whether you like AOL or not, they have millions of subscibers), news places, games, sweepstakes, you name it and an ebay ad will be there.
Obviously small new start-ups can't compete with this kind of advertising or the numbers of sellers and buyers ebay has already built up over the years.
I do agree that bargainandhaggle and carnaby offer us the best hope for an alternative site(s).
posted on August 9, 2001 09:47:36 PM
I keep seeing these same arguments over and over again. The sellers keep complaining about there being no buyers, but, at least in the technolgy areas where I hang out, as a buyer what I see is page after page of identical items from the same seller, with the starting bid so high I can do better at the local stores, let alone how much better I can do at Internet Store fronts! Of course there are no bids. And if some individual does try to sell off some of his 'basement treasures', it just gets lost.
If sellers really want to start up a new venue, they are going to have to be willing to start there items off at the same prices they use on eBay and be prepared to take the big hits in profit for a few months. Once word gets around to the sellers that you can get items for half the price at your new venue, they'll come charging your way.
Either that, or if you could find someone with deep pockets that would spend some of the advertising budget on making sure sellers get some kind of profit. Say, for example, the first 45 days the site pays you the bid price along with the buyer. Then another 45 days at 66 percent award from the site, etc. I don't know if this would work either, but if you don't find some way to bring the buyers along, it doesn't matter where you go.
posted on August 10, 2001 04:32:17 AM
Always seems like there's new competitor for eBay: Yahoo is DOA by their own hand, Bidville is stillborn (had good items on there for months and not even a page view!) and so on. I really don't think large corporate sellers should be on eBay as they're the reason eBay exists so the small guys can have a web presence. However, I probably won't do biz with them because if I can't find it on their sites, why would I want it somewhere else and have another middleman?
posted on August 10, 2001 05:15:31 AM
eBay's fees are not burdensome IMO as long as you get rid of these payment services like PayPal and BillPoint that take a cut of your profits. Offer FREE electronic payment via Yahoo PayDirect, or services where the buyer pays for the use of the service (i.e. Citibank's C2it or BidPay) and take back some of your lost profit. It really adds up over the course of a year!
posted on August 10, 2001 11:53:02 PM
Thanks for this interesting post reston_ray,
The dilemma is well known and quite simple. eBay has the sellers which makes it easy for the buyers to find what they want, which keeps the buyers coming back, which keeps the sellers from going elsewhere.
Once someone makes it to the top of the mountain (eBay) it's very hard for anyone to knock them down. They can then dictate the rules with little fear of consequence.
I believe that you need only 2 things to seriously contend.
The first is huge amounts of products. Some of the "free for now" sites have shown they can do that.
The second is promotion- you have to bring in sufficient buyers to satisfy the sellers
Promotion comes in many forms. From tv commercial ads to banner ads to word of mouth.
Word of mouth can be just as effective but, much less costly. Word of mouth only happens when people are either being paid or truly believe in the product or service they are recommending.
Back to the "mall" or I would call it network concept.
Lets take a site like InternetPioneers for example the sellers at IP believe in the site and promote it. They bring in a certain amount of buyers who search for products. What happens when they don't find what they are looking for? Back to eBay? No. Not quite yet, InternetPioneers says, sorry you didn't find what you are looking for try MegaPowerSellers auction site (made up) still no luck? try JoeSmallTime Site? Still nothing? Try Vintage Co-op. Yes found it!!! Of course this would all happen in a matter of seconds.
This could have happen in reverse. A buyer from vintage co-op could have been sent to Internet Pioneers.
Ok. assuming buyers can find what they want. What about promotion?
Well, the sites promote themselves like any site would However, every site is also promoting the other sites in the "Mall".
Unlike a brick and mortar mall, each auction site is completely independent of the "mall" they are set up on their own computer or server or host. They have the right to detach from the "mall" if they ever decide. They can grow as big as they want or stay as small as they want- complete liberty.
posted on August 11, 2001 06:16:57 AM
And pretty soon the bigger players in the "mall" decide there is a need for more rules and more structure in order to protect market share, and the little guys get ignored because they don't bring enough to the mix to matter, and then we'll see postings on message boards about how the mall no longer cares about the little guy and has any one come across a viable alternative and the cycle begins again....
Just my daily dose of cynicism and meant to provoke thought, not anger...
Gerald
"Oh but it's so hard to live by the rules/I never could and still never do."
It really adds up over the course of a year!