Friday, May 02, 2008

eBay Partners with Buy.com for New-In-Season Merchandise

eBay's "Level playing field" has a "bump" in it and it's called Buy.com

If you ever wanted a preview of the "New eBay," I've got a treat for you, it will look a lot like Buy.com's eBay store. You will be surprised to see 150,000 3-day Fixed Price listings. Yes, that is correct—150,000 FP listings, in categories like Books, Music, DVD, and Computers.

Each of the listings: requires immediate payment (no more nasty non-paying bidders), PayPal only, multiple quantities per listing, the listing run for 3 days and all of the items in the computer category include "Free Shipping". Also, if they are selling a item that has multiple color options , sizes or other options they will have one listing for the SKU and somewhere in the order flow the consumer can select their options. (Wouldn't this be a great option for other eBay sellers)

Buy has a 99.6 Feedback rating and DSRs of 4.8 across the board and has been actively selling on eBay since Dec. of 2007, but there was nothing special about any of that until this week. Thanks to a tip from a reader, I noticed an increase in Buy's Fixed Price listings. Well, I smelled a story, so I contacted eBay and low and behold, there was a story.

Here is the response I received from eBay Spokesman Usher Lieberman; "eBay is aggressively using price as a lever to improve the value and selection on eBay.com. Consistent with our goals, we have entered into a partnership with Buy.com to bring their new-in-season merchandise onto eBay.com. We expect to learn a great deal from this partnership and we will build upon the results."

I asked how this could be economically feasible for Buy.com to list that many listings in Core; my quick calculation put their 3-day listing fees at $600,000. I was told, both by eBay and Buy.com, that this partnership was "economically feasible" for both parties, but that no details would be released.

Lieberman went on to say; "As part of the deal, Buy.com is limited to a single listing per SKU and their merchandise will compete with the merchandise of all sellers for search exposure. It remains incumbent upon every eBay seller to maintain great service, as defined by DSR scores, to surface at the top of search results."

So, I couldn't let this go and I contacted Brandon Dupsky of PeSA/ECMTA and asked if any of the top eBay sellers in his organization were getting a special listing deal. He replied, "No, not to my knowledge." he went on to say "If eBay will be providing volume discounts to large sellers, I hope they start off by opening the door to the professional sellers who helped them build the eBay marketplace over the years"

I'm all for allowing sellers to negotiate volume deals with eBay, I had asked to negotiate my fees every year I sold on eBay and was always told "that is not going to happen," but in light of eBay founder, Pierre Omidyar's recent quote about "the level playing field" you can see that this announcement will not sit well with eBay sellers.

Pierre said, in a recent quote from a video clip “What I meant by level playing field is that everyone should be given an equal opportunity….. I didn't want to have sort of artificial barriers placed on newcomers and to have people by virtue of their stature outside of the eBay community somehow be treated better—special deals behind the scenes because they’re a big retailer and we want to get them to come on eBay, that kind of stuff. That would have been—is—a disaster. That is what I meant by level playing field.”

Most long-time eBay sellers have felt that it was just a matter of time before a major online retailer started selling on eBay, especially with eBay's drive to create a more retail experience for the buyer, but we all knew it wouldn't happen with the current eBay fee structure, which is not conducive to scaling a large business, well after this breaking news, "this ain't your Mama's eBay any longer".

Granted, Buy.com's listings serve as a sort of "Best Practices" for the new eBay, but the economics haven't changed for the existing eBay seller. They can't afford to list 150,000 Fixed Price listings because they still have to pay "Rate Card".

Buy.com is a beneficiary of this new way of thinking at eBay and I guarantee they won't be the last retailer to launch on eBay; now that the economic barriers have been lifted. Mr. Lieberman did say "they were the only one at this time".

Just my 12% or in Buy.com's case maybe 10% with no listing fees.

Update: Here is eBay's official response to the story by RBH at the eBayInkBlog.

PS. This post is an example my search for "Blog Juice", now go out and share the news with every body you know and send them here. :)

34 comments:

Scott Pooler said...

Great Job Randy!

Wow, this will increase the level of anxiety of many long time sellers. It is tough enough to compete with Buy.com when consumers simply compare pricing, when the buyers only have to look in one place to see the pricing difference between sellers paying "full boat" for core listing and large retailers like buy.com offering items with a volume discount, they end is near for small sellers.

I hope eBay realizes the need to explain this move to it's long time customers.

Randy Smythe said...

Scott, I'm sure they are aware of the uproar this will cause.

For the record Buy.com is just doing what businesses do, so I don't think they have done anything wrong.

Anonymous said...

What is so 'in season' about books, movies, and computer stuff. Looks to me like 'in season' is a cover term for 'just Buy.com because they are big outside of eBay.'

I don't see any lawn chairs or sporting goods listed.

There are plenty of eBay sellers that would love this type of deal.

eBay is pretty good at stabbing their best customers in the back but this one takes the cake.

Buy.com never sold on eBay and they get special deals to sell the same stuff that other sellers (that have been paying fees for years) are selling.

This directly contradicts what Pierre said on video just the other day. No special deals for big off-eBay sellers.

Somebody is making Pierre look pretty silly when he goes out there and says 'this would be wrong' but they do it anyway.

eBay should find the good sellers that have been with them for years and help them rather than invite off-eBay competition to have at their marketplace.

-Frustrated and disappointed

Anonymous said...

Do it Randy! Great Job. Keep digging. We need to know what the Buy.com deal is.

I just hope that Best Match isn't manipulated to give them an advantage. I'm betting that once they start selling on eBay in volume that their DSR ratings will drop dramatically. I don't think they can compete on a customer service level when compared to passionate eBay sellers that put 24/7 into taking care of their buyers. That being the case, they should be disadvantaged by Best Match. Time will tell.

KenM

Randy Smythe said...

Anonymous #1

This is just the start, bascially every category available on Buy.com that they sell directly will eventually make its way over to eBay, unless this is a total failure.

One other thing they are selling New Release Media items. This type of of media items has never sold well on eBay, maybe this will change that.


KenM

Buy.com was selected because they could deliver a great retail experience including Customer Service. There DSRs aren't going take a hit.

Anonymous said...

The deal ChannelAdvisor has with Buy.com is designed to send existing eBay sellers into the Buy.com marketplace. This clearly makes Buy.com a competitor of eBay (as much as Amazon is).

So, Buy is actively courting eBay sellers into their marketplace (through ChannelAdvisor) while at the same time getting special deals to penetrate the eBay marketplace themselves.

Buy is working eBay over from both ends.

Seems just plain foolish for eBay to have them in the market. Nobody can blame Buy though for taking advantage of eBays stupidity.

Might as well just redirect eBay.com traffic to Buy.com and be done with it.

Randy Smythe said...

Anonymous, it looks like Buy.com is what Express should have been. Why not just buy the company and make it their fixed price marketplace.

Anonymous said...

Randy,
Just did some quick analysis on "buy"'s listings for the past two weeks. Of 17,705 completed fixed price listings in the DVD/Blu-Ray category in the past two weeks, there were sales on 346 of them for a conversion rate of 2.06%. Not sure how this is supposed to be helping the marketplace.
George

Randy Smythe said...

George,

Conversion rate doesn't matter any longer when you don't pay listing fees (or pay minimal for listing fees)

They appear to be only paying a FVF and can factor that into their pricing. So each sale stands on its own.

eBay shoppers want deals so Buy may find they have a hard time getting the volume.

oldschool said...

Things sure don't look good at all for the independent media seller (of new, wholesale commodity goods, like say, DVDs)...I'm only a very small niche media seller at this point. The marketplace got too ridiculous for me ahwile ago, but I have to admit-this piece of news feels more scary to me than anything else that has been announced since last January. It really is the end of an ebay era in a big way.

Yikes, I wonder where deals like this will eventually leave longtime sellers like Movie Marz, Inflatable Madness, or even Movie Magic USA.

A company like Buy obviously has the resources to be able to afford more customer service muscle in high-volume, tight profit margin catagories...and if they pay LESS fees to ebay than all the other sellers, well that seals it.

A year from now, ebay will likely have made other similar deals with
high-revenue companies, like say, Deep Discount, who are so big they can buy direct from the movie studios, video game manufactuers...etc/all.

Heck, I was once an Economics student, so I understand Economies Of Scale principles, but I just hate to see ebay turning into just another boring, shopping portal, full of boring, corporate merchants. Ebay's was the "people's marketplace" and the diversity of sellers and merchandise are going to shrink away now, little by little...

Randy, keep up the great work, don't let this news story go!

Anonymous said...

Randy,
That was my point exactly, with no insertion fees the conversion rate becomes meaningless and Buy is free to clog up eBay with "garbage" listings that won't sell but will reduce visibility for sellers paying full listing rates. These listings that don't sell seem very contrary to the message of Best Match, that listings that sell well will be rewarded.
George

Randy Smythe said...

George,

They have some restrictions placed on them like one listing per SKU but the reality is that they have such a broad selection they have little to no competition on a lot of their stuff. At least in core. There is tons available in stores but buyers see core items before store items

Talal Ghosheh said...

"What eBay has never got - and this company is filled with very smart people - is that we can't provide Tiffany's level of customer service, sell at below wholesale, and pay 20% gross sales to eBay. That's a perfect storm of impossibility, my friends."

These words came from the inflatable blog... prophetic, thought I would share.

Cliff said...

Great job, Randy!

I'm glad it's all media items (for now!) as this won't touch me (for now!), but I guess it's just a matter of time before we have the answer to "who's next" after Buy.com.

Now is this Step 1 towards more Buy.coms entering the site, or is this Step 1 (1a) towards the subscription rate Stores/Fixed Price plan that was surveyed (they're actually testing that in Italy, right?). More likely a big step towards both?

Cliff said...

Oh, also congrats on getting Richard Brewer-Hay to post on a weekend! That's something I thought wouldn't happen!

Anonymous said...

Yes, Cliff, you are right on with the survey. The whole key I got out of the survey was that for $299 per month you get unlimited listings for free that will show up in core. On my survey I went through at least a dozen or so different price variations with the last one being free on the $299 deal.

Bill

Henrietta said...

Congratulations on your wonderful nose for news, I am so glad I found and bookmarked your blog last week.

Pushed eBay into making an announcement before they were ready you clever old thing, they were just 'neaking in the back door.

I found Richard's final paragraph poignant "Personally, I think that top sellers that have put the sweat equity into helping make eBay what it is today - that have consistently provided excellent service for their customers - should be included for consideration when the time comes."

About as much chance as a snowflake in hell I would say.

Henrietta said...

None of this will help eBay or the sellers remaining on eBay when the small sellers (who are such a large part of the buyer base) are withholding their money. No buying, no selling.

Not all buyers are as dumb as rocks, not the ones with a bit more money anyway.

I can buy the same items at Amazon for less (I checked) while combining purchases for free shipping.

I can buy used books from smaller sellers at Amazon and feel good about the purchase.

Rich said...

What about discussing the future of vintage items on eBay? Is the wave of the future on eBay going to be new and Chinese imports only?

If so, there's nothing there for me!

Randy Smythe said...

Rich,

Unfortunately because there is nowhere else for Vintage and Collectible sellers to go eBay will remain the onl option.

Those categories will just be tucked away in a corner. You will still have a place to sell those items, right next to the Giant Big Box Retailer.

eBay is working on a Mall concept with Anchor Stores and small niche retailers.

Because you have few options they can deal with your product categories last.

Anonymous said...

One thing I noticed about the Buy listings on ebay is that they do not combine shipping charges.

They DO have very low rates if you are only buying one item/some free, but if you purchase MULTIPLE dvds, buyers don't get a price break.....this is interesting because it flies in the face of ebay's preaching about "fair" shipping rates....the rest of us sellers are supposed to make no profit from shipping/handling and offer combined s/h that destroys all the profits from the total sale....but a private deal client, like Buy, obviously is exempt from this...

Also, I'm no conspiracy theorist-and I don't even own a tin hat! But I really don't trust Buy's DSR ratings to be accurate....they just seem a bit TOO high for shipping time/shipping charges.....I really think that ebay gave their DSRs a "tweak", so that when the ebay seller outcry happens, ebay can point to Buy's high level of service as "the only reason we made the deal with them"

Randy Smythe said...

Anonymous, you can borrow my Tin Hat.

Buy has been selling just like other eBay sellers since Dec This deal did not go into force until May 1st, so I believe their DSRs. The tale of the tape will be if the DSR's take a hit now that they have a huge increase in volume.

eBay's oficial line is they will need to meet the same standards as everybody else.

Anonymous said...

Randy, Great story on the Buy deal. But who is Buy.com? We all know that they are BIG and we know what they sell, but who are they. We know all about eBay and Amazon and Yahoo and Google. We know who owns them and who runs them. But what do we really know about Buy.com. I think this would be a great follow up story.

Randy Smythe said...

Anonymous,

I may actually do a post on them shortly if they ever talk to me again.

I can tell you this, they are one of the few who survived the Dot.com bubble even though they had to go Private to do it.

Dan said...

Randy-- great story...I am curious...how does blog juice taste?

Do buyers have a better experience with sellers who have 100k+ active items? In the media category, is Buy.com providing selection that was previously unavailable on eBay.

Randy Smythe said...

Dan,

I'll have to tell you tomorrow how Blog Juice tastes, once the analysts start writing about it.

Actually Buy.com does add inventory to the site that wasn't there before in CORE.

The inventory has been hiding in stores and Buy.com brought it all above the fold.

Rich said...

"All animals are equal but some animals are more equal than others."
---George Orwell, "Animal Farm"

One final refuge amongst the madness on eBay may be for the small seller of unique and vintage items. The feedback system and best match may doom even them.

Anonymous said...

Hmmm....

This is fishy:

99% positive FB with about 900 Negs.

DSR's are 4.8 and higher across the board.

Now, compare that with ResellerRatings where where Buy.com gets an overall rating of 2.25 of 10 or a 22% positive rating.

99% positive at ebay

22% positive at buy.com

So they screw their customers at their website but supply 5 Star service at ebay?

Something stinks here...

I've bought from buy.com and have not been overly pleased with the products and/or service.

ExBuyCustomer said...

EBay has nothing to worry about. Buy.com has the worst customer service of any online retailer i've bought from. EBay has a somewhat dependable rating system and i've never had a problem with their vendors - they typically bend over backwards asking me to give them a favorable review. Just try working with Buy.com customer service.. it's an exercise in frustration. Time will tell. You won't get far by alienating your customers.

froliky said...

Consistent with our goals, we have entered into a partnership with Buy.com to bring their new-in-season merchandise onto eBay.com.
This is from eBay Spokesman Usher Lieberman interview here: http://rksmythe.blogspot.com/2008/05/ebay-partners-with-buycom-for-new-in.html
That is why Buy has over 1500 Christmas items (each for multiple items).
240+ Easter listings
130+ Valentines
110+ Thanksgiving listings
210+ Halloween listings

RicRoe said...

eBay and its new partner, buy.com are teaming up to inflate listings on eBay.

It is interesting that this seller is able to routinely game the
listings policies at eBay, as in the cases documented here, triple
listing identical items despite the announced agreement otherwise.

Either buy.com is routinely violating their agreement, or eBay is
allowing, permitting and condoning these violations in order to
artificially enhance the reported listings volume at the site.

Quoting from the eBay blog here: http://ebayinkblog.com/2008/05/03/ebay-partners-with-buycom/

“In order to protect sellers from being crowded out of search
results, Buy.com merchandise will be limited to a single-listing per
SKU and, even though Buy.com will be competing for eye balls in the
same way as all of eBay�s sellers (through DSRs), I must point out the
fact that this deal is �economically feasible� for both parties.”

It would appear that “economically feasible” includes the benefit eBay
receives by inaccurately stating unique listing counts in quarterly
reports as well as to the media during events such as eBay Live to
convince the public and investors that recent policies imposed on the
site are not having a negative impact on listing volume.

Violations of this stated policy appear below using links to the
triple listing search results of items in direct violation of the
stated policy:

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle……

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle……

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

http://search.ebay.com/search/search.dll?from=R40&_trksid=m37&satitle…

It remains to be seen what action, if any will be taken by eBay with
regard to these items which are triple listed. It is likely, that
there will be nothing more than the usual pre written canned response.
The multiple listings will likely be allowed by eBay to stand, and
repeated with no action taken by eBay to enforce their own policies.

Some people point out the possibility that these multiple listings of identical items are caused by a ‘glitch’, however when the items have been reported to eBay, and the company has taken no action to remove the duplicate listings in keeping with their agreement, then it can only be assumed that eBay is accepting the inflated listing volume these items represent.

As such, listing volumes reported by eBay are mis-stated and grossly inflated as there is no telling exactly how many items have been posted 3 or more times, and for how long this practice has been taking place It is entirely possible that items have been listed multiple times for as long as buy.com has been listing on eBay.

With eBay due to issue their quarterly report in a few days, it remains to be seen if this ‘glitch’ will be noted and reports amended, or if the inflated listing statistics will be reported as fact.

Randy Smythe said...

RicRoe,

I'm sure that eBay has Buy.com turned off when it comes to complaints etc, much the way Glacier Bay was turned off back in the day.

When I say turned off, I just mean that the majority of sellers are on automatic system for viloations, VeRO, etc. Some big sellers are not. Buy.com appears to be one of them.

They list for free, so once that "wall" was broken all the other "walls" that apply to other sellers can come down as well.

Wall Street is watching the listing numbers and at least the analysts I've spoken with take the listing number with a grain of salt and I've spoken with analysts from seven different companies covering eBay.

Anonymous said...

Inflatable madness is terrible. They try to sell things they dont have in stock. if you are unlucky enough to order one of these items, they simply dont send them to you, or offer an explanation.

then you have to go to customer dispute resolution, where inflatable madness will give you a refund. arghh....no explanation there either.,

the guy's a fraud. wants to be big time.

Anonymous said...

Now ebays biggest competitor in japan buys buy.com. Now Ebay must let there biggest competitor be there biggest seller on Ebay.com how does that work. What happens if ebays competitor pulls all there listings. They are ebays biggest seller. Ebay would die just like that. That is what happens when you let suits change a company that was fun.