Monday, May 05, 2008

The Impact of the eBay/Buy.com Deal!

I know it's early, but if I know eBay sellers they are right now checking to see if the onslaught of Buy.com listings is affecting their sales.
  • This morning I received an email from an eBay seller in the computer category who is struggling to adjust to this weekend's news. He can't afford to compete against Buy.com in CORE so he is relegated to Store listings which don't get near the exposure. Add to this that Buy.com is offering lower prices and free shipping and it is a perfect storm for a major slow down in business.
  • Sellers in the Media category are concerned that the CORE listing advantage given to Buy.com will greatly affect their sales. Most large Media sellers list a couple of thousand CORE 7-day listings; not 200K 3-day listings like Buy.com
  • How many buyers will Buy.com siphon off of the platform. Once they've made their initial purchase on eBay, why mess around with the terrible search experience of eBay, when you can go right to Buy.com to purchase your next item?

Let me know what you are seeing in your business, so I can keep everybody up-to-date.

Update: It looks as if Buy.com has ceased using Immediate pay on their listings, which can mean that the sell-thru isn't as great as they had hoped (I've heard that 25% of orders with Immediate Pay actually never complete). Or more likely, they can't combine orders with immediate pay so they've removed it to provide customers with combined shipping.

Now of course they will be subject to all the NPB's (Non-Paying Bidders). It will be interesting to see how Buy.com reacts to the infamous eBay buyer -- lots of work.

Just my 12% (Since I can't get Buy.com 8.75%)

13 comments:

Cliff said...

Hmm, I found the update the most interesting part of this. Wonder if Buy is a guinea pig for us on immediate payments too. Part of me likes the idea, part of me doesn't.

It's great to get a big sale, but sometimes when it's spread out over a week of buying you feel like you should toss in a bottle of wine and bouquet of flowers after all the romancing. Then again, these are some of my best sales and immediate payment would kill them to some degree.

Big difference right there though between the eBay and Amazon shopper if that 25% number is true. Though I guess that compares to an Amazon shopper like me who constantly fills his cart and then leaves it for later...sometimes I order, sometimes I abandon.

Buy better hire a new fleet of workers to handle all of that paperwork on their NPB's! Or, sigh, maybe they'll get a cookie thrown into their deal that allows them to leave negs.

Dave White said...

The situation you describe in the first bullet point is one that came to my mind immediately upon your "Blog Juice" scoop of the Buy.com deal. Once smaller volume sellers find that they can not compete on price or shipping, they have no choice to find other marketplaces. Once Buy.com controls the category, they control price.

Sellers who normally place a couple of thousand listings can not compete with a no insertion fee deal such as Buy.com is getting so they are disadvantaged before they start.

Certainly after the eBay purchase Buy.com will offer upsells from their own site, not from eBay listings. So much for the repeat buyers on eBay, those buyers will be directed to Buy.com.

Super information!

Anonymous said...

as a small-medium sized media seller on eBay, i saw my sales decline considerably over the weekend. I couldn't figure it out but I think I found the cause.

Anonymous said...

Buy are still only accepting Paypal as payment. That means there will only be a manageable amount of Non-paying bidders.

It's the check/money order buyers who account for the huge majority of non-paying bidders.

I am a medium size seller and 6 months ago, I began blocking all buyers who don't have a Paypal account-and I require Paypal on all payments. That alone made 99% of my NPBs go away.

This is just my own personal experience; doing this increased my profit margins. I realize that alot of larger sellers (especially media sellers with tight profit margins) couldn't afford to turn that much business away, they would feel the impact on the bottom line.

My guess is that Buy is large enough to turn away the thousands of buyers who don't want to use Paypal. They don't pay the same ebay fees as the average big seller (probably no insertion fees) so they can afford to do this...

Thus, this is a perfect example of how ebay's private pricing deals with special sellers are going to have a negative impact on ebay's existing longtime sellers....the ones who helped build ebay into what it is/was

Randy Smythe said...

Cliff, I think it is mostly likely that they cancelled Immediate Pay because they couldn't combine orders.

Dave,

It is certainly going to be interesting to observe.

Anonymous #1, I've already spoken with several sellers in the same boat as you.

Anonymous #2 Good point on the NPB issue. They can handle it.

Cliff said...

Randy,

Makes sense. That's actually why I don't use it, though I tried it in a second store once and it was pretty good for one-shot items.

Cliff

Anonymous said...

In my category I checked BUY's prices and they are almost the same as retail.

Ebay's marketplace DOES NOT support this pricing scheme.

Hint: its media!

Anyone thing having alot of fixed priced listings like this will help other sellers to get higher bids?

Trying to think of how this might benefit the marketplace..

Randy Smythe said...

Anonymous, low-price still rules on eBay so if Buy is not competitive then it will not have a major impact on other sellers.

What is interesting: if this deal does not work for eBay and Buy then eBay will have to admit the retail experience they've dreamed of just doesn't work on eBay.

I think there is a lot more downside for eBay on this if it doesn't work.

Not much downside for Buy really.

Could they move as fast as they did with SIS to end this deal?

Anonymous said...

I wouldn't be suprised if ebay encouraged them to start out with traditional, healthier looking "retail" pricing. It's possible. Or maybe, they just want to maintain their own brand value proposition (which longtime ebay sellers know won't work-the lowest price guys gets the sale 98% of the time).

They could always lower their prices in a heartbeat if they want to/or are allowed to.

What concerns me is the precedent that has been set for the longterm.

I think many commodity seller's business models aren't going to work too well with the new ebay of 2010 (hey, time flies, that is only a year and a half away)!

Exit strategies set to defcon3!!

permacrisis said...

I would stick my neck out even further to say that the 'Buy' deal is a sort of test bed for ebay offering their own warehoused goods for sale.

Every one of the movers and shakers behind these changes comes from retail, and all this 'ebay bidder' crap is waaaay over their heads.

They just want to sell pie at the front of the store, and make pie charts in back. They cringe at the thought of touching (or talking to) the icky customers.

When, as you predicted, this latest trial balloon bombs, expect a purchase of Sears Holdings LLC. I kid you not.

Anonymous said...

eBay is not going to offer their own warehoused goods. That's silly. That is an enormous undertaking in an area they have never handled before. Not going to happen.

Randy Smythe said...

Anonymous, you are correct eBay isn't going to warehouse inventory unless it is something similar to Amazon's FBA.

Perhaps they could buy a fulfimment house and create their own FBA program but you are correct they will not own inventory.

Brian said...

everyone ive ever known that used ebay now hates it due to some garbage policy or terrible support issue where they lost hundreds of dollars. i hope ebay burns in Internet hell.