Tuesday, October 21, 2008

Diamond Sellers 101

With all the talk about the new eBay being a retail haven for the Internet 500, I thought it would be good to take a look at some of these companies.

Here are some interesting facts on these retailers:
  • The 2007 annual sales of the Internet 500 range from : #1 Amazon.com at $14.8 billion to #500 KneeDraggers, Inc. at $6.5 million. It is interesting to note that several current eBay sellers sell more than $6 million a year on eBay alone and they aren't getting any special listing deals. So my guess is you'd have to be doing $50 million a year or more for eBay's salespeople to come a knocking, but who knows maybe they are desperate..
  • 208 of the top 500 Internet retailers had sales of less than $25 million last year. Several current eBay sellers do more than $25 million a year on all venues. eForcity being one of them and because they are currently selling on the platform they don't get any deals, as far as I know.
  • 310 of the top 500 retailers had sales of $50 million or less in 2007. 
  • Two of the the Top 10 retailers have already tried to sell on eBay and decided it didn't work -- Dell and Sears Holdings.
  • Other top 500 retailers have sold on eBay in the past and backed out after a few years; #12 Best Buy being one of them. 
  • #33 Buy.com is currently the poster boy of Diamond Sellers on eBay and their current GMV on eBay, while impressive from my perspective, may not even amount to 6% of Buy.com's total GMV for the year. In fact Buy.com might be much better off just paying for sponsored ads and banner ads on eBay, rather than managing an eBay business and all of the overhead that requires. 
  • Other Internet 500 retailers that won't be showing up on eBay: #7 Apple, #11 QVC, #14 Wal-Mart, #16 Circuit City, #17 Neflix and the list could go on and on.
  • Some brands just wouldn't work well on eBay: #27 Zappos and #32 Nordstrom for example. High value brands in a discount marketplace just don't work.
  • Some on the list have already filed bankruptcy; #176 The Sharper Image and #154 Linens and Things and others are teetering on the edge. Not really a time to try a new platform like eBay.
I could go on and on, but you get the point. Of the top Internet retailers, only a small number would even consider selling on eBay and once on the platform they would quickly understand what long-time eBayers are saying. There is not enough demand on the marketplace for the existing group of sellers plus Buy.com, what makes eBay management think adding another 20 large retailers will do to the marketplace.

I hope these companies are not signing any long-term deals with eBay, because they will find out after about 6 months, this is not what they thought it would be. Ask, Buy.com how they feel about this deal 6 months into it. I just checked their sales since FP-30 launched and their sales are down 

If anybody from one of these Internet 500 retailers reads this blog, do yourselves a favor, contact me and get the real story before committing the resources to selling on eBay.

Just my 15%


David said...

I was going to post this in the digging for diamonds thread but now that this thread is empty I will post here.

I find it very hard to believe that Diamond Powersellers need to maintain DSR's of 4.8

Since buy.com happened to have DSR's of 4.8, eBay added this as a "requirement" to discourage others closing in on the Diamond program from knocking on eBay's door.

If buy.com's communication DSR dipped to a 4.7 does anybody really believe they'd be kicked out of the diamond powerseller program?

The diamond powerseller program was created as damage control.

What's interesting is that it looks like buy's user ID was "buytechnology" from 2/12/02 up until 12/21/07. Buytechnology then changed their name to "buy" on 12-21-07.

Does anybody honestly believe that the userID "buy" has been available for 12 years and nobody choose it until December 21st 2007.

If eBay wants you on their site bad enough, they will make some accomodations, like giving you whatever user ID you want, immunity from seller standards

Randy, that one seller that got his 1,000,000th feedback. Why isn't he a diamond powerseller? I read that they do $10,000,000 a year in sales.

Anonymous said...

Eforcity is the one with 1 million feedbacks.

The thing is, they have 4 user names as a corporation. Also, shipping cost do not count.

The sum of 10 million comes from ebay, website and multisales channels ...not just ebay.

I would think with talks eforcity might make it. But also consider this. They might have 1 million feedbacks but their average selling price is ~$5.

Our company has 30,000 and doing 500,000.00+/month and only 5000 feedbacks per month.

Feedback is not a judgement of gross or profit...only a number. Sure its outstanding but dont let it fool you.

We are VERY close to diamond powerseller status. All DSR stars are 4.8 besides shipping/handling cost which im sure will change b/c we are offering free shipping and the month to month its at 4.9 so it will average out in Q1 and we will should qualify :)

Maybe you will hear about monstercellular in a few months :)

Dustin Jones
E-Commerce Operations Director
dustin [at] monster cellular dot net

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Loose diamond said...

Facts are really considerable and few more things for sure as most top eBay sellers operate like retail stores and have return policies. You need to check that do they offer a money-back guarantee?

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