Saturday, December 06, 2008

eBay's Version of Woot! -- The Daily Deal - Updated!

On eBay's Insider Deals page  in the top left portion of the page you will see a Daily Deals ad (see image in this post). 

The Daily Deal is a single low priced item that has free shipping and is listed for a 24 hour period. If you check this page every day at 8:00 am PST you will see a different item so it is basically limited to 365 different items per year. I'm sure eBay is trying to figure out how to maximize this of course.

The approach is very similar to Woot! which has a single daily deal and when they run out of stock there are no additional items available until the next day. Woot has become so popular that they have buyers waiting for the clock to change to the next day and thousands of customers are waiting to buy the next day's item. (All without trampling an employee at the door.)

eBay's version, of course, is really not overly exciting; they do give each item 24 hours beginning at 8:00 AM PT each day. For instance Buy.com had a Daily Deal that began on Friday (Dec 5th) at 8:00 am and ended today (Dec 6th) at 8:00 AM for a Nokia 500 4.3" Touchscreen Auto Navigation GPS.

Brief editorial comment:
Now, I know I write about Buy.com a lot and I want you all to know that I actually like the folks at Buy.com and I don't think they are an evil company. I've spent some time with the CEO Neel Grover and toured their offices here in Southern California. I honestly think of them, just as a really big independent seller. They are not a Wal-Mart or Best Buy.  That being said, I still write about them and their affect on rank and file eBay sellers, because it helps explain things. (To date they feel I have been fair.) 

[ This section removed because I pretty much didn't think it all through and there were some errors. Rather than confuse everybody I felt it would be best to remove it.]

If the Daily Deal is executed properly, this could bring additional sales from the seller's regular listings. It is similar to a loss-leader approach in retail. I'm not yet sure it will work for eBay but it already appears to be helping Buy.com. I will follow this for as long as the program is in place o until Christmas and then give you an update on the programs effect on Buy.com's sales.

Just my 15%

17 comments:

ms.pat said...

Randy - your honest opinion - is there anyway these diamond sellers can make a decent profit on Ebay in this kind of an economy....AND do you feel sooner or later Ebay is going to have to raise their fees because with less and less small sellers to gouge the monster has to be fed by somebody! If so, I feel at that point diamond sellers will scoot.tin

ms.pat said...

Ps: I have no idea where that .tin came from LOL

Randy Smythe said...

Pat,

It is all relative. How's that for a cop-out?

Buy.com developed their own auction software to mange their eBay business; they substantially increased customer service to handle eBay orders; they hi the sales wall within a few months of launching under the new deal and even though they are paying less in fees that the rank and file my guess is they are not overwhelmingly profitable.

Each Diamond that comes on board will shortly be asking themselves the following question: "Is this worth all the effort?" for many of them it may not be and who will eBay get to replace them?

ms.pat said...

Like I said before....I'm waiting for the grovelling to begin. Without diamond sellers - there's nobody left but us little guys! LOL I'd like to think small sellers would laugh in Donahoe's face but I know they'll flock right back again...

Anonymous said...

I'm wondering if Ebay has a big 'ol list of retailers ready to come on board. Is that why they're being so squirrely to the small seller, you think?

2009 or Bust! said...

If eBay had a big ol' list of pending Diamond Sellers I am guessing that they would already be on board.

The last few weeks as I have jumped feat first into Google Adwords and Yahoo's Admarketplace, the whole world has changed for me.

eBay told us to date other people and we did and turns out we like it!

Customer service issues both with eBay and eBay customers is such a time killer. Amazon and Yahoo call you in minutes.

There will be new Diamond Sellers but if Smartbargains rocky start is any indication, I bet they are all thinking long and hard.

Randy, do you have a list of current Diamond sellers?

BTW, I am serious -- lets form some sort of company that will gather thousands of investors to buy that dirt cheap eBay stock and let's put Randy on the Board!

Randy Smythe said...

2009 or Bust,

Thanks for the confidence. I'm just a guy who has an opinion and would be a fish out of water on a corporate board of a public company, but hell I'm game. :)

There is no list of Diamond sellers other than what Ina has put together. Buy of course was the first there are about 6 existing sellers who qualify to be Diamond according to eBay, I am told and SmartBargains, Altrec.com, Shoplet, Toolup and these rumored companies Converse, Dell, J&R Electronics, Lego, Nike, PepBoys (pep_boys), PlexSupply, and TigerDirect.com

Chelle said...

The daily deal is nothing but a marketing tool at the start. Beyond building the box into the home page eBay has no further investment in the program. The daily deal is advantageous to eBay's focus of re-aligning the core business from the marketplace to the payment service.

As insidious and abusive JD's plan is this is the first indication of someone within eBay being capable of grasping long run benefits. We are nothing but a tool to build PayPal's customer base so that eBay can entrench the whole of e-commerce into the use of PayPal. eBay views PayPal as its future and is currently using up the marketplace to achieve its goal.

Adam Nash said...

Randy,

I think you may be missing the point of the daily deal, if done correctly.

The economics would not come from actual sales of the item. In fact, this is more akin to a loss-leader in retail.

The idea (properly executed) would be to get consumers in the habit of regularly coming to eBay to get the daily deal. Maybe they subscribe to an email.

In addition, buyers who get a deal and have a good experience are more likely to come back again and shop. Repeat buyer traffic is fairly significant over the lifetime value of a customer.

Now, it's not at all clear that eBay has implemented the concept completely, but the overall concept is a good one.

In fact, the repeat buyer activity and cross-sell, if done correctly, can be valuable enough that you are happy to lose money on the deal, and even sell out. Buyers who miss one deal may actually be prompted to sign up to be notified of the next deal, so they don't miss the next one.

Like everything in retail, the execution makes or breaks this concept. But it's a much stronger idea than just the GMV/fees from the items themselves.

Adam

Randy Smythe said...

Adam and Chelle,

Yes, you are both correct. The idea is good in theory and if they execute it properly it is much more valuable then just the GMV or revenue generated.

I have to admit a bias creeps into my posts occasionally :) I've seen the poor execution over the years and think "once again" They are overselling the Daily Deal at least in the two instances I looked at. So their execution is not so good.

I was wrong to conclude they just came up with this idea as a revenue generator, so yes I did actually miss the point.

We will attribute that to "Blogger Blindness" :)

Anonymous said...

Ebay will never be able to reproduce the magic of Woot. It should have acquired Woot a long time ago. Woot can be grown if done smartly. Witness Wine Woot and T-Shirt Woot.

eBuyer Feedback said...

Randy,

If I'm not mistaken you originally posted that BUY oversold their photo frames. Well it turns out today eBay purged a whopping 26 negative feedbacks related to this photo frame from BUY's profile. See for yourself at DiamondHaus BUY's profile.

Randy Smythe said...

I think I was mistaken in regards to the over selling of the frame but those negatives certainly do seem to tell a different story.

If the over selling was due to eBay then I can understand them purging the negatives, but if it was due to an error on Buy's part then they should not have removed the negs.

Deal$$ said...

DailySteals.com is a REAL Deal a Day site. Ebay is just looking for some attention.

eBuyer Feedback said...

@ Randy

Completely agree but I constantly hear in the forums and even people discussing on TameBay all sorts of negative feedback being received due to glitches, messages not being received, etc because of eBay yet I never seem to hear about eBay purging those.

The closest I remember was when PayPal had a recent eCheck glitch but decided to eliminate all negative or neutral feedback for all affected transactions, regardless of whether or not PayPal was the cause of the bad feedback.

Anonymous said...

Found this deal site : dillyeo.com

Qeana said...

I use ddtab.com to view eBay daily deals sorted by date and with search function. If you're frequent to deals.ebay.com it'll surely save tons of your time. Hope it will be useful