Saturday, May 31, 2008

Etsy, Reaches a Milestone

Etsy, just sent me an email touting some interesting numbers. Here's what they had to say:

"Greetings from Etsy, your place to buy and sell all things handmade.

We've grown to over 150,000 sellers in 171 countries, and we're just about to reach 1,000,000 members total. This is an exciting milestone for us, and we've made some recent changes to help keep things running smoothly.

With over 1.7 million products on Etsy, we're trying to help buyers more easily find what they are looking for."

Borders Opens 3P Marketplace

Borders has just recently launched their website after several years as part of Amazon.com and they've also opened their doors to 3P media sellers through an arrangement with Alibris. Here is some information from the press release:

"Alibris (www.alibris.com), the premier marketplace for sellers of new, used, and out-of-print books, music items, and movies today announced it has created Borders Marketplace, a special section of the newly launched Borders.com site that gives customers access to more than 75 million used and out-of-print titles. The items are offered for sale by Alibris sellers, a rapidly growing community of more than 12,000 members.

Borders Marketplace is accessible on Borders.com under the Used Books tab. Borders Marketplace will also be accessible via computer kiosks in Borders superstores after the nationwide in-store rollout of Borders.com is completed in the coming weeks.

"We're thrilled to be partnering with Alibris to launch the Borders Marketplace for used books, music, and movies, said Kevin Ertell, vice president of e-business for Borders Group. "By aggregating thousands of independent resellers, they offer millions of used and out-of-print books, music and movies giving Borders customers a deep selection of titles from which to choose when they visit Borders.com."
Check Spelling
The Borders Marketplace Web site was built using the Alibris E-commerce Platform. This proprietary technology provides standalone e-commerce capabilities, including search, browse, shopping cart, profile generation, and credit card processing on a customized Web site that employs the look, tone, and feel of the Borders brand. Fulfillment and customer service, which are provided by Alibris, were branded and tailored to meet Borders's requirements. Site maintenance and support are also provided by Alibris."

Borders has not integrated the used product into the Borders.com website search but provides a tab and link to the http://usedmarketplace.borders.com/ website.

Unfortunately for sellers, the used marketplace is at least two clicks away from the Borders home page and any search you do has to be redone in the marketplace so I'm not sure how much impact this new marketplace will have on your sales.

Just my 12%

Friday, May 30, 2008

Random Thoughts 5-30-2008

Random Thoughts:

  • eBay Live is in 3 weeks and it certainly is going to be interesting. I would hope that the press is there in force to get feedback on the "New eBay". I will be there from the 18th to the 20th and I would love to meet any of my readers who will be attending.
  • I have no problem with the concept of the "New eBay" just keep Classic eBay as well. John Donahoe, you cannot create a hybrid of the two that will have any success. Instead you will marginalize both. The old saying is true; "you can't have your cake and eat it too."
  • eBay should empower sellers not castrate them.
  • eBay wants a buyer experience like Zappos, Amazon, Buy.com but they want small businesses with limited resources to provide that experience, while eBay retains their double digit margins. Ain't gonna happen -- eBay is not a retailer and will never be able to provide the same experience as a retailer. Controlling eBay sellers is like herding cats, they call them independent business people for a reason.
  • The eBay brand is too difficult for eBay management to overcome. You cannot have a discount marketplace with free shipping, liberal returns, Amazon level of customer service and new in-season product. The numbers do not compute and I know eBay is all about the numbers.
  • In Q1 of 2009, what will the new eBay management team do to save eBay. The site won't go away it will just be another site, no longer the king of ecommerce.
  • eBay Sellers need to watch the movie "Network" and at eBay Live, during the Keynote speech they need to shout. "I'm mad as hell and I'm not going to take it anymore"
  • One More Thing! I posted this on my Twitter account, but I thought it made sense here. Somebody should start eBay Anonymous and develop a 12-Step program for sellers to get off the crack.

Just some random thoughts that were banging around in my head. Hope you all have a great weekend.

Tuesday, May 27, 2008

3P Merchant Options Continue to Grow.

NewEgg.com is the latest retailer to open their doors to 3P Merchants with the launch of the NewEggMall.com.

Here are a list of Retailers who allow 3P Merchants to sell on their platform:
  • Amazon.com
  • Overstock.com
  • Buy.com
  • NewEggMarket.com
  • Play.com in the UK

Who will be next? Will BestBuy.com open its doors? Or will the new Gap Marketplace be the next store to welcome 3P merchants. Perhaps, Zappos will take a shot at this new business model.

As, I have said before, 2008 is the Year of the #P Seller and it looks like 2009 will be just as good.

Notice, I didn't mention eBay, because they are not a retailer. They are a pure-play marketplace and will get lost in the shuffle.

Watch Out Craigslist and Kijiji, Wal*Mart's Coming!

Wal Mart has just launched a Classifieds Website in partnership with oodle.com it looks like the 800 lb. Gorilla of the B&M world is now trying to make in-roads in the burgeoning Online Classifieds business.

Ain't competition grand!

The Wave of the Future in eCommerce!

It looks like B&M stores are trying to get aggressive with their online plans.

First we have the announcement that Borders is launching their new website which is really not big news, but today in a post from The Motley Fool: The Gap will be combining four brands into one website; "Well, the company is in the process of integrating its four primary websites -- Gap, Banana Republic, Old Navy, and Piperlime -- into a single shopping experience.

The integration will provide more one-stop convenience, including related breaks in shipping costs when a buyer wants to pair up jeans at the Gap with a Banana Republic handbag, an Old Navy swimsuit, and a pair of Piperlime pumps.

The "4 Stores, 1 Checkout" approach is compelling, especially because Gap is tempting buyers to load up their virtual carts as much as possible and still pay just a flat rate of $7 for shipping. Piperlime orders, as always, ship for free.

Even Amazon can't touch that, because most of the apparel on its site is sold through third-party merchants who don't participate in the Prime subsidized-shipping program."

This is just the beginning, how long before the new Gap marketplace opens their doors to 3P sellers in the apparel and accessories categories and gets some of that Amazon mojo. With this move The Gap saves marketing expenses by gathering all of their brands into one marketplace and they expand their promotional offerings between the brands and can offer great new services like combined shipping for a very low S&H price. Consumers love that.

eBay is the company that should be worried. They are desperately trying to become a fixed-price, New in-season marketplace, but they cannot hope to compete with the web experience that Amazon, Zappos, Best Buy or now The Gap can provide because they don't control price or fulfillment. It is a pipe dream for current eBay managers to think they can even come close to that kind of experience. They don't control price, fulfillment or inventory because they have no skin in the game.

Look for more of these "marketplaces" to develop in the coming years

Amazon vs. eBay -- Apples to Apples Comparison!

For your weekend reading pleasure:

It is difficult to do an Apples-to-Apples comparison of eBay and Amazon, because they are so different, eBay is in 39 countries, has auctions, sells cars and tickets, has a payments business (PayPal) a communications business (Skype) and a classifieds business (Kijiji, et al) while Amazon really is a retailer with a small (30% of units sold) but growing 3P merchant business.

They are also different because they use different terminology. Amazon uses "Revenue" because they actually own the inventory and sell things and they include GMV from 3P merchants in their revenue because they handle the entire payment transaction. eBay uses GMV to discuss the amount of product sold in their marketplace business; eBay's "Revenue" is really the money they get from fees and other business segments. While these two metrics are different, they are similar enough for my comparison. For this purpose I will call Amazon's Revenue, GMV (Gross Merchandise Value).

I will also compare growth rate Y/Y once I've made the 2007 comparison.

Well, right off the bat, it appears we have a problem. eBay had 2007 GMV of $59.35 billion (13% Growth Y/Y) while Amazon had GMV (revenue) of $14.84 billion in 2007 39% Growth Y/Y. eBay certainly is a bigger business, so the only real point of comparison, in my mind, is a comparison of each companies North American Fixed Price business. That's about as Apples-to-Apples as we are going to get with these two companies.


If we back out all of eBay's businesses, that do not compete directly with Amazon (Auctions, StubHub, Automobile Sales, Classifieds, Non-GMV business, PayPal and Skype) and concentrate solely on the North American Fixed Price business, we have a point of comparison that will give us a snapshot of each business to draw some conclusions. Because, eBay does not separate out each of their businesses, I do have to make a few assumptions, but at the most I won't be off by more than a couple $100 million either way.

So here we go: For ease of explanation I've changed North American, which includes Canada to US. Apologies to my friends in the Great White North.
  • Amazon's 2007 number is easy. US GMV (revenue) was $8.1 billion. Since all of their GMV is Fixed Price (their Auctions business was minuscule in 2007) we will compare this number to eBay's US Fixed Price business. BTW, Amazon's US GMV (revenue) grew by 38% Y/Y.

We have to do more work on eBay's numbers, to get to their US Fixed Price GMV.

  • First we need to identify eBay's US GMV, which for 2007 was 46% of Worldwide GMV or $27.04 billion. 8% growth Y/Y.
  • Because eBay Motors is such a huge part of the eBay Marketplace business and Amazon only recently began competing in the Parts and Accessories category and doesn't sell cars (the vast majority of eBay Motors GMV ) I've just backed out eBay Motors completely. eBay Motors contributed an estimated $10.5 billion in US GMV in 2007, so after removing Motors from eBay's US GMV, I come up with $16.54 billion US GMV in 2007
  • Next we have to remove GMV derived from Auctions and here is where I make my biggest assumption, because eBay doesn't report this.

    John Donahoe mentioned in the Q1 2007 Earnings call; "Our global fixed price business already accounts for more than 40% of our GMV..." Now, I believe Fixed price is a greater share of eBay's US GMV than 40% and could be anywhere from 42 to 50% of US GMV so I will use 45% as an estimate -- remember this is a snapshot of the business.

    If 45% of eBay's US GMV is Fixed Price that would put their 2007 Fixed price GMV at $7.44 billion. Fixed Price Y/Y growth is difficult to determine accurately, but we can assume Fixed Price GMV grew faster than Auction GMV, because in Q1 of 2007 eBay stated Fixed Price was 39% of Global GMV and Donahoe just mentioned it was more than 40% in Q4 of 2007. Now, I'm starting to get a headache over my right eye trying to calculate the growth rate of Fixed Price Y/Y, so for arguments sake lets just say it was greater than the 8% Y/Y growth in US GMV.
  • One more metric to back out of the calculation: Since Amazon does not sell Tickets, I will back out StubHub's $650 million in 2007 GMV from the US GMV numbers, to give us an estimated $6.79 billion in comparable US GMV

Drum roll please!

In 2007, it looks like eBay did $6.79 billion in comparable Fixed Price GMV to Amazon's $8.1 billion and Amazon's Fixed Price business grew 38% Y/Y while eBay's US Fixed Price business grew 20% Y/Y.

When you do an Apples-to-Apples comparison of the two businesses, Amazon clearly comes out the winner in US GMV and in Y/Y growth.

Of course if we continued this exercise on the profit side of the story, the results would be much different, but that is for another day... for now, I need to take a nap.

Sunday, May 25, 2008

eBay Needs a "Come to Jesus" Moment!

We've all heard about the eBay seller boycott attempts over the past year and the reality is they have each failed -- sellers rely too much on the income that comes from eBay to stop listing.

I've never been an advocate of boycotts mostly because as John Donahoe says; "With sellers, there's nowhere else to get this volume." source eBay Strategies.

Too many sellers are hooked on the "crack" (volume and cash flow) they are addicted and going cold turkey is too painful. eBay management knows this and uses it to their advantage.

Additional reasons boycotts don't work:
  • eBay is a competitive environment and too many sellers will list items to replace those removed by the sellers who are boycotting. Until every seller acknowledges they are addicts and they want to change, boycotts will continue to fail.
  • eBay controls the flow of "crack" and can just "push" a listing promo, so sellers decide they just can't pass it up. When your personal income depends on eBay, you can't take the chance.
  • PeSA, ECMTA and IMA have never backed a boycott. If the largest sellers or those sellers involved in these organizations do not back a boycott, it will fail. The only way for an action by sellers to succeed, is if all three of these organizations support it.
  • There have never been any stated demands -- all sellers are doing is protesting. I'm not sure if boycotts are ever really successful, but if there are no stated and agreed upon demands then failure is assured.

The title of my post is: eBay needs a "Come to Jesus" moment and they do, before they ruin the best seller empowerment story ever.

I will say this in print right now; the moves eBay managers are making will backfire and end up marginalizing the platform. As Stephanie Telenius mentioned at the ChannelAdvisor Catalyst conference earlier this year "we won't recognize eBay, this same time next year" She was 100% correct, but should have added, "next year at this time nobody is going to care about eBay".

Investors should be very concerned that this management team is taking them down the wrong path. Many of the changes are very necessary, but the execution is wrong.

What will bring eBay managers to this "Come to Jesus" moment? Perhaps a boycott that addresses all of the issues I laid out above, but more than likely the "Come to Jesus" moment will happen around January of 2009 when the eBay board of directors decides to find a new management team to once again fix eBay. I fear it may be too late to avoid this outcome.

It has always been my opinion (my 12%) that eBay can once again grow faster than ecommerce and therefore become a growth investment again, but only if eBay management embraces sellers, rather than use them.

The "carrot and the stick" actions of management, will only motivate sellers in the short-term, but even if these moves change seller behavior, they will in the end deepen seller resentment.

eBay managers are very intelligent and the senior execs all have advanced degrees, but they don't live in the real world. They have no real world experience, nor do they care about real world experience -- they've always viewed the marketplace from their ivory tower. Metrics are the driving force behind all of their decisions, but common sense doesn't seem to be included in the calculations. They are book smart, but real world stupid.

This is how foolish their actions are:

  • They want the Amazon buyer experience, at eBay's traditional profit margins. Hello McFly! Amazon controls price, seller behavior, product selection, merchandising, fulfillment and search because they have skin in the game. Sellers have to fall in line because they compete with Amazon.

    eBay has no skin in this game -- they have traffic and "addicted" sellers. Amazon knows online retail like no other company in the world. eBay knows "jack"
  • It is a "crack pipe" dream, to believe eBay can get close to the Amazon experience without compressing margins by giving real incentives to sellers and advertising to reinvigorate the brand. These fake FVF discounts for higher DSRs and "Free Shipping" are too funny to take seriously.
  • Amazon is a technology company that sells product, while eBay is a bunch of brilliant marketers and consultants who think they are a technology company. Please name one technological innovation eBay ever came up with that worked or that wasn't copied from some other company. All of their success has come from acquisition. Why they didn't outsource Finding 2.0 to Google I will never know.

So, I am on record as saying, that unless eBay managers have a "Come to Jesus" moment in the very near future, they will have it forced on them in Q1 of 2009. There will be no need for a boycott because the power of eBay will be gone by then.

My suggestion for sellers right now: Begin to wean yourselves off of eBay beginning today, because the changes they are making will ultimately fail and you don't want to be dependent on the "New eBay" for your livelihood.

Just my 12%

Friday, May 23, 2008

eBay Pays Sellers to Ship Free! Where's the Beef?

Here is the announcement from yesterday: "Offering free shipping is a great way to make your items stand out from your competition. Buyers love it, and it can help improve your Detailed Seller Ratings scores. If you haven't already tried it, now is a great time to start. From tomorrow, May 23rd through June 1st, you'll get 15% off your Final Value Fees when you offer Free Shipping on eBay.com and for Parts & Accessories listings on eBay Motors! "

Here are the details:

Why should I offer Free Shipping? Try a key business growth strategy. Buyers are becoming used to Free Shipping offers in the general e-Commerce market. See if Free Shipping boosts your sales and learn which pricing makes it work for you. We'll give you a Final Value Fee discount for 10 days to help.

What is it? From May 23 through June 1, sellers who list item(s) in Auction-style or Fixed Price format with FREE Domestic Shipping and have either a Detailed Seller Ratings (DSR) of 4.5 or higher on all 4 DSRs or no DSR rating, will receive 15% off their total Final Value Fees per item listed. (Note: the DSR ratings in your new Seller Dashboard shows a 30-day rating and a 12-month rating. Please refer to the 12-month rating for eligibility of this promotion.)

When is it? Starting Friday, May 23, 2008 between 00:00:01 PT (12:00 AM plus one second on Friday, May 23, 2008) and ending on Sunday June 1, 2008 at 23:59:59 PT (11:59 PM plus 59 seconds).

What are the fees? Sellers who list in Auction-style or Fixed Price format on the U.S. http://www.ebay.com/ and Motors (Parts & Accessories only) http://www.motors.ebay.com/ sites, offer FREE Domestic Shipping and have either a Detailed Seller Ratings (DSR) of 4.5 or higher on all 4 DSRs or no DSR rating, will receive 15% off their total Final Value Fees per item listed as reflected in the fee table below.

Okay, now for my 12% -- let's look at the math.

Before the promo you sold an item for $10 plus $2.95 for S&H. Your FVF was $0.88 cents

Since you still have to pay the same amount to ship the item, most of you will just roll the old S&H price into the sale price. You still charge the customer the exact same Total Price as before "Free Shipping"

  • So now, you sell your item for $12.95 with Free Shipping. Your new FVF is $1.13 or $0.25 more than before the promo.
  • But, since you are taking part in the Free Shipping Promo you get a 15% discount off your FVF which is $0.17.
  • So how did you do? Your FVF actually increased by $0.08 cents if you take part in the Promo.

Where is the great deal here? You have to understand that eBay managers look at all of these numbers and they know that most sellers will just add the S&H to their sale price. So, they can give you 15% off your FVF and still make more money.

Do the Math!

Thursday, May 22, 2008

eBay is Like Crack to Sellers!

My eBay "habit" began in 1999 and for the first 6 years I was in heaven, but in Dec. of 2005, I had to make a decision. Was I going to try and restructure my business, for the 2nd time in as many years; after all it was still generating nearly $350K a month in cash (no profit mind you). Or, would I quit cold turkey and deal with the inevitable crash and burn when the crack (cashflow) stopped.

I actually had three options:
  • I could sell my business for whatever I could get. It made sense to put my sales on top of a lower cost structure and my brand was one of the best on eBay. I actually had a buyer, but the deal fell through at the last moment.
  • I could restructure and try it one more time, hoping I could stop the bleeding and grow my website. The problem with this, was I was upside down in the business and didn't see any way I could turn it around in less than 2 years. I looked down the road 2 years and saw no future as a media seller, so I asked myself, why would I work that hard and for free just to be in the same place 2 years later - but that crack (cash flow) was real tempting.
  • I could shutdown and try my hardest to keep the damage to a minimum. Had I actually seen a future selling "new" media items online, I would certainly not have shut down. 

Well, if you know my story at all, you know what decision I made.

Now 2 1/2 years later I'm seeing fellow sellers in the same predicament as I was. Many of them have restructured their business once already and tried to ween themselves from the "crack pipe" called eBay. You can't just turn the cash flow off without repercussions, restructuring sucks and it effects not only you and your family, but your employees and vendors. The eBay high is no longer there but you just can't turn it off.

Many have tried to ween themselves off and been successful; there are so many more options available today then when I shut down. Many sellers are still smoking the crack, thinking that somehow this is all going to get better, denial seems to be rampant. They say I am not an addict.

Many are still making it work but can't grow and they are fine with that. After all the crack (cash flow) is for recreational use only.

Over the past 3 years, I'm guessing, there have been tens of thousands of "come to Jesus" moments, when sellers had to address their eBay addiction and make a decision. Maybe what is needed is an intervention to shake them up to the realization.

I made my decision in Dec of 2005 and though it was the most painful decision I've ever made in my life, it was the best decision I ever made.

Online selling is not the problem, but reliance on a marketplace is. IMO, sellers need to take stock of their eBay business, admit they are addicted and begin a program to get of the "crack".

Maybe "Cold Turkey" is not the way to go, but sellers need to take a long hard look at their business and see if they can break free of the eBay addiction. Maybe what's needed is ESA or "eBay Sellers Anonymous" where they can stand up with other eBay addicts and say "I am an eBay addict", I need help.

Just my 12%

List Free on Overstock.com for Over Three Years!

ChannelAdvisor and Overstock.com have recently extended their partnership, all fees associated with selling on Overstock.com are waived through Aug. 31, 2011!

Overstock.com generates more than 9 million unique visitors per day. This translates into more product sales and higher revenues - and it’s all free when you become a ChannelAdvisor customer.

Tuesday, May 20, 2008

My Amazon FBA 6-Month Review

November 2007 was my first full month using Amazon's FBA service, so I thought I would look at some stats and share them with all of you.
  • Total items shipped to Amazon FBA to date: 7305
  • Total items sold to date: 6462 or 88% of all items sent to FBA.
  • Total items unsold: 843 or 12% of all items sent to FBA
  • Number of un-sold items that have been warehoused longer than 4 months: 58 or 7% of all unsold items.
  • Total warehouse expense for those 58 items: $3.48
  • Gross Sales (6 months): $85,218.83
  • ASP (Avg. Sale Price) - $13.19. BTW, that ASP is higher than my ASP on eBay "back in the day".
  • No, I'm not going to tell you what my net profit is, so don't ask.
  • I spend 10 hours a week on this business and have not been to the post office or UPS once in six months. I answer 2 emails a day (related to this business) at the most.
  • I have no employees, warehouse, packaging materials or Pitney Bowes account.

This isn't Glacier Bay DVD, but I've learned my lessons from that experience and will take this business slow and steady.

Just my 12% (adjusted for eBay FVF)

Monday, May 19, 2008

More Changes Coming to eBay!

eBay just announced some policy changes coming in the months ahead. There are a number of changes that may affect your business, so please make sure to review the details of the announcement.

One positive that I got from the announcement was the: Removal of the Choice Policy

"First, starting immediately, the Choice Policy, which has required sellers to list similar items in different sizes and colors in separate listings, has been removed. Sellers may now create listings that offer choices such as size, color, and configuration. For example, a shoe seller may now offer a particular shoe in multiple sizes in one listing.

This change adds significant cost savings and convenience for sellers, while helping them delight their buyers with more choice."


This change in policy allows sellers to create one listing for an item and also offer the different sizes and/or features in that same listing. This is one of the changes that sellers have been asking for since the beginning of time, so I'm glad to see it becoming a reality. Now if you have a shoe available in different colors and sizes you only have to create one listing, saving on listing fees and hopefully providing a better experience for the buyer.

Hopefully the software vendors will be able to create listing templates to take advantage of this revised policy. ChannelAdvisor had developed something in the past called "The Configurator", hopefull they can roll this out to their clients quickly.

Feedback 2.0 Comes to the US Today!

eBay's much criticized new Feedback system comes to the US site today. It may take all day to update the site.
  • No negative Feedback for Buyers
  • Past Negatives and Neutrals are all counted as negative. The only options going forward are Positive or Negative.
  • eBay messaging during the Feedback process tells buyers "you can no longer receive negative or neutral Feedback from sellers. You should leave honest and accurate Feedback without the fear of receiving negative or neutral ratings."
  • Many sellers are worried this will drop them out of PowerSeller status.

It will be interesting to watch and see how much this new Feedback improves the "Buyer Experience".

Update: Here is an announcement from eBay "As previously announced, we are making changes to the Feedback system this month. We have begun the back-end changes that will allow Feedback percentages to display only the last twelve months’ worth of transactions, and to show credit for repeat Feedback (retroactive to 1996).

While we are performing the database migration necessary to display the Feedback changes properly, members may notice some discrepancies in the way Feedback is displayed on the View Item pages and in individual members’ Feedback Profiles. During the transition, the positive percentages on these pages may appear to be different.

The migration began on the global sites on May 12 and will complete on all sites by May 28. As always, thank you for your patience and understanding."

Friday, May 16, 2008

Zappos is Branching Out!

I've been following Zappos CEO Tony Hsieh on Twitter for awhile now and I'm fascinated by the way Zappos does business.

They've taken a page from the Amazon playbook (except they aren't a discounter) and decided they would make their Customer Experience the ultimate online shopping experience. IMO, the company would be an excellent case study on Building a Retail Brand. Their catch phrase is "We are a service company that happens to sell"

Zappos was founded in 1999 as an online shoe retailer and has grown to over $1 billion in sales in the last 8 years. They are now expanding into additional categories with a new updated web experience at http://zeta.zappos.com/ (Zeta being a play on the traditional geek speak of Beta)

What is interesting, is that Tony visited eBay several weeks ago to meet with Senior management and explain how they view the customer experience. But in speaking with him (via email and twitter) I don't see Zappos making there way to eBay to sell their product.

Zappos, really isn't a brand that would benefit from an association with eBay.

Here is an interesting interview of CEO Tony Hsieh, discussing their use of Twitter as a viral marketing tool.

Thursday, May 15, 2008

New York Sales Tax Dominos Start to Fall!

It all began as a push to get Amazon.com to collect sales tax on purchases shipped to New York residents and has now begun to impact other online merchants.

Sales Tax law is difficult to understand, but basically if an online retailer has a physical presence (warehouse, sales office, etc.) in a state like NY, they are required to collect sales tax for purchases shipped to that state. In Amazon's case they do not have a physical presence in New York, so the law was expanded to include Affiliates (Associates in Amazon lingo). So, since Amazon has Associates who reside in New York, they are deemed to have a presence in the state, therefore must collect sales tax. The new law has been dubbed the "Amazon Tax".

Amazon has chosen to fight the new law in court, as un-constitutional, but will begin collecting sales tax for purchases shipped to New York on June 1st in compliance with the law until the issue is resolved in court. They chose not to cancel their associates program for New York residents.

Overstock on the other hand has decided that they will cease allowing New York residents to participate in their Affiliate Program, rather than collect sales tax for the state of New York.

Well, the dominoes continue to fall as, Zappos CEO Tony H. said on his Twitter account this morning: "Ack! NY state sent us notice: Starting June 1, collect sales tax on all NY orders." My guess is Zappos management is hunkered down in their home state of Nevada, trying to figure out their response.

If Zappos has been contacted, it is clear that most major online retailers (with affiliate programs) have received similar notices, so expect the fallout to continue.

I'm wondering if eBay has received a similar notice and even though they do not sell directly to the consumer, their marketplace facilitates these transactions and they certainly do have affiliates in New York.

Thankfully, Amazon has sued to have this law over-turned. We can all hope that they are successful.

Wednesday, May 14, 2008

Has eBay "Jumped the Shark"?

For those of you unfamiliar with the phrase "Jump the Shark" here is a good description from Wikipedia:

"The term jumping the shark alludes to a specific scene in a 1977 episode of the TV series Happy Days when the popular character Arthur "Fonzie" Fonzarelli literally jumps over a shark while water skiing. The scene was so preposterous that many believed it to be an ill-conceived attempt at reviving the declining ratings of the flagging show. The phrase has become a colloquialism used by U.S. TV critics and fans to denote the point at which the characters or plot of a TV series veer into a ridiculous, out-of-the-ordinary storyline. Such a show is typically deemed to have passed its peak. Once a show has "jumped the shark" fans sense a noticeable decline in quality or feel the show has undergone too many changes to retain its original appeal ...

The term has also evolved to describe other areas of
pop culture including movie series, musicians, actors or authors for whom a drastic change was seen as the beginning of the end or marking the moment the subject is "past its peak." (bold is mine)




Since 2006 when eBay launched SIS (Stores in Search) and then reverted back a month later, these are some of the changes that have transpired on the site:
  • Store listing fees were raised by up to 150% per listing because "the clutter" was ruining the beauty of eBay. Inventory left the site because it was too expensive to list the "Long Tail"
  • eBay Express was launched with a weak advertising campaign and went from a vehicle to bring new buyers to eBay to a method for getting "more share of existing buyers wallet"
  • The focus of management was on fixing CORE and fees were reduced for auctions with low starting bids.
  • The T&S Crackdown of 2007 began and the "buyer experience" mantra was coined. Basically, sellers didn't do what eBay wanted so they started picking them off one-by-one.
  • DSRs were launched as a way identify the good sellers because Feedback failed to do this.
  • "Shop Victoriously" and Windorphins became the marketing strategy - Auctions (Winning)really were the beauty of eBay.
  • More fee changes with FVF discounts for 'good sellers" and the famous Stephanie Tilenius quote from the ChannelAdvisor's Catalyst conference; "by this time next year we will not recognize eBay.com compared with how it looks today.”
  • Best Match, Finding 2.0, Feedback 2.0 and the list goes on and on.

So my question for you is: Has eBay "jumped the shark"? Are they grasping at straws with these changes in order to save the business? Has eBay passed its prime?

I am very interested in hearing what you think, so I will step out of the way and let you speak. Let me hear your 12%.

Buy.com has Been Busy! They are Selling on Amazon Also.

Thanks to my many readers out there who pass along interesting information. I'm still waiting for an eBay "Whistle Blower" to contact me, but I guess I will have to keep waiting.

This morning I received an email from a faithful reader, who noticed that Buy.com was selling on Amazon as well, as BuyNow Incorporated.

Honestly, I think this is a smart move on their part. Buy.com is really just a huge 3P Merchant in my view. They just started with their own website and then branched out into the marketplaces, as opposed to what most of us did - starting in the marketplaces.

I do think their move does signal a trend that is gaining momentum, where online retailers align themselves with the large marketplaces to continue to grow. I'm not sure who is next, but it sure seems like a large shoe retailer is a prime candidate for something similar.

Just my 12%

Tuesday, May 13, 2008

My 12% on the eBay/Craigslist Battle.

I usually root for the little guy, in most things, over the big bad corporation and certainly root for the eBay seller over eBay management, but for some reason I don't feel that way about craigslist.

Maybe it's because I think Craig is full of shit. I mean come on, if you want to do something good for humanity, sell the rest of craigslist to eBay and do something good with the money -- all of this false piety turns my stomach.

I know I'm in the minority here and if you did a survey right now eBay would certainly look like the bad guy and in reality they most likely are, but lets be pragmatic here Craig. You could do more good for the world with $5 billion in your pocket than you can with a website that looks like it came out of 1960's sci-fi flick.

If you truly want to do good, take the money and share it with those in need then I'll change my opinion.

Just my 12%

Check Your Future eBay Feedback Percentage

Ina Steiner has a post on her blog about Feedback 2.0 being rolled out in Australia and what is interesting about what she found, is that even though you are not based in Australia, you can check your Feedback on eBay Australia and it will show you what your future eBay US Feedback will look like; when they roll-out Feedback 2.0 changes in the US. Good Catch Ina!

To check your Feedback rating under Feedback 2.0, go to the eBay Australia site and using advanced search (search by Find a Member) put in your user ID and whola your new Feedback 2.0 numbers.

I checked one sellers Feedback and they went from 99.6% on the US site to 99% under Feedback 2.0, which is still excellent in my mind, but others I've checked dropped significantly; some by as many as 2 percentage points.

BTW, don't wig out if you don't see any of your items listed in the store. If you don't sell on eBay Australia, they won't show any listings.

Update: Ina has a great little application on her blog, so no need to go over to the eBay Australia site. Just go here to see your current feedback percentage and your FB 2.0 percentage.

Additional Update: As my reader Rupesh Sanghavi pointed out, the FB is now hyperlinked so if a buyer just wants to see all of your negatives at once they just need to click on the number.

In A Perfect World - Online Storefronts

As I was thinking about a topic for today's blog post, I kept coming back to my dream for a Perfect Storefront Platform. There are a few existing platforms that have elements of my perfect platform, but not one of them fits the bill completely.

For purposes of this post the definition of agnostic is: open to all platforms, marketplaces, advertising and payment options -- not likely achievable in our competitive world, but I can dream. That's my definition anyway.

In A Perfect World, the Stores Platform of my dreams would have:
  • Unlimited Inventory Capacity. This is mostly so my Media selling brethren could load up their inventory.
  • A Shopping Cart - I know that will make most of you laugh, but eBay Stores is the largest Store platform in the world and they don't have a shopping cart.
  • Platform Wide Product Search - Basically all the inventory, in each of the stores on the platform could be found in a Store Search. Kind of a GoogleBase just for the product on the platform. There would be no additional listing charge to be included in this search other than if a seller wanted to be featured. The key would be that this is a simple product search not a new Marketplace.
  • Tiered Pricing - Monthly hosting charges would be based solely on SKU count and features. Entry level to full service. Each marketplace or advertising venue would charge their own fees and a sellers could determine if that venue is worth it for their business. Update: Perhaps a reasonable GMV fee model might work
  • Marketplace Agnostic - Sellers on this platform could list their product on multiple marketplaces and have their inventory managed. If you have 10 Mulan DVDs, why not spread that inventory across multiple platforms, including your own storefront.

    Google or Microsoft would be the only large companies out there that could truly be Marketplace agnostic.
  • Advertising Agnostic - Even if Google or Microsoft created this platform, sellers could still do a PPC ad campaign on Yahoo if they chose. The point of this "Perfect World" idea, is to provide all of the options available to advertise your product. It just comes down to budget and resources for the seller.
  • Payments Agnostic - A sellers could offer any payment option they chose. Google Checkout, PayPal, Checks, Money Orders, Merchant Account or possibly a "New" payment option on the horizon.
  • Limited Rules - Unless the product is illegal or harmful, a sellers should be able to sell it on the platform. There would be no huge need for Trust and Safety. Of course there would be some level of restriction for categories with regualtory oversite like Firearms, Drugs, etc as well as the vices like Adult products.
  • Sales Tax - Reporting capability built in. I know you may laugh about this but Amazon WebStores doesn't have this capability.
  • Shipping Services Agnostic - Basically, sellers would have a robust suite of options for shipping. USPS, DHL, FedEx, UPS, Frieght or Local Delivery.
  • Basic Design Templates - 25 or so different looks to get people started but open the door to Design companies to do much more if the seller chooses.
  • eMail Management Program - this would help sellers manage sales on multiple platforms..

I could go on and on, but you get the point. There are over 19 million small businesses in the US and eventually most of them will be online. This is really the next gold rush in ecommerce. Imagine the leverage the platform would have with each marketplace, search engine and payment solution.

Currently, the options are limited, but there is a template out there for this new platform:

  • eBay Stores has over 500,000 existing stores worldwide and could only do this if they added a shopping cart and spun-off the stores platform. The problem is eBay won't be agnostic about competing services and marketplaces.
  • eCrater has a platform wide search but is limited in resources and can't handles the big sellers.
  • Yahoo Stores is a great platform for independent web stores but can't serve as an inventory management platform for other marketplaces.

Google doesn't do ecommerce very well, but they are most suited to develop this type of platform. If there is anybody from Google reading this blog, please email me. We need to talk.

Update: As I re-read this, I realized this sounded a lot like ChannelAdvisor without the store platform. A combination of Google and ChannelAdvisor would make this idea sing.

Scot Wingo, please give Eric Schmidt a call. :)

Just my 12%

Sunday, May 11, 2008

Craig's List Opens the Door to a Sale.

In a recent Financial Times article, craigslist CEO Jim Buckmaster, opended the door to selling Craig's List.

"Among the suggestions that Ebay has made to Craigslist's controlling shareholders, according to court papers released earlier this month, was to buy the company outright.

"If someone wanted to come up with a dump truck and give us a lot of cash we wouldn't say no," Mr Buckmaster says. But he adds that he and Mr Newmark have no interest in being answerable to an outside shareholder who would interfere with their unconventional principles."
(Bold is mine)

Jim, you don't need to worry about answering to an outside shareholder, you and Craig would be out the door before the ink was dry on the agreement. Selling to eBay seems a no-brainer to me.

My guess is a sale will be the ultimate outcome of the legal battle they find themselves engaged in with eBay and I'm sure eBay would love to buy the rest of the company. So I think it is just a matter of time.

I do have a suggestion for Craig and Jim though; when you get your billions from the sale just come up with an auction site to compete against eBay and continue your mission to enable person-to-person commerce. Wouldn't that be ironic?

Buy.com First Week - Little Impact on eBay Media Sellers

Well, the first week of Buy.com's eBay listings onslaught is over and it looks like there was minimal impact on the Media category. My discussions with several media sellers shows little impact on their sales.

I'm looking more in-depth at the impact on the Computers & Networking category and will post about that as soon as I have a feel for what happened.

Buy.com's Free Shipping, for orders over $25 and minimal S&H on most media items (compared to other media sellers) generated higher ASP's but just avg sales. A quick look at some of their listings shows that their BIN price is significantly higher than other eBay sellers and even though Buy.com is supposed to offer a superb "Buying Experience" eBay buyers don't seem to care -- they still want the lowest price on commodity items -- a retailer's brand means very little on eBay, the majority of buyers go to eBay for a deal.

eBay buyers may complain about high S&H and bad sellers, but what they really want is prices that are "eBay Low". Now if I could get "eBay Low" prices and Free Shipping" that would be a winning combinations, but if you beleive that combination is possible for sellers you are kidding yourself. It is actually pretty sad that eBay management can't seem to figure out their own buyers.

This is a huge miss-calculation by eBay, IMO. They are trying to change a discount marketplace into a retail website because they are seeing slowing growth, yet they won't spend any money to go out and get those "Retail Customers" -- the customers who would want the "Retail Experience".

Active eBay buyers want the discount and the service but the discount reigns supreme in their minds. Sellers have been telling eBay managers this for years. What is the old saying; "Service, Quality and Price -- Pick two of them". If eBay managers were actually retail experts then they would already know this.

Their strategy appears to be "change the marketplace by association". In their minds, the current crop of sellers on eBay don't know what they are doing, so why not go out and get someone who does. "You can put lipstick on a pig, but it is still a pig." They are putting lipstick on the eBay marketplace hoping their buyers will care and they don't.

Where does eBay go from here? Perception is reality and nothing eBay is currently doing, or planning to do, will change the perception of the eBay brand.

Update: There appears to be some impact on the Books category from the Buy.com listings but DVD, Music and Games were not impacted.

Just my 12%

Friday, May 09, 2008

Looks Like I Live in the Right Place for an eBay Business.

eBay just released information on the top-10 eBay selling markets in 2007, and Los Angeles was #1. I don't live in Los Angeles but my home county of Orange County is right next door and was # 6 on the list. Combined, the two areas accounted for just over $2 billion of eBay's $60 billion in GMV worldwide.

Here is the entire list:

  1. Los Angeles–Long Beach, California – 196,089 users sold 24,051,645 items for a total of $1.4 billion.
  2. New York City– 158,859 user sold 12,621,651 items for a total of $1.05 billion.
  3. Chicago – 172,972 users sold 10,229,844 items for a total of $908.7 million.
  4. Philadelphia – 120,900 users sold 7,069,212 items for a total of $584.4 million.
  5. Dallas – 85,484 users sold 5,003,292 items for a total of $754.5 million.
  6. Orange County, California – 75,486 users sold 6,945,490 items for a total of $636.7 million.
  7. Washington, D.C. – 112,462 users sold 5,024,888 items for a total of $393.7 million.
  8. Houston – 76,450 users sold 4,297,389 items for a total of $528.8 million.
  9. Nassau–Suffolk, New York – 70,714 users sold 5,396,880 for a total of $400.3 million.
  10. Fort Lauderdale, Florida – 39,623 users sold 2,838,954 items for a total of $632 million.

The top 10 markets for sales generated $7 billion in GMV in 2007, accounting for a whopping 55% of all sales by US-based eBay sellers. The 55% number came from Richard Brewer-Hays at eBay Ink.

So on a side note: I'm assuming the survey excluded eBay Motors, so it looks like eBay's US GMV for eBay.com is just north of $13 Billion or 22% of eBay's $60 billion in GMV that would make eBay Motors GMV around $16 billion. Just throwing numbers out there. :)

I'm glad to see that my area is representing 15% of eBay's non-motors business in 2007

Just my 12%

Thursday, May 08, 2008

StubHub a Case Study in M&A

StubHub had been a fantastic ecommerce story "The company was founded in 2000 by Eric Baker and Jeff Fluhr, former Stanford Business School students and investment bankers and is located in San Francisco, CA. Founder Eric Baker left StubHub in 2004 following a falling out with the company, and has started a new company viagogo. StubHub was acquired by eBay in January 2007." Source Wikipedia.

Next to PayPal, StubHub has been the most successful acquisition for eBay and continues to help the eBay Marketplace business stay above water with its high take-rate and growing revenue. StubHub, has successfully managed to get both buyers (10%) and sellers (15%) to pay them to use the service. In a world of "Free" this is a wonderful business model and eBay bought it for $310 million

eBay has not tried to integrate StubHub into the eBay.com platform, instead choosing to run it as a standalone company. IMO, this was one of the smartest moves they have made. You don’t want to tie it to the flagging eBay business in the public’s mind.

StubHub is led by President Chris Tsakalakis, a former eBay Stores Vice President and the company continues to thrive. As a signal that StubHub is moving into the next stage of development, I recently came across two new job openings at the company. StubHub is looking for a COO (Chief Operating Officer) and a CMO (Chief Marketing Officer) both positions reporting the President Tsakalakis.

StubHub has successfully grown its business, as a separate brand from eBay and the sky appears to be the limit. Business Schools should study the StubHub acquisition and subsequent management as an M&A (Mergers & Acquisitions) Case Study.

Top 500 Web Retailers Account for $101.7 Billion in Sales

According to Internet Retailer "In 2007, many retailers struggled with weak store and catalog sales. By contrast, e-commerce was the retailing industry’s growth engine. In 2007, the business-to-consumer e-commerce market, which includes the Internet Retailer Top 500, grew nearly six times faster than total retail sales. Last year online retail sales reached $165.9 billion, an increase of 21.6% from $136.2 billion a year earlier. Meanwhile, total retail sales grew by 3.9% to $2.41 trillion from $2.32 trillion in 2006, according to the National Retail Federation."


"Back in the day," Online sales were thought to be the equivalent of catalog sales; a nice addition to your B&M business, but the growth would be similar to the catalog business. Well, according to the information coming from Internet Retailer, that is not the case. Business-to-consumer e-commerce is still growing 21.6% Y/Y or $29.7 billion in from 2006 to 2007, while total Retail sales grew by $90 billion Y/Y. A whopping 33% of "total retail" growth is coming from online commerce.

I looked at the list of the top 500 online retailers and to be honest they are missing some companies. They look at eBay's business in the aggregate, saying; "In 2007, the Top 500 grew their combined sales to $101.7 billion, an increase of 21.6% from web sales of $83.6 billion in 2006. The rest of the market, including an estimated $38 billion in eBay Inc.-originated sales that could be considered retail sales, accounted for $64.2 billion in sales, up 22% from $52.6 billion a year earlier. 2007 sales at the Top 100 grew to $87.7 billion —22.5% — from $71.6 billion in 2006. " So eBay accounted for $38 Billion in "retail sales" by far the largest share of the $165.9 billion total, but since they are not a retailer they don't make the list.

According to Internet Retailer: "Last year combined revenue of the Top 500’s 100 smallest merchants—companies with annual web sales ranging from $6.4 million to $13.4 million—rose by 19% to $995.5 million from $836.3 million in 2006."

Notable companies missing from their list:

Grapevinehill
eForcity
Movie Mars

These are just a few online retailers who would have made the list, but were counted in $38 billion from eBay.


Some of the top 100 retailers on the list are already opening up their sites to other merchants to expand their product offerings. We are all aware of Buy.com, Overstock and Amazon opening their platforms to 3P sellers, but a new group of online retailers are getting into the business as well, like NewEgg.com - with over $1.5 billion in sales and a Top 100 retailer in this survey, they have opened up the NewEggMall.com to broaden the product offerings.

In the next few years more top retailers will follow suit and open up their traffic to 3P sellers and ecommerce will continue to thrive.

I've said it before and I'll say it again. Online retail is the growth engine of the future and online merchants have much to look forward to as long as they don't rely on sales from just one channel.

Just my 12%

Wednesday, May 07, 2008

Brilliant! The "eBay Bucks" Test is Brilliant!

Warning!

If you choose to read further, please make sure to wear your "Tin Hat" and verify that there are no “Black Helicopters” in the airspace around your home or place of business.

After thinking about the new "eBay Bucks" test some more, I came to a simple conclusion: This test is brilliant on eBay's part.

First, they test the program with half of Q2 still ahead of them, so there is plenty of time for the excited registrants of the program to "Shop Victoriously" and earn their "eBay Bucks". eBay collects their regular take while delaying payment for the promotion until Q3 – Brilliant!

Since we have no idea how big the test group is we will assume it is sizeable enough to move the GMV and revenue needle upward for the quarter while pushing the cost of the program into Q3.So in Q3 these excited “random” users continue to "Shop Victoriously" for another month-and-a-half before they get to redeem their earned “eBay Bucks” and eBay continues to get their regular take from sellers.

Now, here is the brilliance of the program: The user will have one month to redeem their "eBay Bucks" and they can only use it for purchases on eBay between August 22nd and Sept 21st, 2008. I don't know about you, but I'm on vacation in late August so I won't be on eBay buying anything and would most likely forget about my "eBay Bucks" when I got back. That time of year, is also when consumers are doing their “back to school” shopping which I don't recall every doing on eBay.

Even if I did redeem my earned "eBay Bucks" I would have to spend them on eBay where they would once again get their take of the FVF and other fees from the seller.It's all in the math and the percentage of users who would actually redeem their "eBay Bucks" will be relatively small; just think of how many gift-cards never get redeemed. Those "random" users who do redeem their "eBay Bucks" will have spend them on eBay where eBay still gets the FVF on that purchase and eBay generated far more revenue from the increased spending for 3 months, while only allowing the redemption for 1 month.

This is a perfect example of offering a promotion that looks like it will pay out pretty big to the user, but that actually costs eBay very little and by rolling it out now, they can stoke their Q2 numbers without having to pay anything for the promotion. -- in case you are wondering, that is the "tin hat" part of this post.

Anyway, if the promotion increases sales on the marketplace everybody will be happy; sellers because they sell more product; investors because the promotion really doesn't cost eBay much; eBay managers because they are able to get the benefit in two quarters and buyers because they think they are actually earning something.


Brilliant, I say Brilliant!

Can you tell I was bored?

3P Merchants Open Up Shop on Buy.com

Buy.com has been around since the late 90's and is a survivor of the Dot.com Bubble of 2000 - 2001. According to Wikipedia; "Founder Scott Blum sold his stake to SoftBank in 1999 for $195 million just before the company first filed to go public. Stock values plummeted in the year following Buy.com's initial public offering and in 2001 Blum reacquired Buy.com and took it private for 17 cents per share."

Buy.com opened its doors to 3P merchants sometime in 2005, but never really publicized it so they could mange the growth more effectively. They began to take a more aggressive approach in 2007 and partnered with Mercent, Channel Inteligence, ChannelAdvisor and Zoovy, though I couldn't find much about it on their Zoovy's Website.

Here are the basics to get you started selling on Buy.com:
  • Registration Requirements: "Currently, Buy.com is accepting registration for new business sellers on our Marketplace. A tax ID, valid credit card and checking account information for your payments is required to complete registration application." A word of warning, not all applications will be approved.
  • Open Categories: Books, Videos, Music, Electronics and Computer Hardware, Software, Games, Toys & Baby, Home & Outdoor, Jewelry, Apparel. They will add additional categories over time. Go to the Website for information on fees. The fee structure is comparable to Amazon's.
  • Shipping Options: "Sellers at Buy.com are required to ship all products via a standard shipping method with a level of service at least equal to U.S. Postal Service Media Mail. Shipments sent via standard shipping are expected to arrive in the buyer's hands within 4-14 business days from the date of purchase.

    Sellers can offer buyers expedited shipping. If a buyer selects expedited shipping, the order must arrive within 3 - 6 business days from the order purchase date."
  • Shipping Credit: "Sellers are given a shipping credit for each item sold, which should be enough to cover the seller's shipping charges in most cases. However, these credits may not be enough to cover heavy or oversized items. Sellers can adjust their item price to make up any difference in cost between the shipping credit and their shipping cost. Either way, the shipper must ship the product to the seller via the method of shipping that the buyer selected regardless of whether the shipping credit covers the cost." The Buy.com Shipping credit is lower than Amazon or Half.com

A nice feature of the Buy.com marketplace, for 3P sellers, is the fact you can win the "Buy Box" if your total price (sale price and S&H) is the lowest at the marketplace. So if you can beat the Buy.com price and the rest of the competition on total price you will get premium exposure.

Right now it doesn't appear that 3P merchandise listed on the Buy.com site is making its way over to eBay, but who knows maybe one day you could list on Buy.com and get eBay for free -- Wouldn't that be a kick.

Just my 12%

eBay Rewards Program - eBay Bucks!

Scot Wingo has a very detailed post on the new "eBay Bucks" reward program that eBay is rolling out. It appears that there are some issues with the messaging around the launch and that while eBay says it is limited to select buyers (invitation only) Scot got in without an invite.

Scot also makes a great point about eBay's communication problems.

"So here we have what looks like a pretty interesting program.

ChannelAdvisor is one of eBay's largest partners and I learned about it from a buyer emailing asking if it is phishing or not.

I guarantee eBay hasn't talked to any sellers about this as well."


If you buy on eBay and didn't get the invite. You might just head over to the site and register before they figure out they have a problem.

Update: It looks like the registration is now closed to everybody but those invited, but you can still put your user ID on the list for when they roll this out.

The Amazon Bump

When I was selling on eBay "back in the day," we generally got our biggest sales bump when Auctions or Store items were closing, so we tried to manage the number of items we had closing every day to ride the wave.

I've noticed a similar "bump" on Amazon, but it happens when I list something, or in my case when a shipment is received into Amazon's FBA program. It works like clock work and usually lasts a day or two. So I've decided to ship my orders 2 or 3 times a week instead of one large shipment to get that Amazon Bump all week long. It costs a little more to send 3 separate 20lb boxes, then it does to send one 60lb box, but I've found my sales are better when I do this.

I've spoken with several large sellers, who fulfill their own orders and they've seen the "Bump" as well, so it has little to do with FBA, but most likely happens because newly listed product is priced optimally, though I don't get the same size "Bump" when I reprice the items that are already up on the site.

Anyway, I'm just rambling on to keep myself from writing something else about eBay, so there.

Tuesday, May 06, 2008

Winners and Losers in the Buy.com / eBay Partnership

I said I wasn't going to become the eBay/Buy Blog, but it's the story of the day for eBay sellers so I'll keep posting.

It is still very early in this new arrangement, but I can start to see which segments of the eBay ecosystem are going to benefit and which are going to have trouble.

In Trouble:

  • Current eBay Sellers of New in-season product. This was already a tough business on eBay and it just got tougher. Sure, the sellers who get surplus deals on "New" in-season product will have their opportunities, but the majority of sellers who did business like I did (bought from distributors) at least in the Media category, Consumer Electronics and Computers will have to re-think their business ... again.

    With all of this new in-season product, eBay will be similar to Amazon. Amazon is the 800 lb. gorilla and sells the lion's share of the product but 3P sellers can still stake a claim there. Buy.com will maybe be a 200 lb gorilla, but still formidable. The key for these types of sellers is to do their homework and understand what they are up against. Being nimble has its advantages. Those who don't adapt will be out of business.
  • The Level Playing Field - It's gone and will never be coming back. In fact this will be the last time I bring it up.

    Big retailers, with clout, will be able to negotiate great deals with eBay management. All of the old rules that protected the marketplace like no emailing customers, checkout re-direct, High Core Fees, and DSRs and Feedback (just rumors) won't apply to these new deals.

    These new Anchor Stores will instantly command category share. In fact, Buy.com is already taking share from existing sellers in several categories. It isn't growing eBay's GMV it is just redistributing it. Here's the problem Buy.com may do $2 million in sales this month but it wasn't $2 million in new business, they just took share from each seller in the category.
  • eBay - If this little experiment doesn't work, how are they going to be able to convince other large retailers to take part and what kind of concessions will they need to make to all the existing sellers that they have pissed off.

    The Third Party Seller business is now becoming very competitive and the success of Amazon's model; where a retailer opens up their platform to 3P sellers will be the wave of the future. Imagine BestBuy doing that; or Zappos; or any other large retailer. If eBay fails at this "New" approach they will be marginalized, IMO.

Going to Benefit:

  • Used, Surplus, out-of-season, end-of-life product. With a major retailer taking the lion's share of the new-in-season business and its share of the "new" long-tail business. eBay buyers are still going to be looking for a deal.

    I am doing very well with used product on Amazon and at much great margins than I ever achieved on eBay. The same thing will happen on eBay and when a new retailer heads into your category if you fill the void for used, surplus, out-of-season and end-of-life product you will do okay and might even thrive.
  • Collectibles and Vintage Sellers, may benefit if this move actually re-engages inactive users, more activity on the site should benefit these categories and eBay is still the best place on the web to find this type of product. The only caveats with this, is eBay needs to abandon "Best Match" in these categories, which is not likely.
  • Consumers - In theory this deal and the similar deals coming down the pike will benefit the eBay buyer. It's all about the "Buyer Experience". Now, they can truly find IT on eBay. The one problem with this, is if eBay buyers say; "I can get that new in-season product elsewhere, why would I shop on eBay for it." My guess is eBay has the metrics to show what people are searching for on eBay and they've targeted that type of product for future deals.

There are other winners and losers and this is an All-In bet by eBay. If they pull it off and the inactive eBay buyer re-engages, then this will be a success, even though many small business will fail or have to re-organize. If the in-active eBay buyer just shrugs and says "Big Whoop!" then eBay is in big trouble.

Just my 12%

Monday, May 05, 2008

All eBay / Buy.com All the Time!

Sorry, but this topic doesn't seem to be going away.

Here are some additional interesting tidbits to chew on:
  • Buy.com is not using eBay's checkout and in fact they are taking buyers to a checkout page that looks like an eBay page but is actually hosted on Buy.com's site -- without the nice little message "you are about to enter a third party site" that all software vendors have to include when they setup checkout for a client. There are strict rules they must follow with checkout redirect. It appears that Buy.com does not have to do this.

    First, its about time that eBay allowed this and secondly; why aren't they letting everybody do it? Imagine the improved "buyer experience" if they rolled out these types of features to everybody. I know, I almost choked while writing that.
  • Also, I would imagine they are planning to roll-out a new pricing structure for the commodity categories similar to the one suggested in the many Stores Surveys making the rounds. Basically, Store Subscriptions will determine your CORE listing fees where the more you pay for a store (Anchor $299) the less you pay in listing fees (2 cent listing fees).

    They may not be planning on announcing this just yet because the Buy.com deal became public a couple of weeks earlier than expected, but I would look for a big announcement regarding pricing at or around eBay Live.
  • Speaking of eBay Live! It looks like 2008 is it for while.

That's it for now, keep those cards and letter coming!

Impact of eBay/Buy.com Deal Part 2!

I was talking with a friend in the business about this deal and he made some very good points:
  • The only group this affects is sellers in the same categories as Buy.com. eBay still gets 100% of the GMV and it isn't really growing it's just coming from a different seller.
  • Wall Street just shrugs because the deal isn't material, it isn't growing GMV at all.
  • It does spike listings a little but what's 200K listings in the scheme of things?
  • Even the free listing fees are really just vapor because the listings never would have existed without the deal, so it's not like they were giving away anything. That is why it is looking more like the deal was: Free Listings and standard Core FVF (8.75%)
  • Buy.com gets incremental sales and acquires new customers.
  • Existing sellers in those categories have to adjust or leave. If they leave it doesn't matter because the inventory is still on the site.

So really, the only ones who care about this deal are sellers who are already pissed about the changes being made and those sellers who are worried about the next Anchor store to invade their category. It was already difficult to grow your small business on eBay, most of the affected sellers can kiss growth goodbye for now.

The one downside I see to this for Buy.com and eBay, is that we all have access to Buy.com's sales through completed sales and Terapeak so we will be able to see how much they are doing. If the imported "retail experience" is a bust where does eBay go from here?

Just my 12%

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%)

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. :)

In Search of Some Blog Juice!

As I grow MyBlogUtopia organically and develop a very loyal group of readers and regular commenters, I yearn for the story or post that will bring me some "Blog Juice".

"Blog Juice" almost certainly means your post will get picked up by other bloggers, the mainstream press and maybe even the TV news."Blog Juice" is the blogosphere's version of "traction", "run" or the "scoop"; basically "must-read blogging". TechCrunch, GigaOm and SAI (Silicon Alley Insider) are examples of tech blogs that have "Blog Juice"; Bits and WSJ Blogs have the Juice in the traditional media; Huffington Post and The Drudge Report in politics and Scot Wingo and Ina Steiner are examples in the eBay world.

Most every blogger dreams of the scoop that will create the "Juice" for their blog, that is why there are so many speculative, "sources say" blog posts. The strategy sometimes is to post as many stories as you can in the hopes that one of them sticks.It's a struggle to find a story that has enough impact, that you get the credit for breaking it. It's also difficult to drop a story that you can't confirm completely. You know it is happening, but you just can't prove it, so if you write about it and the story doesn't "break" then you lose some credibility.

I have to be honest with you, I look for stories like that every day, mostly because this is what I do all day. I get tips that I can't confirm and I'm just not ready to go out on a limb yet. Or tips that I hold back like the "Best Match Hack" because I want to see how it plays out before I do and then Wingo scoops me; Damn you Scot!

I know many of my readers don't read this blog for those types of stories, and I will continue to give you my 12% on the topics I believe will be of interest to you, but I really would like to break that story. I am working on something now, it’s close, but no confirmation, yet.

Sorry for the rant, but it’s a Friday and my mind is wandering.

Just my 12%

Blast From the Past - Pierre Omidyar in 2001 Interview

My how things have changed since Pierre spoke to Rob Hof of Business Week; back in 2001. (Special thanks to user: allaboutsewing on the Seller Central board for pointing out this article.)

I'll post the Q&A from the article in 2001 and then the video clip from the John Donahoe interview following. To read the entire Q&A you can go here.
Now, I wasn't going to add my 12% to this and just let you comment about what you see, but obviously I have a point of view based on sections of the interview I chose.

Here is my 12% in a nutshell: In 2001, Pierre wasn't aware of the troubles that eBay would experience as early as 2004 and he was certainly idealistic, back in the day, that he could maintain the marketplace that he had created. Unfortunately that was not the case. So eBay is in a transition, in order to be viable for the next 10 years management believes they need to re-create the marketplace and they are correct, but they are going about it in the wrong way.

The eBay of 2001, "Pierre's eBay", could still exist today and even thrive, but it will no longer grow exponentially and that doesn't sit well with investors, while the eBay of 2008 needs to get back on the growth track, but can't do that if shackled to the past.

Both eBay 2001 and eBay 2008 can co-exist but not in the same platform, trying to "Best Match" them together is like "making a silk purse out of a sow's ear" and if management continues going down this path there is much trouble ahead. What they will achieve is a so-so marketplace that never really reaches its potential.

eBay of 2008 is the Coca Cola of the 80's and we all know how that turned out. (In case you don't get the comparison Amazon 2008 is Pepsi of the 80's)

So, here is Pierre in 2001 and Pierre in 2008

Business Week 2001:

"Q: It seems ironic that eBay started out intending to level the playing field for small businesses and individuals, and now eBay is a big corporation. How do you make those jibe these days?

A: It sure is ironic. I like to think we're a different kind of big company, because of the way we interact with our community. If we lose that, we've pretty much lost everything. If you're starting a revolution and you succeed, then are you still a revolutionary? It's a little bit weird, but I think we still have a long way to go, bringing the level playing field to the rest of the world." (bold is mine)

What he is saying today:



Business Week 2001:

Q: eBay is so much more influenced by its own customers than other companies. How did you make that happen?

A: "It was of necessity, frankly. I had the idea that I wanted to create an efficient market and a level playing field where everyone had equal access to information. I wanted to give the power of the market back to individuals, not just large corporations. That was the driving motivation for creating eBay at the start.

But then beyond that, I didn't have a whole plan for how it would evolve. How it did evolve was that users would write to me and say, "You should do this, you should think about this, you should deal with these issues." I had the very luxurious job of saying, "That's a good idea, and that's a good idea, and let me go do that."

It was letting the users take responsibility for building the community -- even the building of the Web site. That's the kind of thing I tried to keep and encourage as we started building our product marketing teams. We wanted to remind people that the best ideas came from the community. They're the ones that are out there actually using the product and, in some cases, making their living off it. They know what it needs more than we do, generally."

What he is saying today:



I know many of you disagree with me but the only way eBay can come out of this on top is by segmenting the "Classic eBay" the idealistic Pierre from the "New eBay" the realistic Pierre.

If this doesn't happen, you will be reading about eBay 2008 as a cautionary tail of what not to do with a thriving business.

One More Thing: Express was the right idea, but the wrong execution, not from a design perspective, but from a business perspective.

It should never have been called eBay Express and it should have become the Fixed Price marketplace with no listing fees and higher FVF's instead of just being tacked on top of eBay.com listings and left to whither because of lasck of resources.

eBay.com should have become eBay Classic and been auction only, where the money was made on listing fees and low FVF fees and Stores should have become the hub that fed both marketplaces... there, I'm finished.

That's my 12%