Sunday, December 28, 2008
But, this time I'm not going to "out them" because they are not an outside company. They began on eBay and have finally been recognized for their hard work. From what I understand they are one of 10 existing eBay sellers who have been acknowledged as Diamond sellers. Their monthly sales exceed $500k in GMV and their DSRs are 4.9 across the board.
When eBay announced the "Diamond" program, I felt it was just cover for the Buy.com deal, and I'm on record that I have no problem with deals as long as they are open to existing eBay sellers. Offering deals to outside companies without providing the same opportunity for existing sellers is wrong in my view. It took awhile, but it looks like eBay is finally acknowledging the hard work of some of their largest sellers.
It remains to be seen what benefits they will earn from this new sales level but at least eBay has opened their Diamond doors to one of their own.
Now we have to get them to help the small sellers and the tone of this blog may change in 2009.
Just my 15%
Friday, December 26, 2008
Most of you know I am a huge fan of Amazon.com. I believe they had a very solid holiday season, but I have to chuckle a little about today's press release: Amazon.com's 14th Holiday Season Is Best Ever.
In reality, their sales could have been up 1% over last year (their previous best year ever) and that statement would still be accurate. Last year they said the same thing. Amazon.com Wraps Up Its 13th Holiday With Best Season Ever and the year before Amazon.com's 12th Holiday Season is Best Ever and ... well you get the picture.
So after we forgive the PR department for hyperbole, let's take a look at some of the numbers in light of the current economic news.
- 2008 - Amazon's Peak Order Day was Dec 15th with 6.3 million orders placed, which was up 17% over 2007's Peak Order day of Dec. 10th and 5.4 million orders. 17% growth Y/Y on the peak day is pretty impressive, especially in this economy.
It is interesting to note that Amazon's 2008 peak order day was so late in the season, only allowing 9 days for orders to arrive in time for Christmas. In 2007 the peak day was Dec 10th; in 2006 it was Dec. 11th and in 2005 it was Dec. 12th. Perhaps Amazon Prime had some impact on customers waiting until the 15th to order.
- On the peak day this season, Amazon's worldwide fulfillment network shipped over [5.6]million units up [44%] over 2007's 3.9 million orders. That growth is very impressive and the increase may have been favorably impacted by Amazon's FBA program where they warehouse and ship product for 3P merchants.
While these numbers are just a snapshot of Amazon's 4th quarter, they do show significant growth while the rest of ecommerce is contracting.
Now I'm just waiting for eBay's press release on their holiday season. :)
Just my 15%
Wednesday, December 24, 2008
I just wanted to wish all my readers a Merry Christmas and a Happy New Year! I look forward to covering the ecommerce business again in 2009. I hope that everyone has a wonderful holiday season and best wishes for the new year.
Thanks for being a part of My Blog Utopia in 2008.
Just my 15%
Monday, December 22, 2008
Thanks to a comment from a reader, I took a look at the current mix (auctions to FP) in the media categories on eBay and here's what I came up with.
- DVD's - Auctions make-up 15% of total listings
- CD's - Auctions make-up 10% of total listings
- Books - Auctions make-up 10% of total listings
- Video Games - are more difficult to figure out because game systems get included in the games category, but auctions still make up close to 50%
So in the three major categories auctions have lost favor with media sellers and are dangerously close to no longer being worth the effort for eBay, Sellers like JayandMarie may find their business model doesn't make any sense any longer. If eBay is going to go to FP only in the Media category and I have no knowledge that they are, then they should be reaching out to sellers like JayandMarie and giving them fair warning -- none of this "30-days" to convert your entire business model.
Just my 15%
Sunday, December 21, 2008
I'm still on vacation but since Ina Steiner has posted her predictions for 2009 and Sue from Tamebay is working on hers and soon to post them (I'll link to her post when ready), I figured I would jump on the band-wagon.
Warning! This list is for entertainment purposes only and should not be used to make any kind of decision. I was correct on 5 out of 10 last year, so I should get lucky on at least a couple of these.
- Amazon took over the "unique visitor" title in Nov and Dec of 2008 and will continue to battle with eBay through the 1st quarter of 2009, eventually taking the lead for good. In 2007 eBay took back the lead right after the holidays, this time they may lose it forever.
- John Donahoe will get two more quarters to turn eBay around before drastic action is taken, which could mean selling all or part of the business and/or replacing him as CEO.
There are two major caveats to this prediction.
*"Its NOT the economy stupid" scenario - If Amazon beats 4th quarter estimates and provides better than expected 2009 guidance and eBay misses 4th quarter estimates and guides lower for the rest of 2009 then Mr Donahoe may be out the door before the 1st quarter earnings announcement.
*"Its the economy stupid" scenario - If Amazon has a tough 4th quarter and so does eBay (I can't see anyway they will be worse than eBay) than the BOD and investors will give Donahoe a full year to make the turn-around complete, but he only gets 1 more year.
- Buy.com will consider leaving eBay in early 2009, but will decide to stick it out at least through Q1. I'm not sure how profitable their eBay business has been and it is certainly much more work and aggravation than their website and Amazon business are. If eBay is profitable for them, then they will stay.
- More Diamond sellers will launch on eBay with limited success. Unless eBay is willing to spend money to improve traffic and change the brand image of eBay, they can only hope to get incremental sales that require sizable investments in customer service. Plain and simply, it just won't be worth it.
- eBay sellers will have access to large amounts of surplus and liquidation product, but few will have the resources to act on this availability. Those with the cash/credit will be able to source product at unbelievable prices and improve their margins. Online sellers with margin will continue to succeed in a discount environment throughout 2009 both on eBay and on Amazon.
- eBay will continue eBay Stores subscriptions in the US, but will eliminate the SIF (Store Inventory Format) eBay Stores will just become a place to gather a sellers FP and auction listings. When they do make this change they will lower insertion fees for Fixed Price items from the current 35 cents and possibly increase FVF in some categories.
- eBay's Media category will look strangely like Half.com with items displayed 5 at a time and listed by quality. "Low Price", "Free Shipping" and "Recent Sales" will get you in the top 5 as long as your DSR's are better than your competition.
- Half.com will be shut-down at some point at the end of the first quarter. (Of course I've been saying that for a couple of years, so one of these days I will be right).
- Amazon will improve communication and tools for their 3P sellers, but will still not be open to core eBay product categories like vintage items, collectibles and antiques.
- Bonanzle.com (my favorite eBay alternative site) will reach 1 million listings by the end of the year and will open up International sites in the UK and in Australia by the end of the year. (No pressure, Bill)
One extra prediction, and this is more of a suggestion than a prediction, but I think it is likely. It is not mine, but I agree [it will happen]. It comes from a post on Seeking Alpha entitled "What will become of eBay?
"There is still a market for online auctions so management can continue to bleed that business for cash while investing in growing the fixed price business to better compete with Amazon. I would also continue to invest in payments to build out the Merchant Services business. Now that Bill Me Later is in the portfolio, eBay can have a run of the payments business on the web given largely failed efforts by others such as Google. I would also continue to invest and make acquisitions along the classifieds businesses and focus on better monetizing traffic through advertising." (bold is mine)
I'd love to hear your predictions.
Just my 15%
Tuesday, December 16, 2008
I was checking out SellerDome the other day and noticed that GlacierBayDVD had fallen out of the top 25 in feedback all the way down to #28. I guess I couldn't expect to stay there forever since I haven't sold on the site in close to 3 years.
I also noticed that Buy.com had moved into the top 25 at #21 in less than a year on the site. That is an impressive feat since Buy has never used the auction format and Fixed Price items usually don't see the same sales velocity. They are still a long way from Jack Sheng's eForcity, but who knows where they will be a year from now.
Buy is doing exceptionally well (by eBay standards) over the last 30-days, but their sales have been aided by many (loss leader) Daily Deals, so I'm not sure how profitable they are.
Earlier in the year, I was guessing that Buy might be considering leaving the eBay platform after the holiday shopping season, but based on their sales in the last 30 days, I would revise that guess, especially if the Daily Deal is directing a lot of traffic to their other items, which when I look at the numbers seems to be happening.
BTW, many eBay sellers are doing very well selling on Buy.com as an additional marketplace this holiday season (I plan to next year as well), so all-in-all it looks like Buy.com is having a pretty good year even in this bad economy.
Just my 15%
Monday, December 15, 2008
As we enter the final week before Christmas, I'm sure many of my readers are busy trying to get orders out the door. Even with all the bad economic news I've been hearing, it doesn't seem to be affecting many of my seller friends. Several I've spoken with have been working non-stop since Thanksgiving.
This week and next are when Amazon's FBA service earns its money:
- I have one last shipment of product going out Tuesday, so that it is checked-in by Friday and available for those last minute Amazon Prime shoppers.
- I haven't had to answer one customer email -- Amazon handles all customer service on my orders.
- My customers can have their orders gift wrapped at no cost to me. (They do pay Amazon for that though).
- If I was shipping product myself, I would have to tell customers that Friday was the shipping cutoff for items to arrive in time for Christmas; without paying through the nose for expedited shipping. With FBA they can buy my stuff up to the 23rd and have it delivered next-day for $3 (for an estimated 4 million Prime customers).
- I haven't been to the post office one time in the last 3 months. I just ship 300-400 pieces through UPS one day a week.
- No shipping supplies to order or warehouse.
- I only use one room in the house for business
- No hunting through 1600 different DVDs and CDs to pick and pack.
- My customers get world class service and I get the credit.
Now, to be fair, I am just a small business now and a year from now I expect to be much bigger so I can see this being a lot more work next year but there will also be more Amazon Prime customers next year as well, so my sales should benefit from growth in the program.
I recommend Amazon's FBA program highly, even for those sellers who still want to ship product themselves. My number one tip for 2009 and your business. Look into and test Amazon FBA.
Just my 15%
Thursday, December 11, 2008
Amazon, doesn't really do the whole community thing (eBay doesn't either, anymore) they are pretty much all business, but over the last year I've noticed a more concerted effort to communicate with their sellers. The change is happening gradually but it is happening:
- Click-to-call Support for merchants. I've used this several times in the last few months and though the level of support depends on who gets your call (Most of there support team really goes the extra mile) over all the support has been excellent.
- Holiday Shopping Tips in Seller Central.
- Holiday Webinar (look for more of those in 2009)
- The new Seller Support blog. Check out the latest blog post from Cathi C. and add this blog to your RSS reader.
This gradual change shows their commitment to growing and cultivating their 3P business and so far, though the steps are not huge, they are at least going in the right direction. I would look for more of this type of communication in 2009.
Update: Hot off the presses is this great new tutorial on Optimising the Customer Experience, from the Amazon Merchant Services team
Just my 15%
Tuesday, December 09, 2008
Ina Steiner has a great interview of Raghav Gupta, the creator of the algorithm that would become eBay's Best Match. Very interesting reading.
Click on the title of this post or click here.
Just my 15%
Monday, December 08, 2008
In this week economic environment, everybody is looking to save a buck. Microsoft CashBack search is one way folks are doing that. You just go to CashBack.com and search on a product you are looking for and then you get a list of discount offers for that item.
In eBay's case you can search on Live.com and click on an eBay sponsored link which will take you to eBay. [the % discount shows on the eBay link (on Live search) and at the top of the eBay nav bar until the cookie ends, so if you have a PayPal account you will get the discount]
Is buying the customer such a good idea? Doesn't it just encourage the same behavior next time. Look at what happened to Google Checkout. Everyone used it when they got $10 or $20 off but once Google stopped paying so did the usage of Google checkout.
I figure, I really didn't know enough about this type of program to write about it in-depth so I reach out to Brian Lawe, CEO of MyStoreRewards for his take.
Q. As you look at MS Cashback Live – what’s your take?
Let’s start from the perspective that operating a great buyer reward programs is very difficult. The Internet is littered with failed attempts. eBay has its own history of failures, notably eBay Anything Points.
A great buyer reward program requires the perfect balance between a seller’s cost versus the buyer’s benefit – sprinkled with a healthy dose of simplicity and fairness for everyone involved. Amazon Prime is a great example which strikes the right balance. It works really well to drive repeat sales at an acceptable cost.
My advice to the Cash-back Live team is to first improve the buyer registration process since is too complex today. Second, they should decrease the lag-time between purchase and reward (they are working on that). Third, they should create seller incentives for participation. Finally, they should create a really unique buyer engagement mechanism – something that will draw buyers back after the amazing 20-30% cash-back rewards go away. 20-30% cash-back is simply not sustainable – 2-3% yes, but not 20-30%. It is seductively easy to throw money at buying market share. The real challenge is finding mechanisms to get buyers back again and again --- without bankrupting the company! Amazon’s mechanism is around shipping benefits.
Q. You’ve studied cash-back search reward programs – how would you do it differently?
We have experimented with a search reward site in the past but we have no plans to launch a search-reward site today. However, we did file a patent for the method we think works best (http://tinyurl.com/6z4cgv) and my guess is Microsoft looked at that during their development. They adopted some, but not all, our strategies. In our patent, we balanced both seller and buyer interests. The seller gets preferred placement in search results based on the seller offering better buyer rewards. In turn, buyers get their cash-back rewards fast and paid directly to their PayPal-type account. One of our built-in mechanisms to drive repeat sales is to encourage a direct seller-buyer email relationship so the seller gets the opportunity to cross-market other items over time (which drives repeat sales). Finally, when the buyer returns for a new search – any previous rewarding seller gets priority for matching items. These kinds of mechanisms create a win-win for both the buyer and seller.
Q. What would you suggest individual sellers should do to take advantage of MS Live Cashback?
I’ve heard some sellers are inserting text promoting Cashback Live as a way to save more on the product price. That might help, but its more likely just free advertising for Microsoft Live Search, which also opens the door to competition when the buyer starts a new search on Live. Risky move.
Q. What would you suggest to eBay about the MS Live Cashback program?
MS has its own goal of driving search traffic. eBay needs to blaze its own path on buyer loyalty. It can do so in a uniquely eBay-way. Consider a seller selling on Amazon and on eBay. On Amazon, there is absolutely NO question about who owns the buyer. Amazon owns the buyer. The seller is treated like an outside fulfillment house. That means the seller has no vested interest in the buyer. Amazon funds its own buyer loyalty through Prime and it can swap out sellers quickly. On the other hand, a sale on eBay creates a shared eBay/seller relationship with the buyer. If a sale goes bad on eBay, the buyer blames eBay and the seller. If a good seller disappears from eBay, a part of eBay goes with her. eBay should build on this unique shared buyer ownership. eBay can’t do it alone. It needs to encourage sellers to grow repeat sales by giving the seller new technologies and new incentives to grow repeat sales. And eBay needs to act quickly. In the past year many eBay sellers, like Buy.com, now see eBay as only a channel to “acquire” new buyers. Like Amazon, they see the buyer as “theirs.” Once acquired, they aggressively promote their off-eBay store (e.g. Buy.com) for future/repeat purchases. If large sellers continue to do this, every eBay buyer will be drained away from the site. The eBay seller base should be engaged to join the fight for, and share in the rewards of, driving buyer loyalty on eBay.
Lots of good information about rewards programs. They can work, but it looks like Microsoft needs to keep working on theirs. As for eBay, Brian's suggestion should be taken to heart. I'm pretty much tired of making suggestions to eBay.
Additional information on CashBack; Hillary over at the WhineSeller blog has a great explanation on how the program works.
Just my 15%
Sunday, December 07, 2008
I'm not usually a selling tips guy, but with the new Daily Deals program at eBay, this is a great opportunity to source some product at unbelievable prices and sell it elsewhere. Not quite sure that was the intent of the program, but oh well.
Case in point.
Buy.com currently has a deal for the Philips 7 Inch Metal Digital Picture Frame, that began at 8:00 this morning (PST). The listing has 2013 available for $39.99 with Free Shipping. The retail price is $179.99 and Amazon is selling it for $99.99. There are currently only 3 merchants including Amazon selling this item. One merchant is selling it as refurbished for $100 and the other is selling it New for $90.88 (My apologies to that seller for mentioning this here on the blog)
So far Buy has sold nearly 400 of these in an a little under 2 hours. Maybe you would like it as a present for somebody for Christmas and maybe you would like to make $50 on the deal. Just buy it early and pay quick because eBay hasn't figure out how to not oversell the product.
Just an idea from MyBlogUtopia.
One more thing: I will observe what happens to this listing and where the product ends up selling and for what price. If I can gather the data, I'll post what happened here on the blog.
Update: Better hurry, 900 more were sold in the last 2 hours as of 11:37 PST only about 1000 left.
Final Update: Buy's Daily Deal sold out in 6 hours, 53 minutes and 33 seconds. 2300 items at $39.99 each. Now we just have to wait and see how many end up listed on Amazon. Hopefully Buy will get them shipped out real soon. 126 buyers bought 3 or more of this one item.
Check back tomorrow at 8:00 AM PST to see what the next Daily Deal is. I wonder if it will be another Buy.com item or if they will spread it around.
Okay, this is the final update (for now): There was no daily deal this morning. I'm trying to figure out why. If you are going to call it a "Daily" deal, wouldn't you think there would be one ... each day?
Those responsible for the last final update have been sacked -- This is your Final Update: The new Daily deal is up, but its not as good a deal. It selling for $34.99 with a $119.99 retail price and there are 900 left but it is selling for $44.79 on Amazon with 34 different sellers in the Toys category (which is closed to new sellers). The one on Amazon is a 3P sellers using FBA.
Just my 15%
Saturday, December 06, 2008
I normally don't comment on discussions I find on the eBay stores board, but in the past I have found there to be some very wise thinking going on there. Today I came across a thread discussing MAP and VeRO issues, which I have been blogging about for the last couple of days (sorry, just call me Johnny One Note)
I really enjoy reading Carl's (oldspartantrader) posts because he is a wise man and though I don't always agree with him, I still value his opinion. Carl points out that these issues are not simple and that he is glad that eBay is fighting against MAP and other issues because it would be too costly for him to do it on his own. I don't disagree with that.
But, then I kept reading and found out, that according to poster (itspostingtime), I don't know what I'm talking about in regards to VeRO and eBay's ability to change the program. itpostingtime says; "unlike Randy Smythe, who has written about this without any apparent understanding"
So, since I can't clarify my position on the eBay stores boards, I figured I would do it on My Blog Utopia.
First a little information regarding eBay's VeRO program from the company itself:
"eBay is committed to protecting the intellectual property rights of third parties and to providing its users with a safe place to trade. eBay created the Verified Rights Owner (VeRO) Program so that intellectual property owners could easily report listings that infringe their rights. It is in eBay’s interest to ensure that infringing items are removed from the site, as they erode buyer and seller trust." [bold is mine]
eBay created the program to comply with the DMCA or Digital Millennium Copyright Act of 1998. Apparently this version of VeRO was deemed compliant with the DMCA, because there have been few if any challenges.
There is a great document, written by intellectual rights attorney Scott Pilutik, that describes the issues surrounding eBay's VeRO program and heaven forbid he even suggests ways to fix it, which is what I am advocating. I suggest you take the time to read it (it is quite long). Here is a quick excerpt.
"Although the Internet seems custom-built for copyright infringement, trademark infringement also abounds, and nowhere is this more apparent than on eBay, the Internet’s leading online auction site, where over one million items, many of them brand name goods, are traded each day. As an online facilitator of services between parties exchanging brand-name goods, many which are not authentic, eBay may be liable as a contributory (or even vicarious) infringer.But while secondary copyright infringers can look to section 512 of the Digital Millennium Copyright Act (“DMCA”) as a shield against liability, alleged secondary trademark infringers, like eBay, have no such sanctuary. This unfortunate void has forced eBay to fashion a self-help remedy called the Verified Rights Owner Program (“VeRO”), which essentially deputizes the rights owners themselves to police infringing listings on eBay. But just as the fox has little incentive to act prudently while guarding the henhouse, rights owners have routinely overreached when armed with a quasi-official infringement enforcement badge. " [section 512 begins on page 8)
eBay's VeRO program has been a problem for sellers from its creation and though I have had no exposure to the program since 2006, I did deal with VeRO issues for my entire time at eBay. In the early days though, few manufacturers knew much about the program and even fewer organized to abuse the situation.
We are in a completely different environment today, then when VeRO was created. Today entire organizations have been created to abuse the system and manufacturers are getting even more aggressive with the program. eBay continually falls back on the "our hands are tied" defense which, I guess is sufficient for many, but not for me.
My main point in recent posts, that apparently wasn't clear enough, is that manufacturers are now going after sellers who are breaking MAP (minimum advertised price) or who sell product on eBay when the manufacturer has expressly told them not to. While they have the right to protect the value of their product and their pricing, using VeRO to do that is an abuse of the program and has nothing to do with intellectual rights or copyright. It is my position, that if eBay wanted to stop it, they could. So the "our hands are tied" defense is poppycock. They would rather get the PR benefit from a Dog and Pony show in Washington DC standing up for the rights of sellers.
How can VeRO be fixed? Mr. Pilutik has some suggestions"
"eBay similarly lacks any incentive to protect its sellers. As a result of its virtual monopoly on the online auction market, sellers have few alternatives to eBay’s sizeable market and are forced to sue the complaining rights holder if they wish to reinstate their listings. eBay punishes sellers who have had listings removed under the VeRO Program, and it has scant oversight in place to rectify wrongful listing removals at the hands of overzealous rights owners.This inequity could be cured legally in one of two ways: eBay could modify its VeRO Program to account for the due process it owes its selling community, or Congress could enact a safe-harbor provision for online service providers under the Lanham Act similar to section 512 of the DMCA"
The point I have been trying to make regarding VeRO and I apologise if I was unclear, is that eBay has the resources available to fix the problems with VeRO, instead they tie the manufacturers abuse of VeRO into their PR campaign against MAP because it adds weight to their argument. "see what these bad, bad manufacturers are doing, they are abusing our poor little VeRO program to force seller compliance of MAP, we need to overturn MAP because we are powerless to change VeRO" I say, fix the damn VeRO program and protect your sellers from the abuse of that program, then you can go attack MAP -- MAP has enough complexity on its own. If some people don't grasp this distinction I can't help that.
I believe VeRO and MAP are basically two separate issues. I want sellers to be protected from abuse and I want Manufacturers to be able to protect their brands, but because of the abuses of VeRO in regards to fixing prices", and eBay's looking the other way, the two have become one for me.
I don't want eBay fighting a battle for me on one front while they let manufacturers shutdown businesses through VeRO by way of the backdoor that eBay has left wide open.
One more bit of info on VeRO: The Reason Codes
A VeRO member can get a listing taken down for any of these reasons. All they have to do is site which one. eBay does nothing to verify if they are accurate or not. Yet a seller with 5 or more VeRO notices in a month can get suspended.
Trademark - Item infringement
1.1. Trademark owner does not make this type of product
1.2. Item(s) is unlawful replica of a product made by the trademark
1.3. Item(s) is unlawful importation of product bearing trademark
Trademark - listing content infringement
2.1. Listing(s) contains unlawful comparison to trademark owner's brand
2.2. Listing(s) contains unlawful use of trademark owner's logo
Copyright - item infringement
3.1. Software offered for sale in violation of a license
3.2. Item(s) is a bootleg recording of live performance
3.3. Item(s) is an unlawful copy of media (software, games, movies)
3.4. Item(s) is unlawful duplication of printed material
3.5. Item(s) is an unlawful copy of other copyrighted work (paintings,
Copyright - listing content infringement
4.1. Listing(s) uses unauthorized copy of copyrighted text
4.2. Listing(s) uses unauthorized copy of copyrighted image
4.3. Listing(s) uses unauthorized copy of copyrighted image and text
5.1. Item(s) infringes a valid patent (requires patent registration
5.3. Item(s) violates a celebrity's right of publicity
5.4. Listing(s) content violates a celebrity's right of publicity
6.1. The Kitchen Sink - Sorry, I couldn't help myself.
Just my 15%
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%
Friday, December 05, 2008
A while back, I was beginning to wonder if I was running out of things to blog about, at least things that interested me, then I participated in a conference call with Tod Cohen, eBay's VP of Government relations on Tuesday. Now I have all kinds of interesting things to write about; of course they may only be interesting to me and I should thank eBay for the invitation to the conference call.
I've already written a couple of posts on the subject of "price fixing" and that eBay is working with the American Antitrust Institute to fight against manufacturers who use MAP (minimum advertised price) to protect their brands and the value of their products.
My position is that manufacturers have the right to do this as long as they don't abuse it and that MAP actually helps small sellers compete with the large retailers who would "discount" them out of business. I agree the consumer needs to be protected from actual "price fixing" but repealing the ruling on MAP doesn't seem the proper approach.
Then of course I saw this video as part of a press release (please play the video) on the subject, basically saying that eBay was in danger of getting shut down by the Big Box retailers. They should have just said Wal-Mart is trying to shut us down.
Well if you watch the video it will blow you away that eBay is claiming to be the victim under the guise of helping the small seller. Okay stop laughing, its true watch the video.
eBay, a company that invites Big Box retailers to sell on their site, in effect driving the small seller off the marketplace and a company that reduces payment choice for the consumer on their worldwide marketplaces via PayPal "only" is working with the American Antitrust Institute. Isn't that rich?
I had to ask AAI about there association with eBay and their efforts in regards to a repeal of MAP rather than use the Supreme Court's ruling that "rule of reason" should be used to fight abuses. I received the following reply from Albert Foer, President of the organization;
"Contrary to the WSJ report, a coalition has not yet been formed and no decisions have been made. Among the matters that will be discussed, if a coalition goes forward, is whether to support re-institution via legislation of per se illegality or whether some other approach that will structure a rule of reason using rebuttable presumptions and shifting of burdens may be better. The problem today is that Leegin has unleashed a variety of strategies that are hurting consumers and some serious effort needs to be made if a free market is to operate in areas that are now price-fixed." [hyper-links are mine]
For your benefit, I've included a link to the AAI Press conference, in case you would like to get some context and listen to the audio.
So there no coalition and eBay and for that matter AAI are using this as a PR opportunity. I do agree with Mr. Foer's final statement "Leegin has unleashed a variety of strategies that are hurting consumers and some serious effort needs to be made if a free market is to operate in areas that are now price-fixed."
My advice to Mr. Foer is to reevaluate his organizations association with eBay on Antitrust matters.
In my view, the small seller must be part of this discussion or the whole process will be a farce. Small business is the backbone of America and it is time we had a voice. It isn't strictly about the consumer, it involves so much more.
Just my 15%
Thursday, December 04, 2008
If you have been following my recent post on "price fixing" and eBay's efforts at getting a Supreme Court ruling over-turned you will get a kick out of this video clip which can be found at protectconsumerchoice.org
eBay is complaining that the Big Box retailers want to shutdown eBay, yet eBay has been courting some of these very same retailers to become Diamond sellers on the platform. I'm sorry but eBay can't even get it's message straight.
- The Leegin Ruling, which eBay wants to get over-turned is currently protecting manufacturers who want to protect the value of their product with MAP (minimum advertised price) They should have the right to protect the value of their product.
- eBay wants the government to repeal the ruling because they can't even prevent some of these manufacturers from abusing the VeRO (Verified Rights Owner) program. Which is their job.
- eBay is courting large Internet 500 retailers to begin selling on the site and offering deals on fees, while not offering anything to existing sellers except for lip-service.
- Now the video above is blaming Big Box Retailers for wanting to shut eBay down.
Who is running this company?
Just my 15%
I keep following the traffic battle between these two ecommerce giants and since I started with Alexa data I'll continue using it. As you will see by the charts in this post eBay turned on the after burners just prior to Cyber Monday and the two are now neck and neck in reach, though eBay still has the lead in page views and web rank.
Alexa Reach for November
Alexa Web Rank for November
Alexa Page Views November
Just my 15%
eBay's Vice President of Government Relations Tod Cohen and a contingent of retailers, and antitrust experts are heading to Washington DC tomorrow for a press conference on RPM (retail price maintenance) which is basically about "price fixing". Manufacturers want to keep their retail pricing at levels they deem will properly value their product and are requiring retailers to sell at or above that price.
eBay of course wants the lowest prices possible on the marketplace because that drives sales, and the "lowest prices" has been their competitive advantage for many years (not so much now), so they are lobbying to repeal a law that allows manufacturers to "price fix". I won't go into all the legal details, but you can get a snapshot of it with RBH's post at eBayInk.
Normally this kind of stuff bores me, so I rarely write about it, but I was part of a conference call with eBay VP Tod Cohen yesterday and one of my consulting clients is dealing with this very issue with their vendors, so here is my 15%
It is standard in the retail industry for vendors to base their wholesale price on a % discount from the MAP or MSRP -- for purposes of this post let's say 50%. If sold at MSRP or MAP the retailer gets maximum margin, and the manufacturer maintains the proper value for that product. But we live in the real world and sales velocity doesn't happen until the retailer discounts the product. Manufacturers don't like discounting because it devalues their product over time and forces them to lower their wholesale pricing.
In my case with Glacier Bay, back in the day, I had to discount 25% off the MSRP just to get a buyer to look at my listing. Instantly, my margins were squeezed and when you added in eBay and PayPal at 15% to 17% I was left with very little margin. I basically had to make my money off the S&H fee.
In some categories, retailers are required to sell at MAP or MSRP or they risk losing their rights to purchase that product. This is the price fixing that eBay is lobbying against.
Here's the problem:
- Manufacturers sell at a wholesale price and they are done with the process. They have already received their price, but they want to maintain a retail value for their items so that they can maintain their wholesale pricing.
- Retailers don't want to be told what they can sell a product for, but if their right to purchase that product depends on selling at an agreed on price they will do it in order to get the product.
- If nobody breaks MAP then the market for those items never sees any discounting and the retailer has a level playing field with their competition, but we all know that in a competitive marketplace some will break the rules forcing others to follow suit or lose out on sales.
- In a competitive environment retailers are always looking for an edge, so the gaming begins. Retailers don't like price fixing but they aren't going to raise a stink about it because they don't want to be cut off by their suppliers.
- eBay wants the lowest prices possible on the marketplace because, they make their money on the sale. Of course they aren't lobbying to repeal this law out of the goodness of their heart; or to help sellers. They are doing it to help their business. In reality, they are just as bad as the manufacturers; asking sellers to offer free shipping and discount heavily to get the sale. It really isn't their concern if the seller makes any money.
- eBay's own VeRO program is being used to target sellers who are breaking MAP and eBay continually falls back on their "service provider" mantra, saying "we are prohibited by law from interfering in the VeRO process" [my paraphrase]
I could go on and on. As a seller, I don't want to be told what I can sell an item for; I don't want to be told that I need to offer "Free Shipping"; I don't want to be told I need to discount heavily, so that eBay is a low price leader. All I want to do is sell an item for a price that, after all expenses are accounted for, I get to keep enough to pay my mortgage and feed my kids.
I appreciate that eBay spends the money to lobby for these things, but lets not lose sight of the fact they they do this for their own benefit. Sellers may benefit from their efforts but that is really just a side benefit.
One last thing. If given the option of selling at MAP or selling at a huge discount, most sellers would choose to sell at MAP: If I sell 10 items with a gross profit of $20 each, I make $200, if I discount my price so that I am making only $5 gross profit, I now need to sell 4 times as many items to make that same total Gross Profit. The only reason sellers applaud eBay's efforts on this issue is because of the risk they may be cut off by suppliers if they do try and gain a competitive advantage.
Okay, this time I mean it; one last thing: I don't like "price fixing", because it doesn't allow markets to work, so I am all for eBay's efforts. Sellers need a "big fish" to do that work for them because they don't have the resources to do it themselves, though an organization like PeSA should be lobbying for the seller's benefit.
I just wanted to point out the irony in eBay lobbying to restrict manufacturers rights to set their own rules while they regulate their own marketplace with Best Match. The sellers are all I care about and they are getting hit from both ends. If eBay is successful all they will do is increase the weight of low prices in Best Match -- either way sellers are screwed.
Update: Here is an interesting article on the subject and you can follow RBH's coverage of the press conference here.
Further Update: Probably should have added this link in the first place but if you are interested in the Price Fixing subject here is the case that was brought before the Supreme Court called the Leegin Decision
Just my 15%
Tuesday, December 02, 2008
I am very pleased that Brews allowed me to repost this wonderful blogpost from earlier today. I hope you enjoy it as much as I did. Make sure to checkout TheBrewsNews everyday for insight into the world of ecommerce.
Cyber Monday On A Micro Scale - One Multichannel Seller’s Experience
Of course I read all the stats about Black Friday and Cyber Monday so I can keep informed about how the economy is doing, according to the experts. But, most important to me, is how my business is doing.
Cyber Monday, December 1st 2008, started out for me well. I had a huge cup of coffee first thing and then I heard the Christmas music being cranked up in the packing department as they were getting into the spirit of things.
Looking through the stack of orders I knew there was no way possible to get all the orders out that had already come in, much less any new orders coming in throughout the day. So, I gave instructions that our website orders and Amazon orders were to take precedence and eBay orders for single items should be put ahead of larger eBay orders that take more time. The flow of orders was to be monitored all day so that any new expedited orders would be prioritized as well.
Just as we were all hustling and bustling along, the phones were also ringing (a good sound this time of year). Checking the messages of missed calls, we learn that eBay Seller Strategies team called Cyber Monday morning to chat with us. We missed their call. Darn it! We were so looking forward to speaking with them today, of all days. When they didn’t reach us, they sent us an email:
I wanted to quickly follow up on my call about eBay’s Seller Strategies Team. Our team’s goal is to hlelp businesses like yours succeed on eBay.
Currently our goal is to help sellers increase conversion rate and optimize their listings for search. We also want to make sure you are taking advantage of all the opportunities you have to increase traffice to your listings this holiday season.
I look forwad to calling you and discussing your goals on eBay. I am confident you will find the information I have to share with you extremely helpful.
eBay Seller Strategies
Shortly after the eBay email, we checked our inbox and we had an email from Amazon:
Dear merchant,We regularly review the products our customers look for on our website. During the past month, there has been interest in the product(s) listed below, but there was no available inventory from any sellers as of [Today's Date].
As you have listed these products for sale on our website in the past, we wanted to let you know about this buyer interest, in case you want to offer them again on Amazon.com.
You can update your inventory quantities either one at a time or through a feed. To edit products one at a time, go to the Seller Central Inventory tab and click “Manage Inventory”. Find the product you want to update and click “Edit”. After updating the Inventory (Quantity), click “Save changes”.
For information on updating inventory quantities via feeds, view our Help pages in Seller Central:
Seller Central Help > Manage Inventory > Frequently Asked Questions > Managing Products and Inventory
Thank you for selling with Amazon.com.
Before I continue, let me stop here for a minute to give you a little info about us, in case you don’t know. We have sold on eBay for 10+ years and shortly after we began selling on eBay, we developed our own websites as well. This is the first year we are selling on Amazon. We sell a variety of different products and we sell under 3 different eBay IDs. When eBay made their announcements at the beginning of 2008, we knew we it was time to get on board with Amazon. We had been intending on opening up an Amazon account for years but just never found the time to do it until eBay gave us the nudge we needed this year.
In selling on Amazon, we decided to try only one of our lines of product as a test. We wanted to learn the Amazon system slowly and carefully. We chose a line to list on Amazon that has a good margin, that was not saturated on Amazon but was declining on eBay, and that we have been selling for years so we are experts on the product.
For just this ONE line of product we carry, we filled Amazon orders in excess of $2,000 on Cyber Monday and we had $1,600 worth of unfilled Amazon orders that we are working on filling today. As a comparison, this one line of product has resulted in sales of $2,200 for the entire month on eBay. Yes, that is right - one day’s worth of sales on Amazon far exceeded our month’s worth of sales on eBay for this one product line. You can bet that by next holiday season, we will have all of our product lines, not just one, listed on Amazon.
From our perspective as a multi-channel seller we can make observations that clearly show us why our niche-item sales have declined tremendously on eBay while soaring greatly on Amazon. And it isn’t that the sales of these niche-items have simply been transferred to low-cost sellers on eBay as eBay’s charts and graphs show is happening for lots of items on eBay. The sales of my niche-items are not being transferred among eBay sellers; the sales are disappearing on eBay altogether. The buyers are leaving eBay in favor of alternate venues. I see it very clearly from my vantage point as a multichannel seller. I watch my competitors on eBay and I see that the vast majority of them have nothing listed on eBay. Several are NARU as well. And I am sure I am not alone. I am certain that other niche-sellers are seeing the same thing happening in their categories as well.
For me, I don’t care whether the item I sell is blue versus red just as I don’t care whether my profits are made on Amazon versus eBay. I don’t “feel” any particular way about any venue. Selling on a platform is not emotional for me. The fact that eBay is declining at a rapid pace while Amazon is on the rise doesn’t make me happy or sad. It just is what it is. And I have to be aware of the trends so that I can take advantage of the opportunities. I am not responsible for eBay or Amazon’s revenue but I am responsible for my business so I have to choose my business partners (ie eBay versus Amazon) wisely.
In the aggregate, my sales this holiday season are on the rise and I am running out of product daily. I place orders once, sometimes twice, a day because of the amazing Amazon sales that I had not been expecting. And as I sell out of any particular product on Amazon, I am quick to remove the same item that I have listed on eBay so that I can put it back in stock on Amazon. And so the cycle continues - my variety on Amazon is greater than on eBay because my sales are greater on Amazon. And because my variety on eBay is less than before, my sales on eBay are less. Sellers such as myself will continue to seek out those venues where our sales are the best. And because we are bringing our great variety of niche-items with us to the platform, the new venues will benefit because of us and the variety will disappear on the old venue.
Cyber Monday was great for me and I am looking forward to the next few weeks as I know it only gets better from here. I have more product arriving daily and I have a great crew of folks to help get the product out the door as fast as it comes in. And, just as importantly, I have renewed energy and a deeper faith that the future is going to bring more prosperity for our company. I am sure that 2009 will bring its own unique challenges and running your own business is always hard work… but I am up for the challenge.
But, for today, I need to go grab another cup of coffee and get busy filling the orders that are already piling up. It is Cyber Monday + 1 and there are only 22 more days to get items to their intended destinations. The future, and all the great plans I have for 2009, will be here soon enough but for now it will have to wait just a few more weeks.
Just my 15%
In a Fox Business Channel video clip yesterday Lorrie Norrington and Patrick Byrne of Overstock were guests and were discussing Brick and Mortar sales vs. Online sales in this down economy.
I couldn't embed the video so I just took a screen capture and will provide a link to the video.
Just my 15%