If “Brand Homicide” were a felony, eBay’s management would be indicted and convicted on several counts.
eBay continues to struggle with who they are. Is eBay a quirky & fun auction site or an online warehouse for surplus and overstock merchandise? During the past year it looked like eBay was trying to become Amazon. Now it sounds like they want to become Overstock.com. It makes one wonder what will come next?
(I never thought I would look back at Meg Whitman’s reign and think of them as the “good old days.”)
It has been a couple of weeks since eBay held it’s investor analyst’s meeting in San Jose where eBay announced a new strategy to change the direction of eBay towards attracting large liquidation and surplus merchandise dealers to list their items on the site. eBay CEO, John Donahoe, stated that eBay will henceforth focus on “…used and overstocked goods, rather than on the retail market for new goods that is dominated by competitors such as Amazon.com Inc.
Lorrie Norrington, President of eBay Marketplaces summed up the new strategy when she noted "…. the old eBay made a living from peoples’ garage and attics. The new eBay is sitting in warehouses, liquidators and off-price retailers. And they’re looking for cost-effective channel to be able to move high velocity."
The announcement is another body slam to small and medium sellers. eBay claims that their traditional merchandise consisting of art, antiques, collectibles and vintage goods are part of the strategy and that eBay is actually “returning to their roots.” But at the same time they say they are reaching out to mega-retailers of liquidation goods who will list millions of items on the site for low or no listing fees. This will essentially swamp the eBay search engine crowding out small sellers.
Small to medium sellers have long sold surplus and liquidation goods on the platform, so what is the difference? The individual seller is an entrepreneur who takes a risk when they purchase a product and do all the work and spend the fees to list the goods on the site. The eBay sellers who do this are successful if they are good at picking merchandise that the marketplace desires. But the mega sellers like Buy.com, have both the good stuff and the bad stuff and they just list it all. This results in very low sell-through-rates –often as low as 5% or even less. A normal seller could not make money this way, but eBay charges these sellers low –on no, listing fees that eliminates their risk and they hope to make it up on final value fees.
Essentially eBay wants to become a virtual warehouse for highly discounted merchandise that couldn’t, or didn’t, sell in online and offline retail outlets. Products in this category are known by various names including overstock, liquidation and surplus merchandise. The category consists of excess merchandise that didn’t sell (shelf-pulls), customer returns, store returns, floor models, seconds, warranty items and remanufactured goods. This is exactly the area that Overstock.com targets, whereas Amazon tends to sell mostly new or current merchandise.
But what happens to all that stuff “sitting in garages and attics?” Will sellers still be allowed to sell that on eBay? Or will they be relegated to one of the many minor auction sites that continue to struggle.
If you are an eBay seller, don’t panic. All types of used and unique new goods are still selling on eBay and I don’t see this changing soon. Fortunately management’s identity crisis is still in the category of “inside baseball.” The marketplace has not figured out how screwed up eBay is internally.
I am still hopeful that someone at eBay will have a miraculous vision and come to their senses. This move is just another in the long line of management missteps and misdirection’s that usually last a year or so, before they are abandoned. In the meantime, sellers like us just keep plugging away under the radar. So, I am not leaving eBay. I continue to sell and continue to make money on the platform. But I also continue to expand my channels. There is no reason to keep all your water in the same bay.
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