eBay and Buy.com = Diamond PowerSeller

A major story has been percolating this week about a situation that has been affecting eBay sellers and looks to reshape the future of the marketplace. For any merchant who has long tried to find a way to get on eBay in a cost efficient way, that day is soon coming. For small businesses who have made a living seller discounted goods, you may want to look over your shoulder.For a detailed view, I suggest the New York Times article here : http://www.nytimes.com/2008/07/14/technology/14ebay.html?_r=1&oref=slogin

Summary on eBay - Buy.com Agreement

The main point is that Buy.com has secretely (until now) flooded eBay with approximately 5 million listings. For these listings, eBay has charged no listing fees.

The listing fees have been the traditional barrier (in addtion to an auction style format) that has kept many large retailers off eBay. With fixed priced listings becoming the norm, the next stage was getting a retailer with a large inventory on without nasty listing fees, charged on a per item basis. Apparently, this wall has been breached with the Buy.com deal.

Without going into more detail, this means eBay is quickly and aggressively moving to get fixed priced listings as their main revenue source (already happening) and eBay will be targeting more traditional online businesses for expansion.

Actionable: Medium to Large Businesses Not Using eBay

If you are one of these businesses, this means you should  be paying attention over the next few months. Expect an announcement by eBay to begin recruiting businesses on negotiated agreements like the one with Buy.com, where items can be sold at an unspecified commission rate, and no listing feeds. This will essentially open up eBay as a marketplace. Like all other marketplaces, goods will react differently here. Mainly this would be an excellent place for overstock items and liquidations.

Actionable: Small Businesses Already on eBay

Start getting creative, because your business is about to change. The flood of more traditional retailers with large inventories could be pushing you out the door. Expect your business to decline as eBay changes it’s growth strategy. You will want to explore new marketplaces like perhaps Amazon, Facebook selling platforms, or elsewhere.

This change from eBay signals that the talk about fixed priced listings has begin full swing, and the result has been including merchants who couldn’t compete before. Having the cheapest price will still get you a long way, but as a smaller business, your marketing needs to take a big step up or your merchandising needs to be just plain outstanding.

Expect to hear more on this as the coming months unfold.

July 19th, 2008