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eBay Storefronts

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By swapusa
June 19, 2001

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I left town on vacation for a week and eBay opened up their storefronts behind my back? How dare they? I read all the posts on this board since last week and looked at some eBay storefronts. Today, we started our own storefront, even though all items except four are just our regular auctions that were submitted today. I am sure we will add a lot more items to our storefront in the coming weeks, especially since it is free for now, and I will definitely report any progress or sales successes on this board.

Here is our eBay storefront (we just set it up in about 10 minutes as a test and I am sure the looks of it will change soon).

It is still very early to fully realize the effect of the storefronts on eBay's auction business, but there are some points I would like to make about the storefronts and some of the comments made in the previous posts.

From eBay's news release of June 11: In the coming months, based in part on user feedback from the pilot program, enhancements will be made to eBay Stores, including a shopping cart feature, integration of Half.com listings, and additional customization options. Mid summer, the company will aggregate all Stores and launch an eBay Stores Hub, a convenient directory of eBay Stores, enabling buyers to browse and search among all stores or individual sellers...........................and an initial fee of $.05 per item is charged to sellers.

First the $0.05 listing fee and the coming integration of half.com with the storefronts. In post #14391 on June 7th, I predicted a $0.05 listing fee for Half.com and options like premium placement, bold facing, featured items, etc., and it seems like that is exactly what eBay is going to do. I am sure there will be a lot more advertising space sold on the eBay storefronts "hub," and premium placement and featured stores will play a major role in it and will be tremendous source of revenue for eBay.


Albaby: I'll give it a stab, based on something that has been bugging me ever since eBay announced storefronts. The something is a simple question - if eBay was planning to implement a fixed-price market through storefronts, why buy Half.com? Or, put another way, having spent a ton on Half.com, why build storefronts? What's the difference?

Sometimes companies buy competitors to eliminate a potential threat. When eBay bought Half.com, Half was fast becoming a very popular site and was posing a serious threat to eBay's dominance. It already had millions of users and a concept that was working, so IMO, eBay's purchase of Half killed two birds with one stone. It took care of competition in the same time that it acquired a large existing user base.

But half.com was and is limited in its capabilities and integrating it with eBay stores makes perfect sense. On Half, you could only sell certain merchandise, but retail can not be limited to only five or six categories. With eBay storefronts, the limitations are lifted and anything goes.


Albaby: The notion here is that people shop for things, not retailers. So there is very little reason to organize a retail site on the basis of a seller's identity, rather than the product. The organizing principle for eBay and Half.com is the item, not the seller. The organizing principle for Storefronts, just like ZShops and virtual malls, is the seller. The seller tries to build a brand identity on the web, and presumably consumers will buy an item having been influenced by the seller's brand.

I agree that people shop for things and not for retailers. I have also said before that in today's world of mega-store retailing and minimum wage employees, the only loyalty people have is to price and not to the stores' brand name. But I don't think eBay's storefronts are just an attempt to create a shopping mall with brand name retailers. On the contrary, I think the bread and butter of eBay storefronts will come from thousands of small and large existing eBay sellers who will continue to do auctions, and at the same time will have their storefront virtual shelves filled with similar merchandise as their auctions.

The main reason many small retailers like us started selling on eBay was to use a cheap source of advertising to drive traffic to our web sites and stores. eBay has now banned that practice and I am sure the same sellers are going to continue to use auctions to drive traffic to their eBay storefronts, never mind the usual seller uprising after any eBay policy change. The potential profits are too huge for those same angry sellers to leave eBay. They will all stick with it.

Of course, some big retail chains like Best Buy, Circuit City, Target and others will for sure test the eBay storefronts, and for eBay that's the icing on the cake.


Albaby: Sellers will try it out, particularly those who have stores in the real world, because it is a comfortable analog to their real world operations. Since that type of operation doesn't take advantage of the real benefits of the internet, though, it is likely destined to be a marginal effort.

Again, I agree that traditional retail sellers will try it out, but I don't think it will end up to be a marginal effort as Albaby puts it. My guess is that a large number of traditional retail sellers will open up eBay storefronts, and once they are comfortable with the format, they will start testing the auction format, and then they are hooked for ever. eBay auctions are sticky and they will not let go of a retailer.

I think eBay kept the storefronts listing format and looks intentionally the same as eBay auctions to make it easier for new users who start their first eBay selling experience with the storefronts to test the auctions. I wouldn't be surprised if we start seeing a sudden increase in the number of eBay auctions, both from existing sellers who want to use the auctions to drive traffic to their storefronts, and from storefront-only owners who will soon learn their cheapest advertising method is to auction a few hot, in demand products.

Also, think of how much free advertising eBay is going to get from thousands of large and small traditional retailers who are going to advertise their eBay presence to their retail customers. Look at any weekly Toys R Us newspaper ad insert and you will see what I mean. Toys R Us ads and stores are the biggest free advertising spaces for Amazon.com. Since you can now advertise your eBay storefront URL, I am sure those URLs will start appearing on a lot of business cards. Heck, we may even direct our existing web site URL of swapusa.com to our eBay storefront. All this free advertising means more user base for eBay, both sellers and buyers.


Velvet74: I am just curious if there will be some sort of search engine that will allow you to find the store you want.

I would love to be able to look up the title of a N64 game and find a listing of the storefronts that list that game, their price, S&H charge, and their rating. Then I could select the cheapest option with a rating I feel good about.


God, I hope eBay does not do anything like that. A search capability for a specific item from within eBay.com or even within the storefronts with all prices listed will be the death of both eBay.com and the storefronts. Let me explain why I feel this way:

As velvet74 puts it, s/he would love to find out who is the cheapest provider of a particular item with a feedback rating s/he would feel good about. This goes back to what I have said before that in this country, the only loyalty people have is to price. Unfortunately, retailers in America today know only one way to compete, and that is to slash prices. They cut and cut and cut until there is no one left to compete. The logical thinking is that by cutting prices, you will drive out the competitors, and then you can rule the world. The unfortunate part is that a lot of the same price-cutters go out of business before they can drive others out, and sometimes, they all die together.

This cutthroat retail mentality may be one of the reasons why selling prices on Half.com are so low that most sellers stay away from it. If customers are given the ability to find the lowest price offered in the universe for a particular item, the end result does not look very pretty for sellers.

As I have said before, a lot of items we sell on eBay are acquired either from wholesale or from the clearance sales of other retailers. As we speak, we are selling an item on eBay auctions for $50 on a regular basis, and almost anyone can find the same exact item on several well-known game Internet retail sites for $19.99, but not everyone is Internet savvy enough to find those retailers. Now imagine you can do a search on eBay and find everyone's offering and their prices listed at the same time. It will not only be the end of our $50 selling price, it will probably be the end of the $19.99 price the other on-line retailers are charging for it as well, because the same item wholesales for $13 and I am sure some large retailer will decide to use it as a loss leader and sell it at $12. It is not a pretty sight.

I think it is best for everyone (I mean sellers) if eBay designs the storefronts in such a way that the store owners would have to find their own customers through whatever advertising means they choose, and eBay should not push them into price competition.


Shelbyboy:
I typed the item number (1606258316) in the "Search by Item Number" search box and it took me to the listing. Searching by title does not get a hit.

If you check a Toys R Us newspaper ad insert or their in-store advertising, you will see that they have an "online item #" next to the items in their ad that is available online thru Amazon.com. I am hoping that eBay is implementing the same kind of search capability for traditional retailers to advertise their eBay storefront items using the item number. Just think of all the free ads: "Go to eBay.com and search for item number so and so." And for reasons explained previously, I do not like seeing a hit by Searching by Title in eBay's main site.


When shopping at other online retailers for specific books, CDs, movies, DVDs or video games, the Price Patrol companion allows consumers to always know if there's a better price at Half.com.

Consumers download Price Patrol from Half.com for free and it automatically installs on their computers. Then, while shopping on a specific product detail page at another Internet retailer, the small Price Patrol alert pops up. Consumers click on the alert and a new browser page opens taking them directly to the same product detail page on Half.com.

IMO, the Price Patrol will be a good way of driving buyers from other retail sites like Amazon to eBay properties, but, for the same reasons explained previously, I hope the Price Patrol stops showing buyers lower prices when you search inside eBay properties like the storefronts.


Shelbyboy: It appears items in the store can only appear for 30 days. Not good IMO. If eBay is not going to make the item searchable in the primary search function - that means I have to rely on my own promotion.

If I have to rely on my own promotion, I can go elsewhere and set up a storefront and not have a time limit. Maybe eBay will address this through this "Hub" search feature.

IMO, eBay wants the sellers to rely on their own promotions. It means more auction revenue for eBay because auctions are going to be the most logical and cheapest means of promotion for the storefronts. It is true that you can go elsewhere and set up a storefront with no time limit, but would you have the same number of potential buyers? Are you opening your store in a strip mall in the middle of nowhere or inside the Mall of America?

Overall, I think eBay storefronts will succeed. I am sure eBay has a lot of learning to do and the storefronts will definitely go through a lot of changes and fine-tuning. For our part, we will put up more and more items on the shelves, especially items that are not sure and regular sellers on eBay. We have thousands of older games and items that are not worth auctioning due to eBay's listing fee and short exposure period, but with a $0.05 listing fee and 30 day exposure, it's a whole new ball game. We can now auction our games, and at the same time list similar items in the storefront and direct our customers to our storefront for more sales.

One thing I hope eBay implements is to provide an easy way of chaining a storefront item to a regular auction. This way, we can list all our extra items on the storefront, and whenever one of the same items sells on our eBay auction, we can put up another auction with a couple of mouse clicks.

Cheers,

Mehran
SwapUSA