July 05 2006

Ebay Express: a new platform for retailers

Ebay's play to become the 'merchants general' for the web took a step forward today with the announcement of the UK's Ebay Express: a fixed price, new goods platform for retailers, with unified search and basket for customers.

Ebay.co.uk presented its adoption of the US ebay express to invited journalists and the service will be live in the UK from this autumn. Registrations from seller are already underway and Doug McCallum (MD of ebay.co.uk) noted that the accreditation process for UK vendors will be stricter than the US model. Retailers will need to be ebay business sellers of good standing who have agreed to a code of conduct (to include dispute resolution processes and goods returns).

Why the new service? McCallum explained that the 15million customers on ebay spend about 34% of the gross transaction values each year on 'fixed price' sales - the "buy it now" option in auctions. This indicates both that auction-savvy customers exhibit fixed price shopping behaviour and that ebay may be missing out on customers who don't see ebay as a place to do "normal etail". While one might be willing to wait months for an obscure item at the right price, when it comes to a Mother's Day gift we want items in stock at a good price, but with delivery guaranteed (not sometime after the end of an auction - which we may not even win!).

Ebay's offer to retailers is simple: how would you like a share of 15million customers? No set up costs, easy software, best of breed interface (or at least highest common denominator - looks like a 'standard ecommerce site') and a guarantee that you'll be in the company of credible retailers with no second-hand merchandise.

For the customer there're the benefits of "normal shopping", of good trading terms, fixed price, of a unified, clear attribute-based navigation across all retailers and a single basket and payment. In short, "normal etail" (or Kelkoo with a checkout, or Google Checkout, or Amazon Marketplace...).

With the recent developments in this sector, why should retailers and customers choose one over the other?

Retailers shouldn't have to choose between: why would you want to miss out on sales? If you're lucky enough to be selected for the enhanced Amazon marketplace then that's great, but it's not going to be available to small players. Google Checkout registration may help, but you'll pay to advertise, pay for prominence and then pay to have customers grab your bargains without even so much as an email contact for your troubles... Ebay, however, gives you a shop that you can stock yourself, with as much as you wish at the price you wish. You can feed information to ebay in a similar fashion to sending out affiliate, froogle and other feeds, so it makes sense to do so. Sales are likely to be incremental and could - as for the 68,000 or so who earn their livings or secondary incomes from ebay in the UK - be life-changing.

From a customer's perspective it's a case of same old, same old. While we're happy to give our favourite or habitual sites a try or two to sell us things we're neither expecting nor wanting we'll only give so much latitude to offerings that are outside the domain expertise of the site. Google, a price comparison engine, Amazon etc are simply a click away. McCallum clearly sees that while he may dangle the lure of 15million active customers in front of retailers he'll also be hoping to use the vast array of fixed price stock in Express to bring in new customers hitherto not tempted by the auction bug. This indicates to me that there's a possible 'partnership of mutual benefit' to be arrived at here.

Finally, ebay is unique in the effort it makes to develop the supply side of the marketplace. As well as training sellers to improve their auctions, ebay is focused on getting more businesses to trade online - witness, for example, the investment in the Small Business team, led by Azita Qadri. We will be returning soon to speak with Azita to get behind the scenes on the market development activities and case studies.

Ebay's success will depend upon its being a marketing maker and developing both customers suppliers as well as oiling the processes of trade. This offering is a good step forward for a significant minority of existing customers and may unlock further supply and new purchasers.

Ian Jindal. In future articles we'll be looking at some of the strategic and tactical issues for retailers: from the overhead commitment of running a store, to integration with existing systems; from the questions around product attributes to comparison with Amazon and Google offerings.