eBay. Loved and Loathed
I sometimes find it intriguing that when asked what I do, and saying that among other things I sell a reasonable volume of product on eBay, the reaction is generally one of surprise and interest.
Surprise because maybe they would not have guessed that :
- I am the type of person to sell on eBay (for a living basically) or
- That they have met someone who does actually have a large eBay business and doesn’t just sell second hand knick knacks from a garage as a hobby
It is an interesting reaction because consumers and the general public still have an inquisitiveness about eBay. They still seem to love the idea of eBay, and more and more they seem to like the idea of selling on eBay. Yet suppliers seem dead against the venue…
Australia doesn’t have the sort of ratio of sellers to buyers that eBay.com seems to have. I can list the same product in the same category on both sites and get far more item views in Australia. I think perhaps this is why the eBay.com market, in most categories, ends up with a number of large sellers that have efficiency and business acumen to remain profitable, and many more smaller sellers come and go. But that is another story.
What needs to be changed is the perception of suppliers and wholesalers when you mention the word eBay.
In 1998 – 2000 I started working with a website (that I now part own – long story!) called AutoSpeed.com. It is a performance car magazine and owners wanted to establish an online store selling automotive performance parts, books and dvds. I started working on establishing some wholesale relationships to get some products into the store.
It was a hard slog!
Most wholesalers or manufacturers that I approached fell into one of these groups
- My bricks and mortar retailers won’t like it!
I can only assume they were worried that we would take huge volumes of sales from their existing retailers? - You have such low costs that you will undercut my retailers and they won’t like it!
No matter how hard you try to explain to someone that you may end up with similar costs after all the web development, bandwidth and other costs (at least until your site gets large enough) they don’t believe you. In fact, once I ran a few specials at low prices, and got a call from a distributor stating that other retailers had complained about my pricing. “Do they pay the same cost as me?” I asked. “Yes” he answered. “Well, what the hell are they complaining about? They can do the same special price if they want!” I exclaimed. He agreed in the end to keep supplying us, but once asked me verbally not to sell particular products lower than RRP price – a breach of the Australian Trade Practices Act. He wouldn’t put it in writing though… damn! - Whats the Internet? That will never work, don’t waste our time!
Ok, so you don’t know how to use a mouse, you don’t want to take a gamble that I could be one of your largest customers in the next 6 months? Fine. Ill call when I am selling loads of your competitor’s product…
We did get people on board eventually, and sales grew. For a few of our distributors we became their biggest customer. Once the $$$ start coming in, they don’t seem to mind so much…
What still frustrates me these days is that the attitude of suppliers/wholesalers in Australia (and maybe the US? let me know. ) HASN’T CHANGED FROM 1998!
Regardless of how much turnover or sales I have in my online fishing business, we had to open a bricks and mortar fishing store in order to get some ‘brand name’ suppliers supplying us product! And even then some of them seemed very wary that we imported our own range of product!
And even now, we still can’t get accounts with a few of the ‘biggest names’ in Australian fishing, although I admit it has been a while since I spoke to them.. probably time for another catchup I think.
So there we are, suppliers dislike eBay. They are concerned about eBay and its affect on their product brand. They are concerned about damaging existing relationships. They are concerned about change. Consumers seem to be fascinated with eBay and spend a growing amount of money in a growing online retail economy.
When will suppliers change their tune? Will they change at all? Is eBay doomed to be the Sunday Market of the internet forever?
Regarding manufacturers supplying online retailers – as an example I run a furniture/home appliance retail showroom in the UK.
Overall, probably half of the larger established manufacturers that are available to us, over the past few years, have decided to supply internet based businesses.
This has resulted in the online stores aggressively reducing the prices – making as low as £5, but probably on average £30, on £300-£400 items! These figures are just not good enough to keep a large city centre showroom with the usual overheads, making a profit.
What I found was that we had people coming to our showroom, getting all the advice and product demonstration from our salespeople, and then going home and ordering the product online for a cheaper price. The line of work requires a long time to be spent with each potential customer and most of this time was being wasted.
The manufacturers that now have the largest presence online, in my industry, have 100% cheapened their brands in both terms of the prices of their products, and in the views of many retailers. Many ‘real’ stores are now taking the offending manufacturers products off display so if someone is going to buy online they will have to do so blind so to speak – without the help and knowledge from experienced salespeople.
These manufacturers have no doubt seen rising profits in the last 2/3 years due to online sales but eventually with no loyal retail showrooms to display their products remaining, these sales will inevitably fall.
As a result we now focus our showroom displays solely on our manufacturers that have decided not to allow their dedicated retailers to sell their brand online. This means that less of our time is being wasted talking about the online products, and we can focus on the products that we know are not online at ridiculous prices. For our manufacturer it means by choosing to be an ‘offline’ brand they are enjoying more business from our showroom, and know that their competitors will be having less.