Oztion.com.au Australian Auction Site Acquired For Over $1 million

The Australian online auction space is a hive of activity at the moment. eBay Australia is making big site changes, Tradingpost Auctions launches and now we hear the second biggest online auction site in Australia, Oztion.com.au, has been acquired today by Jumbuck Entertainment for $1million in cash, and $1million in Jumbuck shares.

Earn-out is based on revenue achieved for 2009/2010.

Owners Philip Druce and Kelvin Yip have 2 year management contracts with Jumbuck.

Full press release here.

Link to Jumbuck : www.jumbuck.com

Australian Auction Site Oztion Sees Registrations Surge

Since eBay Australia’s announcement that Paypal will be the only allowable payment method on the site (apart form cash on pickup, and credit card via Paypal), competitor Australian auction site Oztion has seen a large jump in daily site registrations.

According to Oztion,

… daily new member registrations has jumped by more than 250% since eBay’s recent announcement. Our internal data shows that 79% of buyers per month use direct deposit as their payment method.

A 250 % increase in your daily user registrations is pretty large. Although Oztion is a much smaller site compared to eBay Australia they have seen steady growth and are now more commonly discussed as an alternative selling platform by Powersellers.

I believe they could really capitalise in the short term thanks to eBay, and boost their seller and buyer base enormously.

Oztion’s resgistered member count now sits at about 250,000, well short of eBay Australia’s millions, but is still growing.

To be honest, I was surprised when Oztion told me their data showed 79% of transactions occurred with direct bank deposit, but in Australia bank transfer or bank deposit is easy and convenient with online banking. eBay’s payment percentages will be skewed because of international payments whereas Oztion is heavily Australian focused I feel.

So, if you are a seller or buyer, and like to use bank deposit then Oztion might be another place to try. Best to have your eggs spread around in a few baskets, and more competition in the marketplace is required I think.

eBay Australia forcing sellers and buyers to use Paypal

In a big move today, eBay Australia announced that shortly only Paypal will be a viable payment option for sellers on the site, along with cash on pickup of items, and credit card payments (via Paypal).

According to the release :

These changes are part of our ongoing commitment to protect our members. We believe buyers will be more confident shopping on eBay if only the safest payment methods are permitted.

In 2007 on eBay.com.au those who paid with PayPal were much less likely to enter a dispute. In fact those using PayPal were almost four times less likely to have a dispute over their purchase than people who paid with bank deposit. Plus, PayPal sellers were almost half as likely to experience an unpaid item as sellers who did not accept PayPal.

The information embargo was broken by local press, resulting in the news reaching buyers and sellers before eBay officially told them. This of course has resulted in a torrent of angry posts in the eBay forums.

The Powerseller forum in particular was active, with 230 replies to one post about the news by mid afternoon today.

And I have to say the overall feelings were very negative. To summarise the local eBay Powersellers:

  • Some sellers believe their main demographic may not buy from them any more (older audience) and only younger buyers will be confident to remain on eBay
  • Sellers don’t want to feel like they will be paying higher fees as a result of being forced to use Paypal
  • Annoyance that eBay stands to possibly boost their ‘take’ per transaction by disallowing payment methods like bank transfer, BPay etc
  • Sellers won’t be able to offer buyers a good choice of payment options.

All in all, a bold move, and for my money a potentially dangerous one.

Maybe eBay Australia is being used as a testbed for the other eBay markets, we know this may happen. But is this a step too far? Trust and Safety is an issue yes, and some bold changes need to take place to improve the marketplace so a step back to take 2 steps forward should be the theme for eBay at the moment.

But is this 2 steps back, rather than 1?

I hope eBay Australia haven’t underestimated the impact this change could have in site GMV.

I could just imagine the staff at Oztion running around their office clapping their hands in the air with joy today!

Personally, 50% of our transactions are made with Paypal, the other 50% choose one of 6 other methods we offer. Most of these buyers :

  1. Don’t know how to use Paypal or what is it (they dot trust it!) or
  2. They don’t want to have to set up another account/login on the internet, just to make a payment.

I am going to be frustrated that direct bank transfer won’t be allowed, nor BPay.

Will sellers lose buyers on the site? Will sales drop?

The gamble is that business conditions will improve in the short to medium term as a result of these changes but I can see a lot of sellers now moving faster than ever to set up their own stores and find alternative channels to sell their products on.

Of course, most sellers will remain selling, and most buyers will remain on the site buying, but the next 2-3 months will be interesting. I will be watching our sales and keeping a finger on the pulse to see…