For years eBay could do no wrong.  It has a virtual monopoly in the online auction marketplace, a sector worth $55 billion worldwide, and has built an impressive customer base of 233 million members in 37 countries.

Recently, however, some of the shine has come off the company.  Sellers have been complaining of high fees, low sales and bad customer service.  There was even a (small) seller strike in August 2006 over the change in eBay shop listing fees.  Amongst many eBayers there is a feeling that it is not looking after its members.  In 2006, a survey on Auctionbytes, a leading online eBay newsletter, found that 60% of sellers wanted to find alternatives to selling on eBay.

The company’s performance has been lacklustre and the growth of eBay’s auction business has been slowing.  In 2006, overall online sales grew by 30% whilst eBay’s grew by a mere 10%.   Competition is also heating up as the success of amazon’s fixed price marketplace begins to threaten eBay’s monopoly.  Furthermore, fraud is still a problem and eBay is locked in a court case with Tiffany & Co.  These factors have all contributed to a flat share price over the last year.

In an effort to recapture its previous momentum the company has been diversifying into other sectors.  However, whilst its investment in PayPal has been a resounding success, it recently had to write off $900 million which it spent on Skype, the internet telephone service.  eBay express, the company’s much anticipated offering for businesses sellers, was a flop.  

Despite these facts, I feel that talk of eBay’s demise is premature.  People love to complain, but there is no evidence of a mass exodus to other auction sites. It is still a great place for both individuals and businesses to trade online and reach a huge international audience.  eBay is acutely aware of the problems it faces and I have been impressed with its efforts to improve user experience such as redesigning the sell your item form.

So what does the future hold for eBay?  Many industry experts think that it should merge with another big online player such as Yahoo or Microsoft.  There are also rumours of a takeover of UK based online auction site QXL, which will enable eBay to get a foothold in the booming economies of Eastern Europe. Whatever happens, eBay is still very much a force to be reckoned with.

I listened to an interesting podcast on the times online today about the low vs high starting price debate.

In the podcast Robert Caldiani draws on the work of Gillian Ku to draw conclusions about the best times to have a low and high starting price auction. Interestingly, he also looks at the wider business world and suggests times when starting projects in a small way can get good results.

Fame at last. eBay, ecommerce life has been reviewed in the Independent guide to eBay 2008.  I particularly like the bit about ‘the author’s clear expertise’ and ‘engaging and accessible style’.

The guide is actually rather good and has some very comprehensive lists of tools and a lot of very sensible advice and good guides.  There is also a large article about my old employer Auctioning4u. All this from the publishers to Maxim. 

The publication is also nice and glossy which makes a change from the average wholesome matt eBay books.

I am 100% sure that the use of online video in product listings both on an off eBay is going to skyrocket over the next few years with more sellers using online video to provide more information to sellers about their products, creating a richer online buying experience. 

However, I am less sure about the business models of the services which have spring up to offer video to eBay sellers. I am guessing that the business model is to build up customers and then get bought out.  However, I don’t really see how these companies are going to survive as their service are not so different from the likes of YouTube, or so hard to create that eBay (or YouTube) could not implement it easily themselves. 

Here are the eBay specific services which are recommended by eBay.  I think that Vzaar is by far the best.  The services are so similar I have had to resort to despirate measures to think of something to say:

Vzaar’s service is the best of the eBay specific video services.  The site is well designed and system easy to use.  The video’s frames are also attractive which is an improvement over other online video providers.  Most importantly it is free, which is critical when you are basically competing with YouTube.  They also had the sense to get a very pretty girl to do their promotional video.

Onstream Auction Video offers a services to integrate video into your eBay listings starting at $9.95 a month.   I prefer the girl in the vzaar promo video.

i2iAuction.com charges from $1.99 to host a video.  Their promotional video is presented with a girl with a terrible fringe. 

Auctionmercial offer another free eBay video service.  They do not have any girls in their demo, so clearly using their own money and are not VC funded. 

The future of Video on eBay

I think that all eBay sellers, especially businesses, should include professional videos to enhance their listings, and measure if it has any effect on performance.  When choosing a service, I would go for a free service, and one which does not start automatically on item loading, as I find that very annoying.

The question therefore is whether to use one of the eBay focused services listed above or a generic video service

Pros of using a eBay dedicated service

• Easy insertion into eBay listings
• Good presenation of videos (especially in the case of Vzaar) 

Cons

• Price (if you are stupid enough to pay for the service)
• Smaller audience for your videos.  If you list your videos on YouTube, your videos have the chance of being viewed by their massive audience.  

Preparation

To the uninitiated, eBay can seem a bit complex and in order to get the best out of the marketplace for your business it is important to understand how eBay works and gain some experience selling products.  I have seen several businesses give up selling on eBay as they did not put the time into preparing for their eBay sales.  Businesses should:

• Research the eBay marketplace to understand where the opportunities lie for your business
• Take time to understand how the eBay platform works
• Ease yourself into the world of eBay by selling a few trial items.

eBay Account

In order to sell on eBay, it is of course necessary to have an eBay account.  Although this is a fairly easy process, it still takes a few days as eBay sends a letter via snail mail to confirm your business address.

As buyers generally don’t like buying from an account with zero feedback, it is a good idea to build up some feedback before trading.  This can be done by buying and selling a few items to gain experience and feedback.  Furthermore, in order to sell fixed price item on eBay it is necessary to have a feedback of 10 or greater

PayPal Account

PayPal is the default method of payment through eBay, and offers both buyers and sellers advantages such as fraud protection and convenience.  As an eBay seller, it is vital to offer PayPal as a method of payment for your customers, as it is the preferred method of payment for 85% of eBay’s members.

Setting up an PayPal account is free, but the process can take several days each account requires several methods of verification and a funding source setup through direct debit

Description and Photos

Every item which you sell on eBay will require a description and one or more photographs.  The more complete the description, the less questions which you will receive and the greater the chance of a sale.

An item description should also include information about your terms and conditions of sale, delivery and payment methods accepted.  Descriptions can generally be taken from your website, however these will require some tweaking to optimise them for eBay.

eBay Shop and Template

eBay offers multiple opportunities to promote your brand and stand out from the crowd.  eBay listings are HTML allowing attractive designs to be implemented.  Furthermore, eBay offers businesses the opportunity to open up an ‘eBay shop’.  This is a page within eBay displaying all the products which a seller has for sale which can be configured to display your company’s branding.  In addition, an eBay shop allows sellers to list items for long durations at a low cost.

Auction Management Software

The process of managing eBay sales can be labourious especially if it is not integrated into your current systems.  Fortunately help is at hand.  For the smaller business seller eBay offers seller manager pro which allows sellers to manage their eBay inventory and offers some process automation. For larger sellers, services such as ChannelAdvisor and eSellerPro offer a much wider range of automation functions as well as enabling sellers to promote their items through other channels such as amazon and shopping comparison engines.

Think About Other Channels

If you are thinking of selling on eBay, then you should also be thinking about selling through the other major online marketplace, amazon.  Selling on amazon is all at a fixed price and listing products is free, with the seller only paying when an item is sold.  Several of the leading auction management applications also enable sellers to list their products on amazon.
 

Michelle from eSellerStreet recently pointed out to me that the affiliate payments differ widely between the US and the UK.  

USA Revenue Share Tiers 

UK Revenue Share Tiers  

It looks to me that affiliates in the UK get approximately 25% less for driving business to eBay.  I wonder why this is the case, do UK affiliate networks drive a less hard bargain?  Is there less competition for affiliate traffic in the UK?  Are affiliate fees in the UK less in general?

I have to say that I am rather dissappointed with eBay’s new neighborhood offering.  It seems to simply be an amalgam of components which already exist within eBay, as opposed to a genuine development.  An eBay Neighborhood consists of the following:

• Discussion boards
• Blogs
• Reviews and guides

And of course associated items and members.  What I think is missing is any really interesting functionality to allow members to interact i.e. to discuss and compare items they own and things which they have bought on eBay. 

On the product site eBay Neighborhoods lacks any interesting fuctionality to either bind the community or connect  demand with supply. At the root of this is eBay’s age old problem of not having an inventory for most sellers to fall back on.  This impeads sellers from directly comparing items and easily cataloging their collection.  It also prevent any kinds of recommendation engine of the sort seen on Amazon.   In this book The Long Tail Chris Anderson talks about Social media being the glue which connects demand and supply.  To do this howover there has to be a common point of reference.  If each item is different, how can a community build up a body of recommendations?  Whilst neighborhoods are definiately an advance in items specific social media, there is nothing ’sticky’ about any of the applications which will make people stay around long enough to find new products

For interesting fuctionality around collections see new products such as MyThings and iTaggit which allow users to log their purchases, share their collections and discuss their hobbies. Squidoo also does a good job of creating ‘experts’ around a certain subject and similar functionality could be used to envigorate eBay’s MyWorld and AboutMe pages

On the social network side, I think that neigbourhoods fail as they are very limited in their social networking functionality.  Members of social networks such as facebook can share a wealth of information about tastes and interests with other members, however on eBay this is very limited.  Members of networks only get the same basic information which is visable to any other eBay user.

I hope the this is merely neighborhoods 1.0, with better things to come.

Fraud is a growing problem on eBay.  The golden rule here is to apply common sense.  However, some of the tactics used can be pretty convencing, especially to the novice user. 

REMEMBER: IF SOMETHING SEEMS TO GOOD TO BE TRUE IT PROBABLY IS!  I would also recommend a visit to eBay’s safety centre

1 Don’t depend on Feedback.

Whilst Feedback is a good indicators of a seller honesty, it is possible to fake feedback by having multiple IDs, and IDs can be stolen.  Buying very cheap information only products is also a very quick way of building feedback, without doing any real trading.

2 Fake eBay webpages

Fake websites are easy to create and will often look just like the real thing. If you clicked a link in an email to reach the website, check that the web address is the same as the one shown in the mail. Never trust a website that doesn’t have eBay.com or eBay.co.uk immediately before the first single forward slash. A real eBay address is http://pages.ebay.co.uk/ and a bogus site would be http://signin.ebay.co.uk-kzan@12.45.4.4/.

eBay provides a tool for detecting bogus websites in the eBay Toolbar called the Account Guard. The Account Guard turns green when you are on a genuine eBay or PayPal site and turns red if you are on a suspect site.

3 Stay inside eBay

Frequently both seller and buyers will approach other users directly and suggest a private deal away from eBay’s commission fees.  As a seller it is very tempting to take them up on the offer as it avoid eBay’s commission fees, and buyers avoid the chance of loosing the auction.

However, trades outside eBay are not subject to any of the protection of the eBay marketplace and if something goes wrong there is little than can be done.  It is also a good idea to always pay with PayPal as it provides a level of payment protection.

4 Shill Bidding

Shill bidding is common on eBay and means bidding on your own items, either through a second ID or via a friend, in order to artificially raise their final value. Shill bidding is illegal in the UK.  Here are some ways of spotting a shill bidder if you suspect foul play:

• Examine Feedback Carefully. Shill bidders may bid exclusively on items offered by one seller. If a bidder has a long history of buying from one seller, it is quite possible they are in cahoots. (that said, at Auctioning4u we did have one seller who bought exclusively from us)
• Be suspicious of zero feedback.  Buyers should be wary of seller with zero feedback under all circumstances
• Suspiciously quick feedback. Be alert if their feedback was left by a satisfied buyer within hours of an auction ending, before the item could possibly have been delivered.
• Feedback from no longer registered users.  This is always something to be wary of, whether looking for shill bidders or vetting a seller before making a bid.
• Retracted bids. If a bidder has retracted lots of bids, especially from the same seller, this could be a sign that shill bidding is a foot.

If you are suspicious of any behaviour on eBay it can be reported using the Report this item link at the bottom of every listing page

5 ‘Phishing’ or ‘Spoof’ emails

Most people get several bogus emails preporting to be from eBay or PayPal every day most of which will be sent by frausters intent on extracting confidential information such as your PayPal login details. Delete any emails sent under the following circumstances:

• If you get an email from eBay or PayPal, informing you that a bid you know nothing about has been successful.
• Any requests from eBay or PayPal for your password, account details, or personal information.

Phishing emails usually have some of the following characteristics

• They will not be addressed to you, but usually start with a generic "Dear eBay member".
• They have an urgent tone, eg "Account Suspension - Urgent Auction Required".
• They have links to web pages that look like eBay pages but are not the real thing (see below).
• They ask for confidential information such as your PayPal password or credit card numbers.

Remember: eBay will never ask people to provide account numbers, passwords or confidential information via email. Any genuine emails from eBay will be in the My Messages box in My eBay. If you are in doubt don’t click on any links from a email.

A quick way to identify bogus emails is to hover your mouse cursor over a link which will display the link’s destination.  If it is not the same as the links which is show in the email, do not click it.

6 Avoid Use Instant Money Transfer services

Money transfer services such as Western Union are designed for people who trust each other to transfer money from one place to and are not intended to carry out transactions between strangers.  Once a transaction has been made the money is untraceable.  For this reason eBay has banned the use of Western union on its site.

7 Fake Goods

Unfortunately the sale of fake goods is common on eBay and so it is important to exercise caution when buying designer items such as Louis Vuitton, Channel and Paul Smith etc.  It can be very difficult to spot fakes, but if something seems too good to be true it probably is.  If you must buy these kinds of items on eBay always check a seller’s feedback.  It is also safter to buy from business sellers.

8 Items that don’t exist

If a seller is peddling a non existant item often there will be no photograph, or a photography clearly lifted from elsewhere on the internet.  If you are at all doubtful, ask to see a photo and get more information.  Once again, checking feedback is important.

9 Excessive postage

eBay allows sellers to set their own postage.  Whilst most give reasonable postage rates some sellers use excessive postage and packaging to increase their profits.  Always check the postage cost of an items and compare with similar items.

10 Check your PayPal Account for Payments

Once you get a payment for a sale through PayPal, you will get an email telling you that the payment has gone through to your account. Fraudsters can send out fake emails telling you that you have been paid in the hope that you will send the goods without checking. Always check your PayPal account to make sure the funds have arrived before sending out the goods.

11 Second Chance Offer Fraud

Second Chance Offer emails are sent, via eBay, by sellers to unsuccessful bidders if they have additional items to sell or the winner fails to pay.  Always check that it has come from a seller you have been dealing with for something you have previously bid on. Fraudsters use bogus Second Chance Offer to get people to send payments to them as opposed to the legitimate seller for items that do not exist, or as a way to get hold of personal data. If in doubt, view your emails in My eBay.

12 Don’t assume eBay is the cheapest  

eBay is not always the cheapest place to make a purchase. Sometimes sellers are trying their luck and so always check prices first on a shopping comparison engine like Kelkoo, Shopping.com and Pricerunner.

13 Don’t buy information only products

Some sellers try to sell lists or links to information which is usually available elsewhere for free. Avoid like the plague.

14 Read the description carefully

When buying items on eBay it is very easy to read things into the description, bidding on what you want, and not what is described.  Sometimes the seller is actually selling the box that an item was sold in and trying to pass this off as the real thing. Always read the whole description in detail before bidding.

15 Know your rights.

If you use the ‘Buy It Now’ button, rather than a standard auction, to buy from a UK based trader on eBay, you have all the same statutory rights as buying from a shop.  If you make a purchase on eBay from a business seller, this means that you have at least a 7 day cooling off period when the item can be returned for any reason.

When buying from an individual the usual rule is Caveat Emptor - buyer beware.  Providing your purchase arrives as described there’s little legal comeback and the standard seven day internet cooling-off period usually doesn’t apply to auction purchases.

16 Beware of Strange Requests (I know there are only 15 in the title, but I though of another one!)

Always be suspicious of people who ask for things out of the ordinary such as overpaying for an item and then getting a refund, or posting to another country from the one given as the user home country.  Trust your judgement, if something seems a little odd there is probably something fishing going on

This is good advice for life in general as well as eBay trading.

To my enormous surprise ChannelAdvisor has taken over Marketworks.  I find this surprising as in my experience, people from Channeladvisor have had nothing good to say about marketworks.  But then, that is probably true for all competitors.

As I understand it, the volume of GMV which was managed by the two companies is about the same.  Channeladvisor’s strategy has been to go for the larger sellers, those of £20K or more a month, whilst marketworks has had a very much a self service model with a much cheaper monthly minimum.

Here is some speculation on the deal, in no particular order:

Poor Product

Marketworks’ product seemed to be rather undeveloped and badly optimised for local markets (e.g. UK users had to use US time), almost as if they weren’t investing in it any more. New entrant product such as eSellerPro and Kyozou which are much slicker and had a greater range of functionality have been gaining market share.

It seemed to me that that in the UK they had been focusing on their larger managed clients like 3M and Viking.  However some of these clients had recently gone off line.  I think that this had been due to a lack of performance and integration with their other channels.

This lack of development of the product had made me wonder where they were going, perhaps they have been looking for a buyer for some time…..

but large number of customers ….

Despite their poor product, Marketworks have a large number of customers, equal in GMV to ChannelAdvisor.  Perhaps ChannelAdvisor thought that it would be cheaper to buy these customers than to gain market share organically.

At the end of the day, the ChannelAdvisor and Marketworks products are quite similar and so I am guessing that the Marketworks product will be closed down eventually.  Larger customers will be migrated onto ChannelAdvisor whilst smaller Marketworks customers will be either pushed out by higher pricing or migrated onto a cheaper, self service version of Channeladvisor.  It is interesting that ChannelAdvisors small business solution, ChannelAdvisorPro was closed down a while back.

The future of the Market

Whilst as Randy Smythe points out, eBay’s growth has slowed of recent, I think that there is still a huge opportunity for businesses in the multichannel software market.  Analysis which I did of the top 500 sellers in the UK (admitedly by feedback) showed that less than 10% of them used any kind of auction management software.  The combined company has 30% of the market for Titanium powersellers and 5% of eBay’s GMV, I bet that most of the remaining 70% of Titanium powersellers are still using turbo lister and Seller manger pro. 

The challenge for the new company will therefore be to make make inroads into the majority of eBay powersellers who still haven’t realised the the 2% odd software fee is a good exchange for the amount of time it will save them and the potential to grow then businesses.  I would also say that at the moment, ChannelAdvisor is a solution for eBay sellers wishing to dip their toe in the water of having a website and selling through other channels.  With online sales growing so rapidly, they need to shift their focus to a stronger website offering.

The nice people at Harriman house have given me a copy of How to have a Baby on eBay: Your One Stop Shopping Guide to Pregnancy, Birth and Beyond by Wiz Wharton.

This book is an interesting combination of shopping guide (the full range of baby stuff from monitors to pushchairs) and a guide to buying and selling on eBay.  On the whole I think that it works.  A lot of the time people need a reason to start using eBay, and this books gives concrete examples of how buying stuff on eBay can really cut of the cost of a new addition to the family.

Where I would criticise this books is that it limits itself to eBay.  eBay is not always the cheapest place to buy items online, and I think that it would have been good to point that out.  When I am searching for an item online, I check eBay first  but also the shopping comparision engines and amazon to try and get the best deal.