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.

I have just read The eBay Business Handbook by Robert Pugh.  This book is a good introduction to starting a business on eBay and is ideal for someone who knows absolutely nothing about eBay.  The book provides a step by step guide to selling on eBay from setting up an account through to completing the auction and sending off the items.

This book is clearly aimed at sole traders who are looking to start small scale business on eBay.  Robert Pugh himself trades on eBay under the name Mollybol. To the novice, eBay can seem complicated and this book is a clearly written guide to all those thorny issues such as accepting payment and dealing with feedback.  The book also provides a brief guides to the steps required to set up your own business such as registering self employed and sorting out national insurance.  From experience, I know that it is not always obvious what actions are required and so this is valuable information.

Where I think this book is weak is on how to run an eBay business.  The book only very briefly touches on how to acquire stock and how to analyse eBay categories to establish a good market entry point. What would have been useful would be examples of how to calculate your profits given purchase cost, eBay and PayPal fees.

For these reasons it would not be much use to a business which is already selling on eBay and wishing to up their game.  For more advanced advice on eBay I would recommend Scott Wingo’s eBay Strategies

I have been reading a paper by Tanjim Hossain and John Morgan entitled Shorouded Attributes and Information suppression: Evidence from field experiments which makes some interesting points about how to treat postage charges on eBay.  Their study looked at how differences in display of postage costs can effect the final price of the auction.  They varied the opening bid, shipping cost and timing of the disclosure of shipping charge while selling matched sets of products. The study came to the following conclusions:

• When the shipping charge was disclosed in the title of the listing there was no revenue effect  of changes in the shipping charge (i.e. shipping + final price = Total price for variations in shipping charge)
• When the shipping charge was  disclosed in the body of the listing but not the title, a seller earns a higher revenue with a higher shipping charge.

They also found the the final prices achieved were the shipping price was displayed in the title of the product. 

This research suggests that sellers should experiment with higher postage charges vs. displaying postage charges in the title and potentially gaining higher revenue.  As ever, a policy of clear costs will probably win out.

I think that this research is also interesting as products such as Marketworks do not support postage attributes in the UK which according to this research could mean lower prices for their customers.  In addition, many ecommerce websites do not display postage costs until the end of the purchasing process, leading to confused buyers and high rates of shopping cart abandonment.

Some new research by Uri Simonsohn entitled Excess Entry into High Demand Markets - Evidence from the Timing of Online Auctions, throws some light on that difficult issue - when to end your auctions. 

Competition neglect is the effect of people choosing actions which would maximise their profits in the absence of competition.  In other words, they do not take into account the effect on competition on their sales, piling into the next big thing without thinking that everyone else is doing the same.

Simonsohn shows that competition neglect is rife in eBay, with sellers listing at high traffic times, without realing that they times produce lower sale prices.  The research showed the following:

• At peak times e.g. Sunday evening, there is a lower bids to auctions ratio i.e. auctions get fewer bids.  For example between 8 and 9a.m. 3.9% of items end but 4.7% of bids are placed, whilst between 5p.m. and 9p.m. 25% of bids are placed but 37.5% of items end.
• Consequently prices are lower at times of peak traffic
• Sellers ending during peak times tended to be the more experienced sellers, those who had consciously decided to end their auctions during the peak periods.
• An analysis of literature on eBay showed that either these books made no recommendation on ending times or recommended ending during peak periods. Even expert eBay sellers, it would appear, have not properly analysed the best eBay ending times.

I would recommend that sellers use products such as eSellerStreet, AuctionIntelligence or Terapeak to investigate their marketplace and experiment with the best ending times for that products - make not assumptions.

eBay has just launched a facebook Application called eBay Marketplace .  This is hot on the heals of their eBay to go application for listing products on blogs and other websites.

This is clearly a no brainer for eBay as Facebook and other social media sites are expanding so rapidly.  The marketplace place app lets users monitor their eBay activity from their facebook account and promote their items to other facebook member. A quick look at the functionality reveals the following:

• Items are listed on your facebook profile, but not in the facebook marketplace
• Items have links to bid and buy, but these direct the user to eBay
• You can allow users to see the items you are watching, items you are selling, sold and unsold (hmmm not sure if I want to show people what I am watching….)

There has been quite a few developments in this space recently.  Buy.com’s launched its Garage sale application, which allows items to be listed and bought through Facebook. 

Ztail report that eBay items listed on social media sites see huge increases in traffic.  From this point of view I think that eBay are missing a bit of trick not taking their product further and allowing people to bid directly the facebook site.  Unlike this eBay app, Ztail shares the affiliate income with its users.

I think that the future for this type of application is to allow eBay users to list them items in the Facebook marketplace, and to integrate the eBay checkout into facebook, allowing an integrated experience.  eBay should also expand the application to cover classified sites such as its own Gumtree, and Craigs list.

Second Rotation has been launched recently as a way for consumers to sell on their electronic items for cash.  This is an interesting development in the drop-shop model which uses the fact that for some categories (mainly electronics) eBay is a liquid market with steady (ish) marketprices.  Based on a number of criteria (condition, accessories etc) the site will give a value which it is willing to pay for an item. Presumably the items are then sold on eBay for a spread over the offer price.

I think that this model is perhaps the future for customer focused eBay consignment sellers, as it provides a good customer experiences (cash today) and allows the consignment company to only deal with items they know will sell.

The idea is not new with The Drop Spot offering to buy up iPods and gaming systems from their site Beyond the Pod.  Similarly in the UK, services such as Mopay, envirofone and mazuma mobile  offer to pay cash for mobile phones

Following my review of Spacetime, a new 3D search tool for eBay and other marketplaces, I have interviewed the CEO, Eddie Bakhash, who has been kind enough to fill us in with some background and developments with his product.

Where do you see SpaceTime fitting into the browser market?

SpaceTime is a next generation media browser that features 3D Search and 3D Tabbed Browsing.  By allowing end users to search an array of content through one search box, SpaceTime eliminates the need for users to hunt for information.  In addition, by displaying information in 3D visual stacks, SpaceTime saves people time by eliminating the need to click back and forth between a list and the items you are looking for.  As PCs become more powerful and bandwidth increases, consumers’ appetite for content will also increase.  SpaceTime offers a solution to this.

How has the uptake been?

We have 200,000 downloads; 500,000 searches; and 5,000,000 impressions in just 37 days.

What is your revenue model since the service is free?

SpaceTime creates new advertising markets leveraging off the proven paid search model, ensuring easy monetization of traffic and creation of a revenue stream.

What do you see as the main advantages of SpaceTime over a normal browser?

1. Reduces clicks - end users used to have to work by clicking back and forth between an endless list of search results and what they are trying to find.
2. Eliminates hunt for information – users must no longer find or travel to new search destinations when information is hard to find.
   
3. More efficient display of information - the top web destinations are in an information bottleneck using interfaces that are a decade old and cram multimedia into HTML pages
   
4. Utilizes dormant computing time - anticipates what the user may seek next, utilizes dormant computing time, and puts the user in a reduced-click computing environment
   
5. Convergence - Allows web, video, music, and photos to converge into one 3D solution. 

It looks nice, but will people use it?

Yes.  Once we release SpaceTime out of Beta, we will have perfected all of its functionality and have a full offering of content for end users that our research shows they are awaiting.

What are your plans for the future? 

SpaceTime plans to broaden its content offering, making it a full media portal to include (a) more e-commerce merchants, (b) video, (c) music, (e) 3D eMail, (f) news and (g) more flavors of search.  In addition, we plan on adding community elements to SpaceTime to enable collaboration among its users.

On July 18th eBay posted their second quarter results.  Here is a snapshot:

• Marketplaces net revenues totaled a record $1.29 billion in Q2-07, a growth rate of 26% over the $1.03 billion reported in Q2-06.  eBay’s users posted a total of 559 million listings in Q2-07, 6% lower than the 596 million listings posted in Q2-06. These listings generated Gross Merchandise Volume (GMV) of $14.46 billion in Q2-07, representing a 12% year-over-year increase from the $12.90 billion reported in Q2-06.
• Store inventory listing were down 25%

Improved performance then.  Presumably increased marketplace growth on a lower number of listing must mean increased conversion rates.  Perhaps to some extent the increase in SIF listing fees has weeded out the rubbish listings as intended.

It is interesting to note that eBay GMV is growing considerably slower than ecommerce as a whole (around 20%).

• PayPal net revenues totaled a record $454 million in Q2-07, a growth rate of 34% over the $339 million reported in Q2-06. Globa TPV was $11.69 billion in Q2-07, a 32% increase from the $8.86 billion reported in Q2-06.

PayPal continues to grow stongly, keeping up with the growth of ecommerce.  It would appear that Google Checkout is not beginning to bite yet.

• As of June 30th, eBay had 241 million users, an year on year increase of 19%
• Active users grew 7% to 83 million

Overall I think that these numbers are pretty positive, althought it does show that in many ways, PayPal is outstripping the performance of its parent, and that eBay is still hanging behind ecommerce as a whole

I came across a post on Techcrunch today about selling on eBay which was based on an article in Christian Science Monitor.  Most of the research which is mentioned is covered in posts on this blog, and so I thought I would link to them to make it easy to people to read what I have to say

• Some buyers outbid the “Buy it now” price for a good, finding 45 to 50 percent of eBay auctions for a sample of iPods exceeded the “buy it now” price.

This was covered in this post. 

• The percentage of daily bids is highest at 8pm. The percentage of closing auctions is also highest at 8pm. The study says this may be counterproductive since it creates greater competition for bidders attention at that time.

I haven’t covered this actual study, but a German study produced similar results

• Buyers seem to favor auctions with more bidders.

They don’t mention the source for this in the article, but it is cover in a study by Gillian Ku, reviewed in this post

• A comparison of CD auctions with equal total costs (price + shipping), found the low-cost, high-shipping auction attracted more bids, more bidders, and 25 percent more money.

I haven’t read this research but it does not surprise me - people are not rational.

• Secret reserves turn off buyers.

The reason why reserve fees are so high on eBay is to discourage people from using them for just this very reason.

• Research on auction websites shows eBay attracted almost 60 percent more bidders and 30 percent higher prices than the same items on Yahoo Auctions.

Don’t know where this came from.  Research that I have conducted (admittedly not on Yahoo!) showed that prices on other auction platforms is very low compared with eBay (that is if the item sell)