Interview with e-consultancy

One does not like to blow ones own trumpet but I have recently been interviewed by the leading e-commerce consultancy e-consultancy. Here is a transcript of the interview:

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What were the key reasons for the launch of Auctioning4u? How does the service work?

Buying an item on eBay takes minutes but selling can take up to 2 hours. Auctioning4u was launched to enable business and consumers to benefit from the enormous potential of eBay.

The service is very simple, all customers need to do is call us and we take care of the rest including checking the item works, photographing and describing the item, listing on eBay, answering bidder queries, collecting payment and finally, dispatching the item to the highest bidder.

For those companies who wish to set up their own eBay business or wish to improve their eBay sales we offer a consultancy service to enable them to get selling on eBay quickly and effectively.

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You‘ve attracted funding recently. Well done. Who are the investors and what are you planning to do with the cash?

We recently raised about £4.1M through Foresight VCT and other high profile investors such as David Yu, the CEO of Betfair, which we are using to expand our operations. We believe that the eBay drop-off shop model only works on a large scale and we have recently opened a 15,000 sq ft processing centre and employ 60 people. Items are brought to our processing centre where we have experts who can correctly describe the huge range of items which we receive, ensuring that our customers get the best possible price.

We see technology as an important competitive advantage and we have developed a proprietary software solution, Auctionworx which enables us to effectively manage the thousands of items which we receive and optimise listing strategies to maximise selling prices.

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What sort of products do you focus on?

We sell new, excess and returned stock, or items that would have previously sold at traditional auction. A typical client would be a retailer who wishes to dispose of last season’s branded stock, or a mail order company with returns. Items that sell particularly well on eBay are consumer electronics, IT equipment, collectables and designer fashion.

On the consumer side of our business we do not have a specific product focus and we will accept any item providing it can be sold on eBay and has a potential value of £20 or more.

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eBay is the dominant force in the online auction space. Do you think it will ever be displaced? What are the key threats to its business?

There are actually 300 online auction sites in the UK. However combined these get less than 1% of auction site traffic. Any threat to eBay will come from auction sites which focus on niche markets, or categories for which eBay does not cater. Examples of this are www.reptileauctions.com in the US (which has an impressive 36,000 users) and www.ToyMart.com in the UK.

To attract and keep businesses as customers eBay faces more competition. Many of the larger retailers with strong brands and plenty of website traffic, such as Comet and Toshiba, have opened their own online auctions to bypass eBay completely.

The newly launched Google Base may also begin to eat into eBay’s fixed-price listings which make up 35% of sales. Google Base allows anyone to publish searchable tagged content, including products. Eventually this will be integrated with Google Checkout to allow users to make purchases. Unlike eBay, Google base charges no listing fees and could become an important channel for business sellers.

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I’ve always thought of eBay as a predominantly consumer product, but we’re seeing increasing numbers of businesses and entrepreneurs setting up eBay stores. Do you have any statistics on the amount of stores there are? Why are they so popular with SMEs?

eBay is an cost effective and easy way to sell online. In a short period of time a company can have an internet presence with an integrated payment solution (PayPal) and traffic to their products. eBay listing fees range from £0.15 – £2.00 and these costs compare favourably to the cost of pay per click advertising through Google.

There are approximately 500,000 eBay stores worldwide with about half based in the USA. eBay accounts for 14% of ecommerce worldwide.

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eBay recently started charging higher fees to store owners. What’s the lowdown on this?

On eBay there are two types of listing: a core listing (the normal eBay listings containing auction and fixed price items) and store-only listings. Originally the core listing got more visibility but the shop listings were cheaper and had a longer duration.

Earlier in the year eBay changed the visibility of the shop listings so that they appeared at the bottom of the core listing search results. This had the effect of buyers moving their listings away from core listings and into shop inventory, reducing the fees which eBay received.

eBay has now reversed the stores in search policy and massively increased the final value fees for shop items. The reason given for this is whilst shop listings make 83% of listings, they account for only 9% of sales. The changes are intended to encourage seller to concentrate on more successful listing types.

At Auctionnig4u we think that the price changes will be counterproductive to eBay as they will make eBay shops uneconomic for some sellers of low price items (such as DVDs), while encouraging all users to look to other cheaper, ecommerce channels.

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You say that more and more big businesses are using eBay to offload end-of-line stock and other surplus inventory. Can you provide some examples?

Some of the world’s largest companies such as Orange, Vodafone, Creative, Dell and Canon use eBay to sell their returns. These items are ideal as they can no longer be sold to high street customers but have huge appeal to eBay’s bargain hunters.

Auctioning4u works for a number of major retailers and manufacturers to help them dispose of their surplus stock.

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What products are the most buoyant on eBay? Where are the opportunities for marketers?

eBay presents businesses with the opportunity to market their goods and services to a huge international marketplace with 200 million users worldwide. It is also an excellent way to increase brand awareness and acquire new customers.

Every company should consider an eBay presence as part of their marketing mix. If your company is not selling their items on eBay, then someone else is controlling your brand on this important channel. Finally, eBay items are also very well indexed by the search engines and can help with driving traffic to your website from eBay.

With 13,000 categories on eBay.co.uk, almost anything can be sold and there are successful businesses selling in all categories. However, it is an increasingly competitive market and we would recommend that retailers analyse the potential of eBay as a channel as they would any other, by looking at average selling prices, competition and cost of sale.

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How do you think eBay users have evolved over the last few years? Has eBay impacted on the culture of ownership and / or the pricing of goods?

eBay is bringing liquidity to a previously illiquid market, second hand consumer goods. In the past the only way to sell unwanted items was through classifieds, but nowadays many items can be sold through eBay for a large proportion of their purchase price. Resale values are therefore starting to play a part in purchasing decisions, with consumers increasingly opting for quality goods which will sell well in the secondary market.

In time the market for many products may begin to resemble that for used cars with consumers owning or leasing items for short periods of time before selling them through their local Auctioning4u drop-off shop.

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eBay Express is due out in a month or so. Why is this needed and what are your expectations for it?

eBay Express is intended to improve the experience for buyers by addressing some of the problems with eBay’s core listings. Currently business and individual seller’s items are listed together making them difficult to distinguish. Some buyers love auctions whilst others value the convenience of buy it now items. eBay Express will allow users to purchase fixed price items from professional buyers who must offer guarantees such as 7 day money back guarantee.

eBay express will also address the problems which eBay has been facing with huge volumes of low priced goods from the Far East flooding the platform.

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Trevor talked to Chris Lake, editor ( chris@e-consultancy.com)