eBay and the Recession Q&A

Sometimes I get contacted by a journalist looking for a view or quote. Here’s a Q&A I did earlier today. Do you agree?

How do you think the recession will affect eBay businesses?
eBay sellers are retailers and, as we’ve seen in the headlines, retail is one sector that is being affected by the economic downturn so it’s inevitable that some eBay sellers will go to the wall and most will probably experience some difficulties.

On the bright side eBay sellers, as is natural for online businesses, tend to be leaner and have lower costs. Most don’t have the expense of a shops premises, run streamlined operations and have few staff. Any efficient and lean business is in a strong position to weather the storm.

In terms of Christmas sales, many eBay sellers are saying they had a strong fourth quarter and many are very bullish about 2009. Several have said to me that they think the turmoil on the High Street and the lure of lower prices online will be great news for online retailers.

In what ways can people help to recession-proof such businesses?
eBay businesses need to prepare for the downtown in the same way as any small firm. Keep an eye on costs, look for savings and efficiencies and minimize debts. For eBay sellers, managing stock effectively is essential. eBay sellers should also ensure they’re getting all the fee discounts they’re eligible for especially the reduced PayPal merchant rate.

Should they be looking to expand what they sell or concentrate their efforts on fewer items?
In a marketplace the size of eBay, with millions of buyers every month, there is always opportunity to try something new. New niches to explore are always emerging and calculated risks are worth taking. But I’d advise any seller, whatever the economic outlook, to concentrate on the most profitable lines first and foremost.

Concentrating on conversion is essential: ensuring that a good percentage of items listed are sold. Paying to list items that don’t sell is expensive and unproductive.

What remains to be seen is whether eBay itself is recession-proof. In straitened times, savvy consumers are likely to turn to preferential process online and eBay seems likely to benefit from that trend.

Any other advice that could be useful?
eBay itself should be thinking about supporting its army of successful sellers with a fee reduction. Think of it like a ‘fiscal stimulus’ scheme. eBay can only prosper if it has a vibrant inventory of items available for purchase by consumers. Preserving choice and supply will be vital and a fee cut could go a long way to reassure sellers.

Sellers should be mindful that buyers enjoy the certainty of Free P&P. Rolling carriage costs into the price the buyer pays makes a lot of sense.

6 Responses to eBay and the Recession Q&A

  1. Thanks for the post.

    You state that eBay should think about a fee reduction for their sellers.

    I am curios why you didn’t mention the fee reduction they already implemented back in the fall?

    http://news.cnet.com/8301-1023_3-10020839-93.html

    How was it perceived? Did it have an impact? Positive? Negative?

  2. Lynne says:

    One of the main things we have seen since the financial melt-down has been a massive increase in international sales. The exchange rates are very much in the favour of international buyers at the moment, and we have found that ensuring that international postage rates are shown, and international visibility selected for auctions, have both shown dividends.

    eBay has proved an extremely good way for us to reach this eager marketplace.

  3. Steve says:

    “eBay can only prosper if it has a vibrant inventory of items available for purchase by consumers. Preserving choice and supply will be vital and a fee cut could go a long way to reassure sellers”

    Given some of the recent changes to low value BIN eligibilty, imminent duplicate listing policy and reluctance to adopt a workable choice listing policy (such as on ebay.com), the UK site still, in my opinion, has quite a bit of work to do to fulfil this vision.

    The craft categories are really struggling due to the removal of sub 99p BINs, and generic items with multple uses and applications (such as batteries and car parts) are likely to suffer under the duplicate listing policy.

    The clothing and footwear sector has been crying out for a proper choice listing policy, and given the low insertion fees, are ebay really making more revenue from that, than providing an easy to use option for buyers?

  4. Dan Wilson says:

    Matt,

    Yeah, those changes were significant. But it’s difficult to say what impact they had because eBay served up so much change in 2008 and there’s a lot of background noise. Interesting, those changes were probably more significant over here than Stateside. In short, they made made it very, very inexpensive to list multiple fixed price/BIN items. It was very much an Amazonification move, pro-business sellers and highly preferential towards those selling circa £5 and above items. High volume, low value sellers were justifiably disgruntled.

    Do we know if it worked? No. And I’m not really sure I can call it either way. I’ll be looking out for Q4/2008 results in the next week or so.

    Insertion fee decreases will have been offset by Final Value Fee increases, I sucpect.

  5. NYM Arts says:

    Ebay can’t make it now, STRICTLY because it banned Money Orders and Checks.
    Why is this FACT so tough to get your Heads Around ?
    THAT’S THE ONLY DIFFERENCE BETWEEN THEN, AND NOW.
    Money Orders and Checks are PARAMOUNT to Recession “Proofness”.
    Apparently College SUCKS THE BRAINS OUT.
    We have to Hammer the Brains back in.
    3rd party payment “Buttinskis” suck, are uninvited, and useless.
    I only do business with checks and money orders.
    Nobody gets between Me, the Money, and my Client. NOBODY.
    Life Is Good.
    http://nymarts.com

  6. Pingback: Time for a break : TameBay : eBay news blog and forum

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