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.