#1 Big commissions. eBay earns, among other things, through commissions that are charged to sellers. And since this is the most popular site, it can afford to make these commissions quite large:
- 35 cents per listing if more than 50 listings per month are posted;
- fees for updating the listing (for example, for editing text, changing the title, adding a photo or increasing categories);
- 10–15% of fees in total, while other sites charge 1–5%.
#2 No delivery assistance. Amazon has several warehouses to help its suppliers with the storage and delivery of goods. eBay is only engaged in mixing the supplier with the buyer and the financial side of the issue.
#3 Vendor discrimination. eBay focuses on those who bring money to the site, that is, to sellers and advertisers. At the same time, the bias towards buyers is quite strong:
- they have more responsive technical and informational support;
- the service does nothing with fake reviews and black PR;
- in disputable situations, the service props up customers.
There are confirmed cases where the eBay code confiscated the seller’s money for the benefit of the buyers, even when they were wrong and violated the terms of the transaction or use of the goods.
#4 Tough competition. eBay is the largest online auction that attracts a very large number of sellers, which is why the competition on the site is off the charts. And how can new sellers attract customers? That's right, just dumping prices, which is why other sellers are forced to lower prices and work on the verge of profitability.
#5 Restrictions on communicating with customers. The service limits communication between the buyer and the seller solely by contact on the lot. Moreover, only the buyer can get in touch, while the seller can only respond, and communicate outside the system is prohibited. This is very inconvenient for building a marketing policy. For example, if you put up a lot, you do not have the opportunity to notify those who previously bought a similar product from you.
How to use the disadvantages of eBay:
- At the start of the project, commissions can be reduced to a minimum, gradually increasing them with the growing popularity of the site to an acceptably low level. At first, it’s better to remove the listing fee - you need to get as many lots as possible to attract customers.
- You can organize several warehouses in large cities with the possibility of issuing goods on the spot, without resorting to delivery services. Here, in the presence of an online auction representative, it will be possible to inspect the goods to ensure its authenticity and integrity.
- A well-defined set of user and arbitration rules that are fair and equal for all parties will help circumvent eBay in terms of protecting system members.
- On the new site there will be no problems with competition, but you need to think in advance about the site's policy regarding easing the conditions for entry into the market for new sellers. For example, you can enter a guarantee when the service or the seller (with a high reputation) vouches for the newcomer, assuming obligations under the transaction in case of violations by the newcomer. Of course, such a guarantee will not be free.
- In terms of communication problems between the seller and the buyer, you can go two ways. The first is to introduce a paid subscription (function), which gives the right to communicate with past customers. The second is to introduce marketing tools, for example, the function of mass mailing of ads to past customers (or a certain group of users) without the possibility of direct communication with individual participants.
These are the most obvious examples of how to use the shortcomings of
eBay to lure some of the users of this service to your website. Surely you can come up with a lot more ways if you think about it a little bit.
Dutch, Scandinavian or English: what type of auction to use?
Classic English Auction. Bidding goes on a price increase until a certain maximum is reached or until the seller agrees to the price indicated by someone. The buyer puts the
product (lot) up for auction, sets the minimum starting price, the time when the auction started and their duration. Rates can be raised only by a certain amount - step.
English auction can be:
- Direct. A certain starting price is assigned, which grows with the receipt of bids from auction participants. The winner is the one who makes the maximum bet.
- Reverse. In this case, there is one buyer and several sellers. The buyer sets the maximum price, the sellers are trying to reduce it, so they bought their goods.
First price auction. Closed auction, where the starting or maximum bid is not announced. Participants make hidden bets once. The one who makes the biggest bid wins. Usually they sell real estate, cars and
government contracts in this way.
Second price auction, or Vickrey auction. The rules are the same as in the first price auction, only the winner pays not the amount he indicated, but the second one on top (which the other participant indicated). Usually used to sell collectible items. On eBay, there is this type of auction, but with closed bids and the ability to set a minimum reserved price.
Dutch auction. Usually used to sell large quantities of dairy products, herbs, meat, etc. in a short time. Participation is paid. The lot is set at the maximum price, which gradually decreases (by the second, by the minute, once per hour, etc.) until a buyer is found.
Dutch auction with hidden price. The seller puts the lot at the market price, a.k.a. the starting price. Viewing the starting price is paid, and each viewing reduces the price by a certain step. The one who agrees to buy goods after viewing the current price wins.
If you already know which niche to choose, then study the main competitors to understand:
