EBay Stores Revisited

by Craig Stark

#50, 22 August 2005

Part I: Whoa, Is This Thing Actually Working?

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Seems like yesterday when eBay installed its storefront program, but believe it or not, it was 4 troubled years ago - in 2001. If I recall correctly, I took advantage of a first-month-free offer to launch my store (if you want to call it that) sometime in 2002.

eBay's store concept has always appealed to me. Here was (still is) my thinking: the problem with the auction format is that I have at best a 10-day window to snag a buyer. If I don't, more fees are incurred relisting. And sometimes re-re-etc.-listing. With a companion store, however, if I couldn't get my price for a book at auction, why, I could simply park it and wait for a buyer to drop by. No auction relisting fees whatsoever, only a modest charge of pennies a month. Or, if it didn't sell it in the store either, I'd only be a few keystrokes away from putting it up for auction on a free-listing day. Having the ability to park books on eBay is especially intriguing to me because I sell a high percentage of books that, for one reason or another, are in high demand but have only a limited number of potential buyers hanging around - that is, they sometimes need time to sell.

The eBay store has always seemed like a nifty solution to me, something I truly wanted to make work. Only my 2002 version didn't. At all. Thirty days went by - no sales. And, since I wasn't going to pay a monthly fee for that kind of performance, I did what any other sensible bookseller would do: I shut the damn thing down. Forum chatter echoed my experience. Other sellers weren't selling in stores either. There were reasons, most of them having to do with visibility, and the biggest, most bizarre reason of all was that store items didn't come up on eBay searches. What could eBay have been thinking, I thought, going to all that trouble to set up what in effect was an invisible store program?

Fortunately, there have been changes. Shelve a book in your eBay store today, and it will indeed come up on searches. True, store items are kicked to the end of the search results line, pinned immediately behind auctions, but if it's an uncommon item, chances are it'll arrive on the first (and only) page anyway, and sometimes it'll be the only item of its kind. Also, perform that same search on Froogle, and pow, zoom, it's there.

Despite these improvements, I was hardly eager to jump back in the water, but I continued to monitor forum chatter on the topic notwithstanding because some sellers were reporting consistent sales. Some sellers were even making money with their stores! Still, the water had been so icy on that first dive that I was in no hurry to repeat the experience, especially since that same chatter was reporting that most store sales were for low-dollar books - precisely the kind of books I try to avoid selling on eBay.

Then something happened that riveted my attention: eBay raised their store fees. About doubled them. Understandably, there was an initial cry of protest - in fact, it was one of the more vocal, heated ones in recent memory - and apparently many sellers soon closed their stores. eBay stock took step or two down, and public perception was headed south as well.

However, perhaps ironically, that's when I began to smell the possibility of success. Higher fees? Hmm. Something must be working now that wasn't before. And this is how it so often works in the marketplace: you give away stuff that doesn't have value; you charge for stuff that does; and you raise prices on stuff that has increased in value. Why? Because you can. Because it's worth it. If eBay stores were tanking, eBay couldn't/wouldn't raise fees. So, this was my call to action. I was suddenly sold, ready for a second plunge.

Going in the second time, I was primarily concerned about price. My plan was to list only books that hadn't sold at auction through several relists. Unfortunately, none of these were low-dollar books, and I still wasn't hearing reports about higher-dollar books flying out other sellers' doors. However, since the first month's fee ($15.95) was again waived, I decided to start with the boutique approach: list them at relatively ambitious prices for the first month - and this often meant raising prices above what I'd been asking for them at auction.

Crazy? Maybe. But in the back of my mind I was thinking, this will just be a phase of an ongoing experiment, something I don't expect will work but will try just for the heck of it. No sales, no problem. Next month I'll drop prices to get things moving. If that doesn't work, I'll drop them again, and again, until I've stepped down enough to meet the market.

Well, here's what happened. I listed 50 items on July 6, and what do you know - one book sold the first day. More surprises: by August 18, a month and 12 days later, another 6 had sold. Average price: $41.71. Amazing for a guy who was expecting nothing. Total listing fees for these books came to a whopping $.21. As I said, there was no monthly charge for the first month, but even if there had been, I'd priced these books high enough to cancel out the effect out entirely, and then some. The only significant charges were for final value fees, which I would've paid at auction anyway. An important observation: 7 sold books out of 50 is a 14% sell-through. This is significantly higher than my sell-through on fixed-price venues for a similar period.

Can this thing actually work month in and month out? Should I be increasing my store inventory to levels that could possibly deliver a substantial income? Too soon to say, I think, but it's been some time since I've felt this kind of enthusiasm for a new venue. Further experimentation is definitely in order. Among other things, this will include increasing/upgrading my inventory, listing books directly into the store (instead of trying them at auction first), perhaps using the new "Best Offer" option on selected titles, and simply trying different types of books and related items. For the time being - this is where I didn't think I'd be at this point in time - it won't involve price reductions.

When I have more returns in, I'll be back with another report. Meanwhile, even though I don't have enough confidence to heartily recommend that you jump in with me, let me remind you that the first 30 days are free. How much can it hurt?

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