Changing Landscape for Online Marketplaces!

I just got back from the ChannelAdvisor Catalyst conference in North Carolina and thought I would recap some of the key takeaways. Ina Steiner of Auctionbytes.com was there and has written a nice recap of the conference. So if you want a quick snapshot of what happened please read her article.

My key takeaway from the conference was that the top online marketplaces are changing markedly:

Amazon is renewing their focus on 3P (Third Party) sellers with their invitation only offering called Seller Central. Currently 3P sales represent 25% of Amazon’s business and this number will continue to grow. By making this invitation only, Amazon can bring in the best and brightest sellers without flooding the market with too much inventory and too much competition. If you are a large online seller you should be considering how you could take part in this offering from Amazon. If you are interested in the program please email me and I can introduce you to someone at Amazon.

Overstock.com is undergoing some significant changes in their marketplace. According to CEO Patrick Byrne 3P sellers now make up 68% of their core business (not auctions) and with the recently announced agreement with ChannelAdvisor that percentage will increase substantially. With the agreement between CA and Overstock sellers can now include their product in the main Overstock site -- not auctions. One of the first eBay sellers to take part in this new program is Designer Athletic. If you are a large online seller you might contact ChannelAdvisor to discuss being part of the Overstock program.

EBay – eBay has just announced that Half.com sellers can now opt into eBay Express as an additional sales channel. While most media sellers think eBay Express is not worth their time as a marketplace, I’m not sure why they wouldn’t look into this for incremental sales growth. The opt-in process is pretty seemless and the fee structure is better for them on Express if they are high volume sellers. My Take: I think this is a precursor to moving the entire Media category off of eBay and onto Half.com -- remember you heard it here first. Here are the details on the program.

Google is now testing a PPA model for Ad Words that may have a huge impact on online sellers. In this limited Beta test sellers can set a specific fee per action. Here are the details from Google. This new wrinkle may be what kills the Golden Goose (eBay). PPA is a godsend for those sellers who have avoided using Google’s AdWords up till now.

According to Jeetil Patel of Deutsche Bank in a research note on the Channel Advisor Conference “Having attended the ChannelAdvisor Catalyst e-commerce conference, we believe that third-party sellers currently on eBay are increasingly diversifying their channels to incorporate direct (incl. paid search and comparison shopping) and most importantly Amazon.com. Seller feedback towards Amazon.com was particularly positive while eBay feedback was more bearish.” He goes on to say “…the same sellers have been aggressively shifting a portion of their inventories to Amazon with strong success (especially in the media categories). Sellers indicated that higher pricing; lower commission and higher collections (relative to eBay) represented key advantages for Amazon. However, it is important to note that sellers still enjoy profitability on eBay, yet would like to grow these profits (either by way of eBay, Amazon or direct).”

It is clear that eBay’s large sellers are increasingly looking for alternatives to eBay and that the exodus has begun. If a product sells profitably on eBay it will stay on eBay but sellers will move the Long Tail over to other marketplaces like Amazon or their own website. eBay’s catch phrase “Whatever IT is you can find it on eBay” may need to be revised to “Whatever IT is you can find it on eBay, except the Long Tail.” Of course eBay will be able to direct you to the Long Tail -- on other sites -- through their paid search links via Yahoo and Google.