Tuesday, July 15, 2008

And The Point Is?

A good advertising campaign not only motivates the customer to the final purchase but educates the buyer tn the benefits of shopping at the advertisers venue. eBay Australia seems a bit confused, and if they are not confused I certainly am! The theme of their latest advertising campaign is no longer the tacky and suggestive 'doing it with lots of people but using protection' (adolescent sniggers all round) now we have Big Game Bargain Hunters Shop on eBay. Here is the video:

The supporting 'print' ads one and two seem to be pushing the buyer to buy anything as long as it is cheap and has free shipping.

The CEO of eBay, John Donohoe has expressed a dislike of the 'flea market' atmosphere on eBay and the entire trend on the U.S. site has been away from that. All recent promotions, discounts and benefits have been aimed at large volume commodity sellers, the upper tier PowerSellers. Comparatively low volume sellers have borne the full weight of fee increases and been disadvantaged in search through the DSR component in Best Match. We were told quite bluntly by Lorrie Norrington, eBay President, to gear up and sell more if we wanted to share in the largesse. Is eBay Australia traveling in the opposite direction? If so, why?

The motivation for free shipping is very clear, we all know there is no such thing as free shipping, shipping is a service, sellers pay for shipping, that cost has to be factored into the sales price for the seller to remain in business. If shipping is included then eBay will take a cut of that too, twice, once in FVF and again in PayPal fees.

Insertion Fees in Australia are 30c for an item starting under 99c. A gallery picture will cost an additional 59c. Final Value Fees are 5.25%, PayPal is 30c plus 2.4%, therefore, rounded up, eBay/PayPal's take on an item which sells for 99c would be $1.20. As far as I can determine it costs 55c to mail a letter weighing less than 250g (approximately 8oz.) Assuming our 99c seller got the item free he/she is already hock deep in red ink, never mind overhead. I am told that due to the devaluation of the US$ the exchange rate is almost identical.

If you are selling internationally it is important to remember that there are now International Visibility Fees, extra PayPal fees and that PayPal has recently very quietly started gaming the exchange rate. More on that later.

My message from the advertising is that eBay is trying to apply pressure to sellers to reduce prices. What I can't understand is, why? eBay does not own the items for sale and the higher price a seller gets, the bigger eBay's fees... so why the big push?

Our Australian friend Kevin says:

Am I wrong to think that such marketing strategies encourage lower prices? Yes, this has been underlying theme of much that I have said in the last few months, but it seems if anything to be becoming more blatant. If buyers are actively asking for free shipping, as eBay tells us, why instruct more of them on how to find that at the expense of finding every other auction on eBay - surely those that are demanding free shipping are already searching for it specifically? Why encourage bidders to search only for items with a price under a dollar, to the extent of teaching them that if it already has a bid, it is too dear? For eBay, who has no stock cost to carry, the mark-up percentage is fine, but as I have asked before, if you try to force the sellers into accommodating this mindset, how can they sustain a viable business model.

To me this is all skewed wrongly and in the long run unsustainable to everyone (EVEN ebay) - does anyone else see it this way, or do you see these as clever marketing strategies?

Y'all come back!


Anonymous said...

I don't think eBay knows what it wants. On the one hand they want top, volume sellers with cheap prices/free shipping and still be a venue. On the other hand, they don't want to look like a flea market. Do they honestly believe that sellers of authentic/new/quality items are not going to be giving their wares away for free or even for less than cost?

If eBay truly wants sellers that are going to take care of customers and provide exceptional service, then they have to realize that there will be no sellers hawking Maui Jim sunglasses for $0.99 opening bid with free shipping. Nor will there be any Cannon Rebel XTI cameras with full factory warranty.

Now, if they truly want Luis Vuitton $0.99 with free shipping then they have no choice but to accept the flea market attitude. It's time eBay...pick one or the other; venue or flea market?

Anony Mouse

Anonymous said...

There's no way on this little earth that I'm going to be selling my books at auction with a 99cent start price and offering free postage.

Considering that most of my books need to be posted in a 500gram pre-paid postage satchel (this costs $5.30) and then if each item sold for its starting price then I would be $6.00 out of pocket. Not to mention the time it takes to list an item, any packaging used, and the drive to the Post Office etc. I'd be better off financially if I stood in the middle of the road and ripped twenty dollar notes to shreds and threw and resultant confetti into the air... No ebay, I wont be playing your game.
Another Anony Mouse