In today's AuctionBytes "Vendor Monday" column, ChannelAdvisor CEO Scot Wingo discusses multi-channel selling for eBay sellers. Each week,
AuctionBytes.com runs an article submitted by a vendor or marketplace in the online-auction industry about a topic helpful to online sellers. Story submissions are welcome by
emailing the editor.
There are several trends in ecommerce that every online seller should be aware of as we get ready to enter 2007. The good news is ecommerce continues to grow at a rapid pace. Most industry analysts peg the growth at 25-30% growth year over year. Today eBay represents about 25% of ecommerce so by selling on eBay you have taken a great first step towards taking advantage of the broader ecommerce opportunity.
Now for the bad news, starting in 2005, eBay's Gross Merchandise Value (GMV) slowed down to "slower than ecommerce" growth. For example, in eBay's 2006 third quarter results, GMV grew 17% year over year which given the 25% growth for ecommerce indicates eBay is growing 8% slower than ecommerce.
What this trend mean for you if you are exclusively selling on eBay is if you want to grow as fast as ecommerce (or faster) you need to do so by taking share of your category. In other words, if you grow just at the pace of eBay (maintain share), you will be losing ground in the broader market. Taking eBay share sounds like the right way to go, even if it requires some creative pricing. However, as most sellers are painfully aware, as eBay's growth has slowed, in order to achieve their revenue goals, eBay has had to increase fees.
This has created a "perfect storm" for many sellers where they want to grow with ecommerce by taking share on eBay, but economically this will probably cause them to actually lose money on the way to that objective.
What's a seller to do?
The solution for most sellers is to spread their wings, jump out of the eBay nest and soar into the broader world of ecommerce. In fact eBay's own published data (Analyst day 2006) indicates that 77% of eBay's own top-sellers are now multi-channel.
Remember earlier I mentioned that eBay is about 25% of ecommerce. Well here is how the rest of what I call the "online channels" breaks down:
- 40% - Search (natural and paid)
- 10% - Comparison Shopping Engines
- 25% - Direct to ecommerce site
There are two main differences between what you've already been doing on eBay and what you will need to be successful "off-eBay":
- Bring the buyers. I liken eBay to ecommerce training wheels. Your job is to source products, list them and ship them. eBay's job is to bring the buyers. Well in the off-eBay scenario, you are now in charge of bringing buyers.
- Enable transactions. One important detail that eBay also takes care of for you that you won't have when you go "off-eBay/multi-channel" is the actual completion of a transaction (from the "buy button" through the checkout).
As the data shows, to bring buyers you'll need to become proficient at natural search, paid search and comparison shopping engines. However, to enable transactions from these channels AND turn on the "direct to ecommerce site" piece of the pie you will need an ecommerce platform.
Ecommerce platform: The foundation of off-eBay success
Fortunately, there are literally hundreds of ecommerce platforms available and most are very reasonably priced. The topic of choosing an ecommerce platform is worthy of its own book, so we can't get into the details here. Instead here are three rules of thumb that should help guide you in your decision:
- Think Channels. Remember that 50-75% of your off-eBay sales will come from Search and Comparison Shopping Engines with the rest coming from "direct". You can spend your entire budget on fancy whiz-bang features, but if your site doesn't work well with the channels (I call this channel-optimized), nobody will see your fancy whiz-bang features. This is like the age-old question: "If a tree falls in a forest without anyone to hear it does it make a noise?". Incidentally, my Dad has a version of that question about the light in the refrigerator that used to keep me occupied for hours as a kid.
- Keep it simple. Many eBay sellers have very grand ambitions when they expand off-eBay. In fact they can be too grand. It's unrealistic to expect you'll be able to start out with an amazon.com kind of buyer-experience with product recommendations, reviews, configurators, wizards, eighteen payment methods, etc.
So instead of focusing on these "nice to have" features, focus on the "must haves". Are your products searchable, clearly described, great images and easy to buy? If you invest your dollars into the basic buying experience, and then the rest of your dollars in the channel aspect of off-eBay selling you will do very well.
- Think Multi-channel. As you expand off eBay, you need to think multi-channel. In other words, you want to run your business so that you can add new online channels seamlessly instead of having to do double the work for each channel. This philosophy goes throughout the entire ecommerce operation.
For example, think about inventory in a two-channel (eBay and ecommerce) world. There are two ways to handle inventory in a two-channel world. In the first, you take your inventory and enter it into two systems (your eBay and your ecommerce). You then manually move inventory around between the systems trying to make sure you are up to date across both. Alternatively if you think multi-channel you would find a system that allows you to put your inventory in once and then virtually allocate it to either channel. Then the multi-channel system would keep track of everything for you.
Once you make the multi-channel leap your business scales to 3, 4, 5, heck X channels because you have abstracted and simplified the multi-channel aspects of your business and can focus on selling regardless of channel.
To summarize the ecommerce platform selection process, my advice is a balanced approach that takes equally into consideration features, channel-optimization and multi-channel factors.
If you build it, will they come? (Or the Ecommerce Field of Dreams)
Once you've selected an ecommerce platform and launched; now you need to bring the buyers. This is another topic worthy of an entire book or series of books and I'm already hitting the end of my space here so let me summarize some ideas for you to explore from here.
- Leverage your eBay business - Think of your eBay business as the wind in your ecommerce sails (or sales!). Just because you are expanding off-eBay doesn't mean you are taking your business off-eBay. In fact your eBay customers can give you a great boost in your off-eBay efforts. Promote your ecommerce site aggressively in every email you send out, your about-me page and even in your packaging. Consider offering coupons to eBay buyers for your ecommerce site to get them to make the jump. Also your ecommerce site will give you the ability (no listing fees!!) to offer a much broader selection. Let eBay buyers know this with a simple: "Looking for more? Checkout my website" kind of message. Finally, remember to offer your eBay buyers the ability to opt-in to your email newsletter for your website.
- Email Marketing - Email marketing is one of the largest drivers of direct ecommerce. You need to set a monthly, bi-weekly or weekly schedule to send out a newsletter to your loyal followers. Be generous with coupons and discounts to build loyalty. There are hundreds of services that help you with email marketing including IntelliContact and ConstantContact.
- Natural Search - Google, Yahoo! and the other search engines constantly crawl the web looking for content. Make sure that your items are all indexed and properly meta-tagged. Also make sure that you have many related sites linking to you to help with your PageRank (Google's algorithm based on link popularity that determines how high you show up in their free or natural/organic/algorithmic results).
- Paid Search - Google owns 60-80% of this market so start your efforts with Google AdWords. The world of paid-search is very different from eBay. Instead of paying a listing+final-value-fee, you pay a per-click charges for traffic and then it is up to you to turn that traffic into sales. This economic model increases the risk for you (buying lots of traffic that doesn't convert), but also gives you more flexibility. The key to success here is coming up with a "tail" strategy that will allow you to avoid competing with the big guys, but give you enough keywords and search volume to generate some mass. Once you've mastered AdWords, then fire up Yahoo! Search Marketing - Yahoo!'s equivalent to Google AdWords.
- Comparison Shopping Engines (CSEs) - Like paid-search engines, CSEs work on a pay-per-click model. Before you even worry about that you need to get your products to the shopping engines via a datafeed. While there are over 20 CSEs, I recommend focusing on the big seven: Shopping.com, Shopzilla, NextTag, Yahoo! Shopping, MSN Shopping, Froogle, PriceGrabber. If this list overwhelms you, then consider getting your toe in the water via Froogle, Google's offering, which is completely free.
- Think outside the box - Create your niche and go from there. Everyone is an expert on something. Create a blog or wiki, publish a guide (if you've done these things on eBay, move them off to your website instead). The search engines will find this content and then buyers will find this content, come to your site and drive sales.
Spread those wings and FLY!
Hopefully this article has given you some ideas and a basic roadmap to consider for starting your multi-channel adventure. As you continue, I'd love to hear more from you and you are always welcome to check out my blog: ebaystrategies.blogs.com for more ideas.
Scot Wingo is CEO of ChannelAdvisor, a leading provider of multi-channel software for eBay, comparison shopping engines and search. Scot is also author of eBay Strategies. You can read his blog at http://ebaystrategies.blogs.com.