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EcommerceBytes-Update, Number 204 - December 02, 2007 - ISSN 1528-6703     3 of 7

Top Seller Bargainland Leaves eBay to Launch New Auction Site


By Ina Steiner
EcommerceBytes.com

December 02, 2007
 



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As a liquidator on eBay, Paul St. James has made a living turning bad situations into money-making opportunities. Lost freight, products from derailed trains and truck rollovers, discontinued product lines and returned and distressed merchandise are the bane of manufacturers and retailers, but they represent inventory to St. James. So perhaps it's not surprising that when eBay began limiting his sales on the auction marketplace, he turned it into a new business venture.

Bargainland has racked up over one million positive feedback on eBay since 1999 and is one of eBay's best-known, if somewhat controversial, sellers. That's because Bargainland has one of the worst feedback ratings on eBay. At times, Bargainland's feedback rating has dipped below 90 percent, something almost unheard of in a venue where both buyers and sellers experience angst over a single negative feedback rating.

St. James ceased selling on eBay - at least for now - and has moved his auction business to his own site at Bargainland.net (http://www.bargainland.net), which he launched about 3 months ago.

When asked why he suspended his sales on eBay, St. James said, "I can't define it as any one single point. It was kind of the aggregate of quite a bit. It felt like eBay was distancing itself more and more from the large volume sellers and, in particular, the as-is, 99-cent, No Reserve type seller. It seemed like to us they were trying to get more into the sexier, cleaner Amazon-type space."

St. James said conditions at eBay became increasingly challenging for high volume sellers over the past year, including policies around VeRO (trademark) and feedback. He said eBay implemented a new policy in which sellers were unable to launch more than five designer items a month, for example. Despite having documentation showing legitimate ownership of branded items, eBay kept limits in place and increased the number of brands in the embargo, he said.

"There's dozens of examples similar to this where it was becoming more and more restrictive to put auctions up on eBay in many different ways and was ever becoming more complicated and more and more difficult to work within their structures."

eBay also demanded that Bargainland achieve a feedback rating of 98 or 99 percent. St. James said feedback satisfaction levels differ by type of business - "if you're a masseuse, you'll get a higher feedback than if you're a dentist or an airline. Delta Airlines will never get the same rating as the Four Seasons or a masseur will get." In addition, resellers - those who buy from Bargainland and resell the products - are motivated to leave negative ratings for Bargainland in order to limit competition and keep prices down.

To illustrate his point about negative feedback ratings, he said there are tons of Bargainland hate sites. Now that the company has its own website, they've been able to determine through tracking IP addresses that the number-one Bargainland hate site is run by one of Bargainland's biggest customers. St. James said according to Nortica's list of eBay's highest volume sellers, Bargainland rates worst in feedback ratings, but rates in the top-ten in terms of repeat-purchases, which he says is indicates strong customer loyalty.

Despite these arguments, eBay imposed volume restrictions when Bargainland was unable to raise its feedback rating to 98 percent. So at that point, St. James launched a two-pronged approach to surviving without eBay. He assigned half of his programmers to working on a solution to integrate with Overstock.com, and the other half to work on an independent site exclusively for Bargainland.

"I basically had 24 days to design a site," St. James said.

He believed his salvation would be Overstock.com sales, and describes the effort to develop his own site as half-hearted, an attempt to see what kind of following he would have. On day 2 of the site's launch, however, the off-the-shelf software couldn't handle the sales, he said. He abandoned the Overstock.com project and assigned all of his programmers to rewrite the Bargainland auction site from scratch.

St. James said that by the second month, Bargainland.net had achieved the same Average Selling Prices as on eBay. "We were dumbfounded by the response, and we were dumbfounded by the results."

Bargainland has just initiated a pilot program in which it allows a limited number of other sellers onto the site, and St. James said it is going exceedingly well. He said they plan to change the name of the site, keeping Bargainland as his company's seller name. He said Bargainland will hand-select sellers, who must have a physical location, sell hundreds of items a week, and are like-minded sellers who believe in the dollar, no-reserve auction format.

St. James said he has not ruled out the possibility of selling on eBay in the future if it made sense, but said it is expensive to sell there.

eBay sellers have engaged in heated debate over the merits of eBay's policies to clean up the site launched this year, such as the anti-counterfeiting initiative (http://www.auctionbytes.com/cab/abn/y07/m04/i11/s03) and the new criteria for enforcing its Seller Non Performance policy (http://www.auctionbytes.com/cab/abn/y07/m08/i30/s01). Some may see the departure of Bargainland as a sign of eBay going too far, others will likely applaud the move.

Post your own thoughts on the AuctionBytes blog.
http://tinyurl.com/yvllnk

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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