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Mon Sept 7 2009 22:21:08

eBay Pushes to Liquidate High Volumes of Retail Inventory

By: Ina Steiner

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In March, eBay told analysts it was going after the secondary market, calling it $500 billion opportunity. I was curious about its definition of the secondary market and how eBay came up with that figure. I was also curious what other companies thought about eBay's numbers, and what the experts had to say, so I set out to find the answers, which are presented in Tuesday's newsletter.

While eBay counts the secondary market as excess inventory and used goods, including collectibles and thrift shop sales, its Analyst Day slides and presentations focused on excess inventory and returns. eBay's decision to provide a high-velocity channel for liquidated goods could have serious effects on shopper behavior and perceptions of the site, and its special deals with certain retailers and liquidators could make things more challenging for everyone else.



I obtained some data on eBay's Daily Deals in Germany and how it positions its "deals" portal page there. Clearly eBay is serious about becoming a discount retail destination.

Among the people I contacted in researching the article were: an expert in reverse logistics (returns); a seller of liquidated goods who had run a significant business on eBay; the man who launched and ran eBay's B2B Private Marketplaces business; and one of eBay's competitor who specializes in the secondary markets.

Sellers need to understand where eBay is headed in order to plan for their businesses. eBay's focus on assisting certain players to liquidate goods will have as important an effect on sellers as its decision to create the Diamond level PowerSeller designation and Large Merchant Services API (operation catalog).

It's debatable whether eBay's approach will pay off for its own benefit and/or the benefit of its long-time sellers. So let the debate begin.




Comments (129) | Permalink

Readers Comments

eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

by: Patricia

Mon Sep 7 23:55:14 2009

Sorry, I don't see much success here.  In part, the economy did hurt them but more than anything else its the Ebay management team. Ebay is becoming less and less of the household name it used to be.  Maybe they could have made it in retail - though the competition there is going to be extremely stiff and run by big time competitors who know their stuff.  The present Ebay team seems to be just a bunch of babes in the woods when it comes to building a solid business model.  Ebay is more like a patchwork quilt.  I'm expecting Walmart and Amazon to steam roller them - not to mention Jack Ma's Alibaba ;-).

Those of you who haven't opened your own website yet, get to it.  This way you can sit back and watch the upcoming slaughter.

eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

by: JG

Mon Sep 7 23:56:46 2009

This article left me with chills down my spine.  Now I really know that it's almost over for my nice ebay store. We small buyers will just get swept away by the new eBay and we need to be aware of that.  If you haven't started preparing for the changeover, it's time to wake up and smell the coffee, folks.  From auctionbytes, we need an up-to-date comparison spreadsheet of sales and requirements of the eBay alternative sites for 2009. I know there was one maybe 6 months ago, but this has been a momentous year with massive changes in the traditonal eBay market. (My page views are one third of what they were last year.) We also need a new term that doesn't define the alternative sites by the eBay name.  We need a comprehensive list of sites available for small sellers and what each site is like -- what sells best on them.  Friends, we have to help each other as we always have -- maybe by a mass group signup on one of free the sites.  Which site would we focus on? Let's hear suggestions. This is the time to brainstorm and map out a plan for our futures as sellers. The time is now.

eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

by: Franci

Tue Sep 8 00:01:15 2009

After reading your article, Ina, twice, I have a few thoughts and no conclusions.

It seems to me that eBay is out of its league.  eBay has always been a glorified flea market and though Donahoe is not fond of that concept, it is a fact, and remains one today.  Coupled with a rather dismal track record in fraud prevention if I was a liquidator I'd not think of eBay first when looking for outlets.

Isn't eBay buying into the past rather than the future.  There is a big bubble of stuff in the secondary market that resulted from the economic storm that began a year ago and continues.  It has created a new kind of consumer: one that saves far more than in the past, is working to get out of debt, if possible, and very frugal with their hard earned cash.  That's the folks who still have money to spend.  There are now millions who don't.  Also most consumers are now looking at least modestly "green" in their buying habits and are being encouraged left and right to conserve, don't waste, buy local and even share.

There's nothing in this secondary market to attract those buyers....of which there are many and more joining the ranks daily.  

They may be able to sell 7 or 8 thousand gismos, purses, blankets or whatever in a few hours, but I don't see how that makes a business like eBay a better place to shop.  Aren't lots of those buyers buying to resell?

And I think that there's a liquidation bubble right now.  The big economic dive put lots of items that would have sold over the holiday last year into this year's excess, but that is a one year deal.  We know that's not going to happen this year because retailers have reworked their ordering to accommodate the new conditions.  Secondary market stuff that's two or three years old is just not attractive and the first year has already passed.  Manufacturers have stepped back their production and the excess will decline from now on, I'd imagine.  Nobody is going to make or buy stuff they know they won't sell so there will be a big decline in the secondary market come January.

Anyone who's been in the secondary market knows that one bad buy can put you out of business.  It is a very narrow profit margin and some of these big diamond sellers may be a thing of the past in short order.  That they are turning to eBay and that eBay is rolling out the welcome mat is not reassuring by my standards.

Just a few thoughts.  And ditto what JG said.

eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

by: matza

Tue Sep 8 01:20:51 2009

Well that ought to go over well with the new policies coming out in October.

Refurbished merchandise...in order to sell you must maintain a 0.50% satisfaction rate. Yep less than 1% LOL

IS DONOHOLE THE DUMBEST OR WHAT?

What a complete goofball.

By the way go ahead and Google every daily deal deal. 9 out of 10 times you WILL find it cheaper many other places.

I wish Donohole would just give up. He's clueless. 0.50% and now we're going to sell seconds and refurbs hahahahahahahahahahahhahaha

You can't even sell the best of the best the cream of the crop and keep a 0.50% satisfaction rate.

Donohole has to understand, it isn't the ebay sellers that have run business away HE DID!

He should be sweeping the halls at ebay headquarters not running it. I'd worry about him with a dangerous broom in his hand though. Knowing him he'd end up destroying something.

You got hong kong and china merchants accepting best offers of a penny to boost their listings in best match permanently acquiring the spot with cheap junk toxic items nobody wants.

You have more hong kong china sellers selling earbud covers and gumball machine trinkets for a penny with free shipping so they can pad their feedback that helps them later sell bootleg knockoff ipods and iphones and other assorted shoddy electronic crap. ect ect.

Donohole has created a complete utter disaster.

Amazon is going to have ebay for christmas dinner this year.

Donohole must be dragged out by his ear!  


eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

by: matza

Tue Sep 8 01:29:30 2009

@jg

don't worry nobody will make it on ebay. Big small short or tall.
It's already in crisis mode.
JD's days are numbered. He is the sole person to blame for all the decline.

Best match is being manipulated by many sellers. With making a best offer on a private listing you can accept anything like say for instance you are selling 300.00 vacuum cleaners you can have someone send you a best offer of a penny accept it, exchange feedback and boost your listing.

Do a search..there are listings with permanent spots that are always at the top.

flawed plan after flawed plan. This guy has no innovative ideas, no sense of what he is running. He's useless!

eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

by: A Car This Fine

Tue Sep 8 03:03:26 2009

Oh my gosh... This article sent shivers down my spine too... Reading this article makes me feel like Ebay is on its last breath... Secondary market is all the stuff that people do not want... I think I just lost all hope for an Ebay recovery...

eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

by: m

Tue Sep 8 03:09:44 2009

I'm on eBay, as well as most of the "alternative sites." My eBay sales far outnumber the combined sales on the other sites. It's not for lack of trying, that's for sure. Buyers just don't seem to want to use the other sites because they're not familiar with them. And so the cycle continues..

eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

by: A Car This Fine

Tue Sep 8 03:09:48 2009

I meant Secondary market is all the stuff that SELLERS do not want on Ebay... Alot of sellers go to the secondary market and resell on Ebay.... That secondary market stuff is going to be too much competition for me...

eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

by: Ebay's Slow Death

Tue Sep 8 03:29:53 2009

I agree with Franci. Lots of good points there about the secondary market and the economy.

We've been in the antiques-collectibles-junk market for a long time. We have had a large B&M retail store for twenty-five years, and I've been selling on Ebay and the internet for over ten years. What we are seeing at our shop is that people want new or newer items really cheap. It is becoming increasingly difficult to sell the vintage stuff.

Also, a funny thing is happening. There are fewer garage sales in our area, and the thrift stores are having a hard time getting donations. The antique malls are full of great old merchandise, and the mall dealers we know are complaining about slow sales. Our friends who own a second-hand store are doing great. Every thrift store we go into is full of people. It appears people are spending less money, and holding onto what they have.

The regular retail stores are carrying less inventory. With the supply-chain ordering systems now, where you reorder only when the demand is there, makes it so there is less and less overstock or excess inventory.  The stores I frequent, seem to be having bigger discounts on the older merchandise.

So, I think that secondary market, which JD is lusting after, is quickly shrinking.  Liquidating excess merchandise is an old, out-of-date business model.

Also, there is the postage factor with internet retail. I think people are shopping less on Ebay, because postage has gotten so expensive. It adds too much to the cost of the item. The secondary market items JD wants to sell will have that added postage cost, whether or not the Seller says Free Shipping. Most people would prefer to go to their local store, pick out the item and not have to pay postage. I know I do.

Ebay has always had the advantage when it came to hard-to-find items. You use to be able to type a word into search and there it would be. Not anymore. JD has ruined that. I love it when I put in a certain word and Ebay changes it to a common word and brings up all this stuff I have no interest in.  Best Match was only intended to give the Diamond Sellers another advantage.

JD and his management team are just thrashing around saying, ''Let's try this, that didn't work, so we'll try this.''  In their greed, they have managed to kill the Golden Goose.  Ebay isn't laying many Golden Eggs anymore.

I still can't figure out why the Board and the large stockholders have let him get away with killing a highly successful business. Seems nobody has anything good to say about Ebay anymore, unless they are paid to say something nice.  

People who come into our shop don't talk about Ebay anymore. It has passed out of the popular culture.

Looking forward to Ina's report tomorrow!

eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

by: The etail Tsar

Tue Sep 8 04:17:16 2009

Secondary Market will work for eBay if it is done properly. It will be interesting to follow. About 10 years ago i came up with a new marketing strategy called "etail4retail" looks like the smart a**es have finally figured it out 10 years down the line. Interesting to see if the got the proper diagram to it. If not, its always for SALE. Price = eBay Island

eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

by: Pat

Tue Sep 8 04:26:01 2009

Here's something that jumped out at me from the article:

"Three Wall Street analysts who follow eBay said they did not measure the secondary market, but referred to eBay's estimate of the market size, while Colin Sebastian of Lazard Capital Markets estimated the returns market alone to be at least $50 billion."

It seems that Wall Street has no idea if eBay is being overly optimistic about the secondary market opportunity because these analysts could only refer back to eBay's own estimate of the market's potential. How convoluted is that?

How can you follow a stock as an analyst and not know what the potential is for a market that eBay is banking their entire future on? None of the experts in the article pegged the market at more than $80 billion. That's a huge difference from the $500 billion that eBay claims the market size is.

eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

by: Disgraceful

Tue Sep 8 05:33:23 2009

Sleezebay has become and will get worse the crap site of cheap china items and worthless junk. Too bad, they had something pretty good years ago, but because of such mismangement and ebay's hatetred for the average seller people (both sellers and buyers) are leaving ebay for good.

eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

This user has validated their user name. by: Philip Cohen

Tue Sep 8 06:24:49 2009

Did someone mention 99c-start, no reserve, auctions? My observation of 99c-start auctions, reserve or no, is that in many instances there are more shills than genuine bidders bidding thereon; the rolling appearance of the same group of bidding aliases leads one to believe that the unscrupulous sellers all attended the same seminar on shill bidding.

eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

by: Jo

Tue Sep 8 07:51:50 2009

Somewhere a while back I remember reading something about being a successful seller on eBay. One of the  suggestions and it was a very good one was to find your niche or sell something specific and stick to it.

We collect and deal in old documents and did just this on eBay for 10 years. We found that dealing and selling a specific item was a good thing. It brought us in a steady flow of buyers, some of which purchased hundreds of items from us over the years.

Why would eBay want to get into a market that every other company is clambering to get into as well. I remember watching the searches in areas we collect & sell and at times eBay would be flooded with a fairly large amount of items similar in nature. The end result was prices would drop.


If eBay, Walmart, Amazon, Buy, Overstock, etc etc etc all get into the act they will flood e commerce and prices will drop to an impossible level for most sellers to deal with. Not to mention the absolutely mind boggling searches that a buyer is now forced to look through. Literally 1000,s of pages of the same cheap garbage.

I believe this is a recipe for disaster.  

eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

by: matza

Tue Sep 8 07:54:06 2009

The least of anyone's problems are shill bidders..lol

You got a Donohole problem, that's the major issue they have going on.

Clueless in San Jose.

Had an virtual army of sellers and crapped on 'em. Used them and still are manipulating them with best match as their tool, taking their money to finance the so called diamond sellers project who they boost in search which also happen to be some of the worst sellers on the site and don't even own the majority of their own merchandise.

Then they have this so called secondary market thought in the works, which is returned, refurbished merchandise, shelf pulls ect. and at the same time they come up with this other brilliant idea to require a 0.50% satisfaction rate.

Genius huh?

You're going to run a secondary market and all your customers are going to be satisfied more than 99.9% of the time.

I'm telling you that Donohole is CRAZY.
He has to be on drugs seriously!

No retail establishment in American history has a satidfaction rating higher than 99.9% or nowhere near.
Yet this dizzy delusional man expects a mere ebay seller to do so.

He really needs counseling.
Something has got to be wrong with him upstairs.

I don't know which form of ebay in the last 2 years I like the least.
Was it the be like Amazon month or was it the costco month or was it the overstock week or this months diaries of a car dealer.

Running the manipulated marketplace isn't going to get the donut-Ho anywhere. He has to try and create some more "glitches" to help him steal some more money.

That top seller badge is going to hit some bigger sellers hard. Just wait till all the ranting and raving you're going to hear in October.

More noise for the HO coming right up!

eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

by: matza

Tue Sep 8 08:00:58 2009

@ jo

You're right, problem is they have a guy running the site who has NO IDEA what he is doing. I'm seriously having doubts he's sane. He could be a danger to society for all I know.

I imagine we will all see him one day on CNN in an orange jumpsuit talking to a reporter from prison.
If he runs ebay this crookedly, just imagine what he does in his everyday life. This is not an honest man. I bet he's into a lot of things we all don't know about yet.

eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

by: Harriet

Tue Sep 8 08:29:34 2009

If everyone who is reading these blogs would just go to some of the other sites and merely look around, they would be surprised. You will see the things you have missed on eBay for a while now.

Make a purchase, even a small one to get the feel of the other places. Let's help each other out with more exposure.

Some of the good ones are eCrater.com, Bonanzle.com and Etsy.com. Oh, eBid also.

it's high time to open the horizons and see what else is available.

We love to sell and we love to buy online. eBay is no longer the only game in town. Time for some fresh new vistas.

eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

by: Ebay Pays My Minimum Monthly Payment

Tue Sep 8 09:14:53 2009


Sellers still complain that they have tried other sites and they still say that they are not as good as Ebay. I can understand that but I wonder why these people don't have their own websites? Even people with no knowledge of building a website can do it.

eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

by: Ebay No More

Tue Sep 8 09:38:07 2009

Lofty goals from a management team that can't even effectively manage their own site. Like everything else Ebay has done in their history it's a great idea in theory. Unfortunately it's the usual poor implementation and delivery that gets Ebay every time. I'll worry about my business when Ebay's site quits having glitches and software works properly. Until then I'll consider it business as usual for Ebay.

eBay Pushes to Liquidate High Volumes of Retail Inventory   eBay Pushes to Liquidate High Volumes of Retail Inventory

by: Sleepless in Chicago

Tue Sep 8 09:47:05 2009

Could this be more big bubbles no troubles?

Donahoe tried to get Zappos and failed.  Donahoe got GM and look how bad GM is doing... This may fail also... Or is this just wishful thinking on my part?

I have always had a feeling that reputible businesses like Zappos no longer want to do business with Ebay because they can make it on their own... So they are going to be left with clients like liquidation.com??  What if these retail liquidators back out???

Donahoe always paints a pretty picture but in reality, it seems everything he plans fails....

I closed my store and they sent me an email saying I was a "Top Rated Seller" and they want me back, etc...

I have a feedback score under 500 so what does that tell you??  I think they are trying to get small sellers back because they are desparate... 5 free listings, etc...

Donahoe's plans are not working out... He is desperate...  When Ebay finally collapses and they fire Donahoe, maybe then it can be rebuilt???

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