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Thu Nov 3 2011 22:07:50

Is Price All that Matters in Retail?

By: Ina Steiner

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eBay CEO John Donahoe told attendees of the Open Mobile Summit today that "the concept of e-commerce is dead and buried, since consumers really don't care about where they buy, so long as they get the cheapest price," according to a report in The Register.

While price is really high on the list of what is important to shoppers, there are many factors that go into a purchasing decision. Fashion is a great example of an area where consumers may pay more for what is virtually the same item with one difference - a small tag with the name of a designer.

But it's not just the product - sometimes it's the retail experience that consumers care about. Some may feel more comfortable buying on Amazon, others on eBay. And the same holds true in real-world shops as well.

For instance, we have the luxury of having an enormous assortment of supermarkets in our area, from wholesale clubs to specialty grocery stores to a high-end supermarket. The supermarket with the cheapest prices thrives, but the high-end supermarket with the higher prices does well too. It's in a great location and a very pleasing atmosphere with wide aisles, superb service, and baggers who take the groceries out to your car and return the shopping cart so you don't have to.

That supermarket knows that there are a number of ways to attract customers even without having the cheapest prices.

I encountered a similar experience when helping my sister-in-law buy a major appliance this summer. We visited two retailers and purchased the identical appliance at the higher price because of fast-delivery and a better service plan and warranty. Yes, we were able to negotiate the price down to close to what the other store offered, but we didn't mind paying a slight premium to get the other things on our wish-list.

I agree with eBay's Donahoe that mobile commerce is blurring the lines of retail. But experienced retailers know that competing on price alone is a sure race to the bottom that no retailer is happy to win!




Comments (46) | Permalink

Readers Comments

Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

This user has validated their user name. by: Philip Cohen
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Thu Nov 3 22:51:59 2011

My God, not another shot of this wanker waving his dumb phone around? This headless turkey is a mindless, as is (in my humble opinion) anyone who spends all (or even a little) of their time attempting to buy things of any value via a mobile phone. Maybe I’m just too old but I can’t see mobile phones “blurring the lines of retail”. The eBay Marketplace undoubtedly was blurring the retail experience, and this turkey is doing his best to destroy that platform. Mobiles? Never! This guy is utterly delusional; probably should be certified; certainly should be hospitalized by eBay’s BoD before it is too late, if it is not already too late.

Enron / eBay / PayPal / Donahoe: Dead Men Walking.

Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

by: Rich

Thu Nov 3 23:02:22 2011

He's an idiot and he's wrong.  Price is important but not the only factor. He's ruined a great company with greed and stupidity.  

Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

This user has validated their user name. by: Ric

Thu Nov 3 23:11:01 2011

Price is not everything by any means.

Wal-Mart has been offering low prices yet their same store sales have declined as retailers like Target with slightly higher prices increase their market share. Price is not driving that change, miscalculations by Wal-Mart are..

I get the sense that John Donahoe's statements are little more than an attempt to make recent eBay acquisitions seem more attractive to investors as they drag on profitability. His statements and predictions seem aimed at justifying recent acquisitions by attempting to have them appear to be more cutting edge and ahead of the curve than may really be.

Donahoe's pronouncement that ecommerce is dying is his way of attempting to trivialize the struggles eBay as facing as a result of his own miscalculations. Donahoe appears desperate to keep investors attention by appearing as a visionary in order to appeal to analysts and investors.

Donahoe has a self interest in seeing eBay share prices grow so he can cash in every month to supplement his salary with the proceeds from gifted shares.

In the meantime, small sellers struggle mightily to survive in the anti seller environment Donahoe has conceived for eBay.

If ecommerce dies, it will be due to the concerted efforts of inept - over paid CEO's like John Donahoe who have destroyed ecommerce with destructive innovations that drive buyers away and prevent sellers from thriving.

Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

by: angryjim

Thu Nov 3 23:45:59 2011

Perfectly understandable view of retailing from Donahoe, who leads a company that seems to be seeking out the lowest common denominator in e-commerce.

Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

by: angryjim

Thu Nov 3 23:50:35 2011

''But it's not just the product - sometimes it's the retail experience that consumers care about.''

Which is a kind way of describing ebay as a gutter level selling venue.

Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

by: Kevin

Fri Nov 4 00:32:26 2011

Then why do they use all those metrics like DSR and feedback to raise and lower sellers position in the searches? If only price matters then let sellers battle it out on price.

Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

by: mindelec This user has validated their user name.

Fri Nov 4 00:37:24 2011

has this man ever worked a real day of retail in his life.  i mean retail where you actually have to buy and sell things with the goal of making a profit?

to say ""the concept of e-commerce is dead and buried, since consumers really don't care about where they buy, so long as they get the cheapest price"  illustrates a complete lack of knowledge of what e-commerce is.  if you are buying something online you are engaging in E-COMMERCE, no matter what the price you are paying.

Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

by: Lace
Web Site

Fri Nov 4 00:54:02 2011

That was a major generalization, price is just one of the P's people consider when making a purchase. Many have learnt from the past that there are no winners when price wars are waged.

Lest we also forget there are different segments in the market and that includes people who are willing to pay premium for special service and time saved.

Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

by: Dead & Buried or How low can you go?

Fri Nov 4 02:15:32 2011

Once again JD's main focus is only on new retail where price does seem to matter. However, once again he dismisses the antiques, collectibles, hard to find items usually found in auctions. You know, the fun, the draw, the place to go BEFORE 2008 JD who stated auctions were no longer valid. As far as mobile, new items and eBay are concerned, e-commerce could very well be dying since I only see the mobile consumer where price is NOT an issue, time being more important, fast track AND of the minority, AND eBay NOT being the place to buy. Yes, e-commerce is dead to the elite and to the Donahoes of this world. JD stating e-commerce is dead is IMO putting the kiss of death on his own company. A CEO who verbally doesn't support his own company and would make such a statement? Isn't Ebay an e-commerce site?

Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

by: Red Ink Diary This user has validated their user name.
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Fri Nov 4 02:17:57 2011

As he so often is, mostly wrong. If price is everything why isn't he wearing a Walmart shirt and a Harry Winston watch? Is that an iPhone? Surely he could have gotten just about the same functionality in another brand for a lot less money.

Oh but wait! He is talking about price being so important for us, the noisy masses, the 99% it isn't at all important for the 1%.

I will happily pay more at Amazon because I can find what I am looking for, my time is worth money.

I will happily pay more for made in America because I live here and it is the right thing to do.

I shop at Walmart occasionally but I am not thrilled by how they treat their workers. Now we have a Target I go there more often even though it is higher priced.

Cheap is not the be all and end all except on eBay.




Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

This user has validated their user name. by: Leafgreen
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Fri Nov 4 02:23:20 2011

I have a one word response that shows how foolish Mr. Donohoe is: Apple.

Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

by: ebay.con

Fri Nov 4 03:15:15 2011

It's not the price but what you get for the price and the reputation of the people you buy from.

Would you buy dead batteries for your cell phone because they are cheap? Do good mechanics own chinese tools? Is car insurance for $20 a month a good buy if it has a $20,000 deductible?

Would you buy groceries from a store with cockroaches and rats running around and mouse droppings everywhere because they have the cheapest prices?

Listing fees, final value fees, paypal charge, paypal fee, paypal holds, constant interference, refunding scam buyers, forcing sellers to offer free fast shipping to get exposure. How can a buyer get any value for their dollar when ebay wants all the dollars?

Watch infomercials some go so overboard appearing to give you a good deal  they make a good product look like a cheap piece of junk. Remind you of anybody?

ebay has no class they are the gold toothed, leisure suite wearing Freddy ''don kick the tires or they will burst'' used car salesman of the internet. .

e-commerce is dead and buried. Holiday shopping expected to be okay. Applying paypal holds to foreigners shopping on ebay.com This all sounds like a company running out of ways to steal money from customers going down the tubes fast. FLUSHHHHHHHHHHHHHHH.

Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

by: NullApps This user has validated their user name.
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Fri Nov 4 03:38:23 2011

Price isn't the only thing that matters.  I happen to run a dynamic eBay repricer so I do know that it is an extremely important factor but it is by no means the only thing.  If it was eBay would reduce their prices to allow their sellers to be more competitive than sites like Amazon.

Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

This user has validated their user name. by: Ed Gadfly

Fri Nov 4 08:18:27 2011

Even if you screw people and hold their money they will come back to eBay if the price is low and the shipping is free.

Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

This user has validated their user name. by: Tula

Fri Nov 4 09:11:55 2011

Mobile shopping will be growing in certain areas. In less-developed parts of the world, they're forgoing the old, wired style of receiving internet or phone service and jumping straight to cellular because the infrastructure is far cheaper to deploy. For a lot of people, a smart phone or tablet may be their only internet access. I read an article that projected huge growth in smart phone usage in places like India and China, so pushing mobile commerce does make some sense. However, price won't be the only issue, since consumers will still want a quality mobile shopping experience. If ecommerce sites don't leverage their technology well enough to make mobile shopping easy with high-quality graphics and info tailored to the mobile platform, then it won't matter. If the person can't see enough detail on an item on their tiny smartphone screen, they probably won't buy, good price or not. If eBay focuses only on price, they're going to further cement their reputation as the cheap dollar store of the internet, while those seeking quality will go elsewhere.

Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

by: Elsewhere

Fri Nov 4 10:00:44 2011

This sure explains JD's love of the Chinese bulk sellers and disdain for the small sellers.

But how does eBay balance the push toward the lowest price in the world against their ever increasing fees to sellers? Seems like these are two opposites. Dear Sellers: Keep reducing your prices (and offer "free shipping") to get sales and we will keep taking higher fees from your pockets.

It doesn't take a rocket scientist to see that this is not a sustainable plan!

What a warped view from this econo-sociopath.

Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

by: Bob@eBay21K

Fri Nov 4 11:45:55 2011

February 6, 2008 "We're going to get very aggressive about making eBay easier and safer to use. The Net has evolved dramatically in recent years. Buyers have become accustomed to streamlined purchasing experiences that put a premium on speed, convenience and reliability. While we have made strides in these areas, I am clear that we need to do much more."

April 21, 2008 – Arkansas Democrat Gazette - Donahoe said it is not the company’s intent to discriminate against small sellers. But, he said, “where large and small sellers are trying to cut corners and not provide a good buying experience, we are making less room for them in the marketplace.”

July 17, 2008 – International Herald Tribune - "When you have 84 million active users, any time you make a change, someone is going to be upset," Donahoe said in a call with analysts and investors. "But we listen and we incorporate their feedback with what we believe is best for the collective good of the marketplace."

October 17, 2008 – CNNMoney.com - "We do see buyers moving toward sellers with higher ratings."

Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

This user has validated their user name. by: elpereles
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Fri Nov 4 11:49:01 2011

''the concept of e-commerce is dead and buried, since consumers really don't care about where they buy, so long as they get the cheapest price''

Seriously, is this guy CEO from an e-commerce site? I know people that prefer to buy in Amazon than eBay or other site. Even when they can get the same item cheaper in eB or an Alternative site, but they prefer Amazon.

Last year, I have an e-mail from an buyer that he was interested in an item, but because it was in Blujay. He will not buy it. So I don't believe that BS of the cheapest price. The reality is that some people love a site and they will stay in it.

Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

by: Just a Seller

Fri Nov 4 12:41:58 2011

Ebay is a perfect example for the opposite: Their product (selling platform) is the most expansive around and still they are doing very well - only God knows how.

:-)

Is Price All that Matters in Retail?   Is Price All that Matters in Retail?

by: Independent seller
Web Site

Fri Nov 4 14:50:14 2011

Obviously he's talking out of his hat, since the convenience of ordering via cellphone is not what keeps a customer coming back. It's superior customer service, fast response time and attention to detail. Not the price. If I went into a Cartier store and tried to engage a clerk to wait on me, and that clerk is too busy talking on his/her cellphone to pay attention, I'll turn around and go to Harry Winston. Price has nothing to do with it. But customer service in this case also has to do with treating your vendors right, and from what I have read over the last few years it's a good thing I stopped using eBay a long times ago.

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