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Thu June 12 2014 10:01:41

Why Do Large Retailers Such as ToysRUs Sell on eBay?

By: Reader

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Dear Ina,
Great Blog! I have a question about eBay: I don't quite understand why companies like Toys R Us or Best Buy would want to have stores on eBay. Don't they compete with eBay - isn't eBay just getting customers to go through eBay and then they will take down the Toys R Us and BestBuy type stores?

Am I missing something here - why is eBay helping competitors??

Thanks for any thoughts or clarity!
Dino




Comments (23) | Permalink

Readers Comments

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

by: 1beck3 This user has validated their user name.

Thu Jun 12 10:16:58 2014

I would guess that, even if they're selling for the same price on ebay as their site (which nets them less after fees), they're probably generating sales they wouldn't otherwise from the increased exposure.

They probably consider whatever fees they pay for selling on ebay like an advertising cost. Maybe those ebay sales help build their customer base and drive those customers into their stores.

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

This user has validated their user name. by: Ric

Thu Jun 12 12:17:25 2014

OP asks... I don't quite understand why companies like Toys R Us or Best Buy would want to have stores on eBay.

That is simple. Both retailers were on the rocks and desperate to find a way to grow sales.

In the case of Toys R Us, they retained the services of Bain ( Donahoe's former employer) to help pull them out of their financial mess. The Bain relationship explains why Toys R Us is allowed to continue selling on eBay despite their numerous policy violations and poor feedback which shows them disappointing nearly 3,000 customers annually.

If eBay wonders why buyers are not coming back to eBay, they should look at all the unhappy buyers Toys R Us has managed to alienate instead of blaming their Top Rated Sellers.

In the case of Best Buy, they too are a company desperately seeking higher revenues. Even though they may find plenty of competition on eBay, as an "Diamond" seller, I am sure they were promised elevated visibility, discounted fees and other perks which would help boost their sales on the site.

That said, Best Buy on eBay makes sense for another reason. At the end of model years, retailers find themselves with leftover inventory of items that are discontinued.   In the past, they would take significant markdowns on these items in their retail stores to clear the backlog before new goods arrive.

By selling on eBay, Best Buy has an outlet where by they can move excess inventory of discontinued models without having to incur the significant markdowns necessary in their B & M stores or warehouse liquidation sales.

Yes, the possibility exists that both these retailers could pull buyers to their own websites and away from eBay, however, eBay is also a company that is desperate for revenue.

JD has always been under the misconception that he could significantly boost eBay's GMV by bringing Big Box retailers such as TRS & BB into the marketplace.

Of course, it does not take a genius to see that JD's grandiose plan of eBay riches has simply not panned out as he expected.

Between the tens of thousands of buyers who blame eBay for their disappointing transactions with Toys R Us, the attrition factor of potential buyers migrating to the retailers own web sites, and the number of small sellers who left eBay when these big box retailers came aboard, JD's dreams of growing eBay's GMV have never materialized.

JD grossly overestimated potential revenues, and his grand dreams never materialized. From day one, Donahoe failed to understand why buyers come to eBay.


 

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

This user has validated their user name. by: iheartjacksparrow

Thu Jun 12 13:50:20 2014

That's an excellent question from Dino. I have often wondered the same thing since both companies have their own web sites and their own B&M stores. More than competing with eBay, it would seem that their presence on eBay would be competing with their own sites, since there is a possibility of sellers with the same merchandise as both at lower prices. And as Ric pointed out, the feedback for TRU shows they leave a lot of people unhappy. It seems it would almost be better for TRU not to have a shop on eBay since a disappointed customer there will most likely vow never to shop at a TRU again (I've read that feedback before). At least on their own site their lack of customer service isn't there for all to see.  

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

This user has validated their user name. by: Basset

Thu Jun 12 14:06:33 2014

I've often wondered if they were getting rid of old stock as Ric says, or returns. Surely both stores get a lot of those.  

I have not been in a TRU for years, the last time I was in one they had so much junk you could hardly walk. I've never bought anything from TRU or BB on eBay.

If I were shopping for something at BB, it makes sense to me to start at their own website.

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

by: RCL This user has validated their user name.

Thu Jun 12 15:06:09 2014

Ric--good analysis

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

This user has validated their user name. by: Puck

Thu Jun 12 15:29:58 2014

Toys R Us has a voracious appetite for all the mouthwatering free red doughnuts they receive from buyers.

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

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

Thu Jun 12 17:48:20 2014

Ric's response is spot on; Johnny Ho never had a clue from the start; his dream of turning eBay into the “Westfield Mall” of online up-market commerce was always delusional, particularly when his plan involved effectively destroying one perfectly good commercial model to try to implment his dream. What a shame it is that Bain & Co doesn't take returns on the basis of SNAD!

And the ultimate proof is the performance of eBay’s stock price since August 2007 when the Ho was effectively in control—sheesh! And currently <$50 and “Going Down!” …

eBay Inc, where the incompetent mingle with the malevolent and the criminal, and the just plain stupid ... http://bit.ly/11F2eas

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

by: tony bonn This user has validated their user name.
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Thu Jun 12 18:58:56 2014

ebay, toy r us, and best buy are not competitors per se. ebay is a marketplace - an intermediary, or a broker, if you will. framing the analysis in terms of competition is entirely wrong headed.

many ebay vendors sell on etsy, bonanza, etc - same thing with these guys.

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

by: kazaly This user has validated their user name.

Thu Jun 12 21:51:11 2014

It's all about exposure.
When you consider the advertising budgets of companies like these the pittance they have to stump up for a presence in such a large marketplace is well justified.
Their entire monthly ebay costs would barely amount to a 30 second primetime adspot.
And then there's the data ... mmmm bigdata!

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

by: pfft!! This user has validated their user name.

Thu Jun 12 22:37:19 2014

The whole feedback thing is the thing that just amazes me about these big box retailers.
WHY in the WORLD would a company that has obviously spent MILLIONS of dollars growing and cultivating their "brand"........want to expose that SAME BRAND to the horrible reviews they will receive on a company like ebay.
To be FAIR...I will admit that I think the whole "feedback" thing on ebay is SOOOOOO outdated in todays online marketplaces.  There are much more precise ways to keep track of a sellers performance than "opinion" based public reviews.  
But THAT Said....it just blows my MIND that ANY of these companies would allow their "brand" to be ridiculed on a daily basis and in such a public fashion (whether it's deserved or not).  Honestly, it's just NOT good marketing for any brand.
And once all those thousands of negative reviews (feedbacks) are out there....well....there's no way to put the genie back in THAT bottle  

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

by: comet This user has validated their user name.

Thu Jun 12 22:39:21 2014

I wouldn't say "I will never shop at Best Buy" again because they sell on ebay but I certainly would NOT buy using ebay to GET to a Best Buy item.  That said I find Best Buys own web site completely ridiculous and beyond hard to navigate. Brick and mortar BB for me please.

Toys R Us--Hate 'em and won't go there on line or in person after two seperate bad experiences with their employees in their B&M stores.  Lost me and my kids and grand kids and a lot of our friends.

Almost wish I HAD gotten something from them via ebay to be ABLE to leave a public NEGATIVE,.

But it's not really "competition" so much as it is driving sales towards the companies OWN sites.  Which does in some ways seem--absurd.  

Gee if you and I buyers post 10 or more NEGATIVES PER DAY FOR YEARS--how long do you think WE would last???

No Touchy Toys R Us.

Special built in Pain Relief from Bain

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

by: Gina This user has validated their user name.

Thu Jun 12 23:41:34 2014

Because they can get away with anything-even stealing a "little" seller's photo with total impunity!  eBay probably gives them other perks...for a price of course!  Accustomed to paying for 'advertising', big retailers happily pay for features that us 'noise' little sellers would balk at!

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

This user has validated their user name. by: Rexford

Fri Jun 13 06:42:38 2014

tony bonn says "ebay, toy r us, and best buy are not competitors per se. ebay is a marketplace - an intermediary, or a broker, if you will. framing the analysis in terms of competition is entirely wrong headed."

Perhaps I need to go back and re-read a few posts, but I don't think that anyone stated that BB or TRU are competitors of eBay.  And, eBay is only a venue when they are in court with a luxury retailer. If they were just a venue they would not be micro-managing every aspect of sellers' businesses.

I have never heard Ric or 90% of the posters here state anything "wrong headed" (especially Ric, who is quite brilliant and is always right on target).  Most sellers here have 10-15 years of selling experience and I have rarely known any of them to be wrong when calling out eBay or issues related to eBay.

Too bad that the esteemed CEO and senior leadership do not listen to these seasoned sellers.  Sellers who post here have been right time and time again when they have seen eBay rolling out some questionable initiative that, true to sellers' predictions, is later "sunsetted".    

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

by: doboy This user has validated their user name.

Fri Jun 13 07:02:13 2014

If you don't live in an area with Toys 'R Us close by, ordering online and having it shipped is the way to go.  Ditto on out of stock merchandise or merchandise sold in certain areas.

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

by: pjjc1 This user has validated their user name.

Fri Jun 13 09:40:46 2014

Better see the CEO's speech at the conference. (ON THIS SITE) This is the direction they are heading.Small sellers who built this company are getting squeezed out.  

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

This user has validated their user name. by: Rexford

Fri Jun 13 10:03:42 2014

pjjci, the CEO better hope that he's not squeezed out.  :)  He's looking a little green at the gills these days.

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

by: pace306 This user has validated their user name.

Fri Jun 13 14:07:51 2014

1) costs them nothing to list and sell on eBay - they dont have the same fee structure we do
2) free publicity/advertising/brand awareness
3) money laundering
4) dumping old/out dated stock
5) boastfulness in meetings, to friends and in corporate BS events - "we are the largest eBay seller


stuff like that ... =)

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

This user has validated their user name. by: Ming the Merciless

Sat Jun 14 00:49:27 2014

Ah, that oh so fresh fragrance of new house plants...

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

by: hogwarth This user has validated their user name.

Sat Jun 14 12:47:07 2014

i remember when i got 2 low stars because of 2 sellers that didnt like that i didnt get free ship and my accoutn got restricted and you look at toys r us and all the strikes against them and probably nothing is restricted on them,  ebay at its best

Why Do Large Retailers Such as ToysRUs Sell on eBa   Why Do Large Retailers Such as ToysRUs Sell on eBa

by: Cassie This user has validated their user name.

Sat Jun 14 20:10:52 2014

Pace360 is correct:

I do as a low-cost growth and liquidation eBay still generates millions daily traffic buying or researching value: what one should pay or price goods.

The sheer traffic volume means  separating quality customer base for primary operations.

Abundant clearance inventory is a disservice any business as professional liquidators can devalue a business than serve a solution. So, retailers gets cheap controlled inventory liquidation without hitting their bottom-line plus perks drawing more sales.

The internet retail competition is growing daily early dot com's had their bubble, soon big box as well as established small sites are looking at any angle to stay afloat market changes.Even eBay as new foreign marketers enter the fray this is another  retention angle.

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