Can a Big Brand Make it on eBay?

By Scot Wingo

With e-commerce growing in the double digits this year, more retailers are turning their attention to selling online. Traditionally, larger retailers have stuck to bidding on keywords to drive traffic to their websites in hopes of selling product there. Savvy retailers, however, have realized that eBay shouldn't be ignored.

Given the current tenuous state of the economy, large retailers are looking to further diversify their businesses and grow sales by venturing out to other online channels. While in the past launching a new marketplace on a site such as eBay presented challenges for large retailers from a technical and business standpoint, that's beginning to change. As opposed to its traditional auction-style listings — which are generally less attractive to big brands that don't have the flexibility to compete in this environment — eBay is moving toward a fixed-price marketplace. It's also lowering its listing fees.

These changes should encourage large retailers to bring their full catalogs to eBay to tap into the potential of the marketplace's 90 million active shoppers. One well-known brand is already doing this. In general, while large retailers often have held misconceptions that they can't be successful on eBay, the rewards of shopping on the site may soon quell their reservations.

eBay's Fee Structure
As an incentive to bring well-known brands to its site, eBay has reorganized its fee structure to focus heavily on a fixed-price format. In fact, fixed-price listings now account for up to 60 percent of eBay's sales. This provides retailers a low-risk opportunity to list their full catalogs and pay a commission to eBay only when a sale is completed. This change is vital to attracting large retailers to sell on eBay, and is more in line with other online marketplaces such as Amazon.

An important aspect to every successful e-commerce strategy is determining when, how often and how many items are posted to the marketplace. eBay's new fee structure further emphasizes the importance for retailers to get their full catalogs posted and maintained on its site in an efficient way.

If best-sellers aren't posted often enough, potential sales may be missed. If they're posted too often, the marketplace might become flooded and revenue can be lost. Large retailers should work to optimize this balance and develop a software schedule to keep a specific number of listings live on the marketplace for each item that uses the schedule. When this type of schedule is used with a fixed-price listing, it becomes unnecessary to monitor the listings to replace items that are sold. The software will automatically post a new listing when the quantity in your live product listing becomes depleted, ensuring that retailers don't miss out on future sales opportunities.

Inventory Control
With eBay's efforts to attract more high-volume, large-catalog retailers to its site, it's important for retailers to list and oversee their vast product offerings. Many successful retailers operate in multiple online sales channels in order to distribute merchandise to the largest number of potential buyers possible. Therefore, managing inventory across multiple marketplaces requires an integrated inventory and sales management solution.

Retailers never want to be in a situation where one item mistakenly gets sold to two buyers. At the same time, retailers want to make sure they're not leaving products on the shelf that could be sold to willing buyers. Effective third-party solutions can be used to keep track of inventory, so retailers can spend less time bogged down in the details and more time growing their businesses.

Brand Recognition
eBay's changes offer a number of incentives for large retailers; however, retailers still need to assess whether eBay is a good fit for their brands. Historically, some retailers of luxury brands have viewed eBay as a place ripe for brand fraud, with sellers illegally posting unauthorized items. With the shift to larger, better known brands using eBay as another sales channel, it presents an opportunity for retailers to post their own branded, authorized listings on the site. This gives retailers more control of their brands and presences on eBay.

Retailers can even design a custom eBay store that's completely branded. Coupled with the use of automated settings, retailers can now customize their messaging to buyers via email notifications  and feedback.

Daily Deal Program
Another plus for large retailers on eBay: If you have the luxury of deep inventory for a certain product, coupled with a good price for that product, you could be part of eBay's Daily Deal program. The Daily Deal — highlighted on eBay's homepage — can move large amounts of product, resulting in significant spikes in revenue. Gem Stone King, an online jewelry retailer, sold $230,000 worth of products in one day when it was featured as the Daily Deal.

If you're a large retailer that has either yet to consider eBay or historically avoided it due to its challenges, think again. With eBay's shift toward fixed-price listings — helping it to bring more well-known brands to the site — it's time to re-evaluate and take advantage of the opportunities to further diversify your business, get your products in front of eBay's 90 million shoppers and increase revenue.

Scot Wingo is president/CEO of online sales channel software provider ChannelAdvisor (scot.wingo@ channeladvisor.com).