eBay Strategies

Live blogging from Overstock's partner summit in SLC

I'm out in Salt Lake City (first time - very scenic!) today at Overstock's 2008 Partner Summit.

Background:

ChannelAdvisor is one of two vendors that are directly connected into Overstock's backend which allows our customers to post their products directly into the Overstock shopping site.  We call this Overstock Shopping at ChannelAdvisor, not to be confused with Overstock Auctions.

This has been the 'little channel that could' for us and exceeded our expectations.  Overstock announced Q1 results early that exceeded expectations largely due to their partner (third party or 3P in industry lingo) sales.   Some highlights from Q1:

• $200.7m in revenues - up 27% y/y (this is faster than ecommerce)
• The direct business grew 13% y/y (26% of total)
• Partner (3P) business grew 33% y/y (74% of total)

The analysts reports I've seen forecast that in 08 Overstock will do about $1b in GMV and if partner stays at 75% or more, that will make overstock the third largest marketplace:

1. eBay - $50b GMV (global)
2. Amazon - $2-5b GMV (global, 3P only, estimates)
3. Overstock - $750m

Against eBay it seems tiny, but when you take eBay and cut out international, autos, collectibles and a couple of other categories, you can see that Overstock can be a material channel.

Report from the 08 Overstock Partner Summit
Today's summit was kicked off by Overstock CEO, Patrick Byrne.  Patrick gave about 30mins of prepared remarks and then went into a long Q+A session touching on a really wide variety of topics.  Patrick is quite a character and I always find his talks very interesting, this was no exception.  (Plus as a Star Wars fan, I always appreciate the Sith Lord references even if I have no idea what/who he's talking about ;-) ).

That was followed by some updates on new technologies that Overstock is working on and then a marketing update (lots of TV ads coming, they look good).

After lunch, I'm up to give an ecommerce overview and then there are more detailed sessions around returns, and other issues important to O's partners.

The Mood

There are approximately 250-350 people here representing Overstock's top partners (easily as much GMV in the room as a CA catalyst, ima or pesa gig, ebay gig, etc.).  The mood is interesting, this group is very much down to business.  Overstock uses the partner term for 3P's and this group leverages that to push Overstock to do more, faster, bigger, better.  Overstock does a great job of being humble, admitting whatever shortcomings they have and taking the feedback to mull over.

Definitely no vibes around the economic slowdown or anything like that here in SLC.  More as it comes.

SeekingAlpha Disclaimer: I am long Google

**UPDATED** eBay reveals DSR and discount stats at PESA event

**UPDATE on the post below***

Usher who works in eBay's PR department posted a comment that I wanted to surface here on the main post:

Scot - on the 63/30 question:

63% of ALL PowerSellers got *at least* a 5% discount. 
30% of ALL PowerSellers got a 15% discount (double our expectations)

Let me know if you have other questions. New Orleans is great, hope London went as well as the reports I've heard. Safe travels.
-Usher

So by this math, it seems that 33% of sellers got the 5% discount and 30% got the 15% discount so a total of 63% got a discount and 37% did not get a discount.  Thanks for clarifying that.

Also, reader 'Eric' posted in the comments some interesting math about the 5 stars on S+H stat and how while that sounds great, but if you look at the math it still adds up to below a 4.5 depending on how the other non 5-stars come in.  Eric points out that we need hundredths on DSRs and I couldn't agree more - eBay definitely needs more transparency on DSRs and that's a great way to do it without de-anonymizing the system.

**and now for the original post**

I couldn't make it this year due to Catalyst UK, but we have several folks at the PESA event in New Orleans where Lorrie Norrington (head of eBay marketplaces) spoke today.  Evidently (according to the ChannelAdvisor attendees and Randy Smythe's twitters), Lorrie revealed some interesting stats:

• 72% of S+H DSRs are 5.0 (I believe this for S+H time, but not cost - that one has to be lower IMO)
• 63% of PS'ers got the 5% FVF discount
• 30% of PS'ers achieved the 15% discounts
  • This always confused me, does this mean that 93% of PS'ers got a discount or is it inclusive - in other words did 33% get the 5% and 30% get the 15% and thus 37% of powersellers did not get a discount?
• More fee changes (also messaged in the UK) are coming
• She also said that seller's are eBay's customers

Would love clarification on the 63%/30%/33%/37%/93% item if anyone has it.

The last part of Catalyst UK - play.com, DSRs, consumers, etc.

Tuesday afternoon we concluded the UK ChannelAdvisor Catalyst event with a flurry of activity.

Play.com's head of their marketplace (called PlayTrade), Luke Taylor presented an interesting overview of PlayTrade.  This is another datapoint in a trend we are seeing in the States that was started by Amazon - the addition of third party marketplaces to internet retailer sites.

In fact, Play.com is very analogous to what we saw with buy.com in the US. These retailers have spent lots of time and effort carving out a brand and customer base in specific categories and now are looking to leverage 3P to add new categories and explode selection.

What's the play?

Luke revealed some interesting elements of PlayTrade:

• Play was started in 1998, by some Jersey boys (and not the Bruce Springsteen variety)
• Play is the third largest online retailer in the UK, second only behind eBay and Amazon
• They enjoy 7.6m registered users, of which 3m were active in the last year.
• They did approx £340m in sales (that's like a zillion $ US with the current weakness in the dollar ;-) )
• They are primarily a media seller (book/music/video/games)
• They soft-launched third party in 2006 and then really opened it up in Q107
• GMS is in the tens of millions of £ in the first years
• 10 sellers or more are projected to do over £1m turn over

Play believes they offer merchants the following benefits:

• Bring customers to the site - play.com will spend over £8m to bring customers
• Strong IT infrastructure
• Every claim is reviewed by a human to protect the seller - they have merchant-oriented dispute resolution
• Every ProTrader is given an account manager - so lots of relationship/human touch
• They treat sellers like partners and recognize/appreciate that it's the sellers that are making the 3P a success.
• Merchants gain easy access to the £7B UK media market and buyers
• Zero risk.  They didn't mention specifics on fees, but did say there is no listing/subscription fee
• He talked about the importance of repricing and being competitive
• Their goal for PlayTrade is for it to exceed their retail business in < 10yrs
• They manage sales in UK+EU and deal with the currency/CBT issues
• There's some kind of reward system called PlayFunds that sellers can earn and are then able to buy items on Play.com with those funds.

DSRs

After Play, I ran a DSR workshop with a TnS rep (Richard) from eBay that was very interactive.  A couple of differences that came out between the US+UK of note:

• BestMatch in the UK does disadvantage sellers with low DSRs, but currently does not advantage like the US does.
• Richard highlighted that while PS'ers don't get that benefit, the seller fee rewards are much higher in the UK.  It's interesting to see eBay testing different fee/benefit/disadvantage schemes globally to learn what works best and it's important to keep up with as it can be a harbinger for the future of each market as they adopt the best schemes.
• The top tier of seller's in the UK are in the 4.6 S+H cost DSR.

We reviewed some DSR best practices and took quite a bit of Q+A.  As in the US, business sellers in the UK are resolved that DSRs/BM are here to stay and working on improving their businesses to take advantage of the monetary benefits.

UK Internet consumers

For the final session, we hosted 8 internet buyers of different demographics from around London.  This was very interesting and here are some highlights I jotted down:

• 7/8 use google to shop online
• Several buyers had a bad ebay experience at one point that caused them to be reluctant to shop there again.  (this jives with my feeling that eBay must do more about guaranteeing transactions)
  • One lady bought a £50 item and it didn't arrive and she could't get through the eBay refund process - a very common problem I hear about from consumers.
• Most buyers would not by from a small retailer, UNLESS it was less expensive or took something like PayPal.  PayPal seemed to make them feel better about using the less known brands.

It's a Wrap
Catalyst UK was a huge success, with registration up over 2X+ last year. Thanks to the CA UK team for a great event and to the all the attendees for taking time out of your busy schedules to learn more about multi-channel online selling.

Comparison Shopping Engines in the UK

Over on our sister site, CSE Strategies, we have coverage of what's going on with Comparison Shopping Engines (CSEs) in the UK and EU that will be of interest to anyone selling in multiple channels.

PayPal at ChannelAdvisor Catalyst UK

Carl Olav-Scheible from PayPal EU gave a great presentation today.  From a US perspective, it never occurred to me how important the cross-border trade (CBT) elements of Paypal are here in the EU.  According to Carl, buyers in Europe leverage PayPal for a CBT solution as frequently as they do for convenience and security.

It also seems like Merchant services (off-eBay Paypal) is doing very well here in Europe, Carl cited some stats I hadn't heard before:

• 13/50 of the top internet retailers in the UK take PayPal
• 10/50 of the top internet retailers in Germany take PayPal
• 15/50 of the top internet retailers in the rest of EU take PayPal

In the Q+A Carl answered many questions.  One that was interesting from a US perspective was around echecks.  Carl mentioned that 2-3% of payments are echeck and it's a solution for those people that don't have funds in their account.  The seller that asked the question mentioned that the user communication on echecks needs work as it tells the buyer it will take 2-3 days to clear and in reality it's more like 10 days.  Carl agreed that there is much room for improvement (we hear this from USA sellers too) and said they are working on it.

There were questions about the seller protection plan in the UK. Evidently it's capped out at 500 pounds.  Carl mentioned that they are looking at increasing it. He suggested 2000-10,000 as the potential range. They are also looking into how they can 'remove the asterisks' from many of the protections.  Asterisks are the little fine-print exceptions in the SPP that cause sellers to take a hit.

eBay glitch locks out large sellers, discount listing day and more eBay news.

Catching up on some general eBay items that I haven't seen blogged about yet:

eBay glitch locks out large sellers
I don't know the impact, but it seems to be widespread that yesterday (4/21), eBay locked many large sellers that list hundreds/thousands of items out of their accounts with this message:

Attention Seller
 
We've noticed an unusual spike in activity on your eBay account. As a routine precaution, we've placed a temporary hold on additional listings pending further review. This hold is not visible to buyers and will not affect your current listings. This action is part of our ongoing efforts to monitor and preserve the safety of the eBay marketplace. We will contact you within 24 hours if we need more information, and will notify you by email when the hold is lifted. "

 One ChannelAdvisor customer was able to get their account manager to admit that the bug was caused by the system looking at the absolute number of listings vs. a percentage so if you listed hundreds of items, BOOM you were locked out.

Discounted (ten cents) listing day for powersellers on 4/22 in the USA
eBay announced a listing promotion for powersellers only.  To my knowledge this is the first time they've offered a listing promo like this to powersellers only.

Reading the announcement details, I was also suprised to see that this promotion was sponsored by monster.com.  This is the first time I've ever seen anything like that as well.

I wonder what it costs Monster to sponsor a .10 listing day for powersellers?

eBay stock down on analyst's comments
When checking the market while here in the UK, I noticed an unusual drop in eBay's stock price. After some research, some articles referenced Jeetil Patel at Deutsche Bank's weekly eBay update.  I read the piece and wanted to share some of Jeetil's findings.

First, Jeetil's overall thesis is that the price changes made in Q1 are hitting diminishing returns.  This is based off of two data points: listings and pageviews.

On listings, Jeetil had some disturbing data showing that UK listings are down 19% y/y (I don't know if that's due to a tough 07 comp from a listing promo or just plain listings being down). 

Secondarily, Jeetil references the comscore pageview data for the US and globally for US vs.  Amazon as shown here:

As these charts clearly illustrate eBay's pageviews are declining rapidly and Amazon's are increasing.  It's important to note that while pageviews are a generally good way to view activity on websites, there can be underlying changes that may decrease pageviews, but are not a negative.

A good example of this is with search engines.  Very frequently with search engines, the best user experience is to actually reduce pageviews (users hunting for items vs. finding them quickly).  It could very well be that eBay's pageviews are down because of the introduction of BestMatch and users are finding what they are looking for in a fraction of the pageviews vs. before BestMatch.  My guess is that both decreased demand and BestMatch are at work here, but only eBay knows the contribution each is making to that 17% y/y decline.

SeekingAlpha disclosure: I am long Google

Google Keynote from Catalyst UK

This morning, Rob Swerling, head of commerce partnerships at Google UK, gave a great talk.  Rob drew an analogy to the off-line 'off licence' business (alcohol retailers) and compared that to online.  He specifically mentioned one called Thresher's which is popular in the UK.

The off licence retailer in the UK focuses on four things:

1. velocity
2. visibility
3. value
4. variation

• Velocity - make it easy
• Visibility - don't suprise your customers
  • No hidden charges

He tied this to google checkout and the ability to accelerate/streamline the process.

He talked about Google Analytics and Google Website Optimizer as ways to increase the velocity and visibility of items.  Threshens does lots of testing of pricing, special offers, etc.

• Value - offer great prices and also value the shopper's time
• Variation - consumers love selection

During the Q+A there were lots of questions about Google Product Search.  It's my opinion based on what we saw in the US last Q4, that it's very likely that Google will increase the visibility of Google Product Search in the UK this year.

Catalyst UK is underway!

This week at ChannelAdvisor we are hosting our UK Catalyst event in downtown London in this neat wine museum/tasting place called Vinopolis.

The blogging will be light this week as I'll be spending most of my time with UK internet retailers.  However, the folks at TameBay are here and Dan Wilson (great ex-ebayer that is part of vzaar now) and they both appear to be blogging so keep an eye on their reports.  I'll try to summarize tomorrow as the event winds down.

Here's a quick summary so far:

• This morning we had a pre-conference with CA customers and got some great feedback.
• The MD of Red Letter Days, Bill Alexander gave a great talk on the importance of brand.
• I provided a recap of some of the multi-channel trends we are seeing.
• Next, eBay.co.uk's MD, Mark Lewis, gave a great overview of the changes eBay has made and then messaged that many more changes are coming.  The message of 'change' and partnering with sellers is definitely crossing the pond from San Jose to London.
• Right now, Colleen Aubrey who runs Business Development for amazon.co.uk is talking about Amazon's offerings in the UK, how to own the buy-box, etc.

Up next we have a dinner cruise on the Thames and a chance to meet many comparison shopping engines.

It's baaaaaaaaaccckkkkkk!

Thanks to readers for letting me know that eBay's BayEstimator utility is back online!  This is a great move by eBay to continue to give sellers the transparency they need to be successful on eBay.

I also noticed a new utility called eBaySaurus (no it's not a dinosaur, but more of a thesaurus).  This flash-based utility gives you a neat little graph (I believe it's what we would call a cluster graph in geekier circles).

Digg has had this kind of thing for a while called Swarm, and there are web search engines like Clusty with the same concept.

Here's an example of star wars where I drilled in and learned that star wars posters is one of the top searched items in the universe of star wars items.

eBay admits that they may sell (a.k.a dispose) Skype (yeah!)

There have been tons of rumors swirling around eBay potentially selling Skype and today, according to the Financial Times (they yellow paper newspaper) John Donahoe said:

"What we're testing this year are the synergies," Mr Donahoe told the Financial Times this week after Ebay reported its latest earnings. "If the synergies are strong, we'll keep it in our portfolio. If not, we'll reassess it." That could lead to the disposal of the business, he indicated.

I think we can save eBay a lot of time on this one and say the synergies from a seller's/eBay marketplace point of view just aren't there.  The best way to leverage this puppy is to throw some ads (banner/search) onto the desktop client and at least monetize all those people staring at Skype all day while they enjoy their near-free phone calls.

In the same story, JD said that they have no plans to sell/spin-out PayPal and that it is very attached to the eBay/marketplace business (I agree on this one).  I haven't had a chance to chat with Scott Devitt, but he's going to shed a tear on this one as almost everyone of his reports lately has some interesting/compelling reasons to the contrary.

P.S. I worked for a division of a big co. once upon a time where the CEO said they may "shed" it (JD says "dispose"), and once that was out there, the employees scattered like... (insert your favorite vermin: rats, cockroaches, etc.). It wasn't really a "hey let's get fired up" kind of an event.

SeekingAlpha Disclosure: long Google!