eBay to release new weapon in the 'selection' battle - InDemand

**Update - several commenters have correctly pointed out that I neglected to mention that the criteria for a seller to use InDemand is that you have to be a PowerSeller with 30-day DSRs over 4.8.  I agree this is a very high bar, and I'm already on the record with my top 5 reasons DSRs are broken here so don't shoot he messenger here. If you want access, might as well send an email to 'indemand@ebay.com'.

ChannelAdvisor and some of our eBay selling customers have been giving eBay some beta feedback on a new program they are calling InDemand.  eBay was kind enought to let us blog about this before it hits the radar (with the stipulation that we didn't have to pull any puches of course).

Introducing InDemand

The general idea is as follows:

• eBay is (finally!) starting to get some religion around the importance of selection. The prior regime implemented many policies that in my opinion hobbled selection at eBay - frequently I tell folks that eBay "cut off its long tail".  On the flipside of that coin, Amazon around the same time (mid-06), realized that mid-size retailers can bring some really interesting selection to the site that is filling out the long-tail for Amazon.  They priced their third party offering with this in mind (high bar, but once you are in, no listing fees).
• There are two major hurdles to selection on eBay: 
  •  Information - eBay has tons of data on who is searching for what, what listings are being watched, what millions of keywords they are buying from google, etc.  However sellers never have access to that data.  When your supply is blind to demand - it seems obvious that there will be unmet demand due to a fundamental lack of information parity.
  • Channel Pricing -  Frequently eBay's listing fee, final value fee or both can make it uneconomical for supply to come to the site.  For example, everyone in the media categories knows that the ebay fees make it a non-starter for brand-new items to be on the site, thus eBay tends to not have big slices of 'recent releases's on the site.  (mini rant - In my opinion,listing/insertion fees are the archenemy of selection.  eBay argues they are quality's friend, but personally I worry more about selection and quality will take care of it self if you have a good search/finding experience.)
• Enter InDemand - InDemand is a microsite at indemand.ebay.com that looks to address the two selection challenges (Info/Pricing).  It does this by first providing a list of 'in demand' products based on eBay's research (this addresses the Info problem). Secondarily, InDemand gives eBay the ability to offer spot fee discounts (listng+FVF based on my understanding) for the products it feels are important for selection but due to the very broad fee structure, that product is not coming to the site.   

Did you say lower fees for InDemand items?!?!

I think this 'item level fee discount' capability and big strategic change on eBay's part in thinking about eBay fees (we went from global to geo to category and now to item) is the equivalent to a tectonic shift and worthy of a moment of reflection....

Ok, now let's dig into InDemand more.

How InDemand works

A seller logs into indemand and is presented with the entire list of indemand items.  In this screen shot below you will see there are currently 510 items.

 

If you look at the first item here - a book, you'll see a couple of things of note:

• First, you'll see every InDemand item has a 'eBay Product ID' associated with it.  This looks like eBay starting to head to a more Amazon-like ASIN model.  I guess now we have EPIDs and ASINs (that one is for the readers that always comment about my copious use of TLAs).
• Next, if you look at the little box at the left, that's where you'll see any promotion (listing/fvf fees) associated with that item.  At the time of this writing none of the items have promos, but eBay swears they are coming. 
• Next, there's a 'currently' on eBay link that pops a new window with all of the listings on eBay right now for this product. 
• Finally, you'll see there's a 'sell this item' link. This link will take you to SYI which is pre-populated with that products information.

Use case

Let's go through a use case. Let's say I'm a Lego seller and I'm going to order some product tomorrow.  I go to indemand and search for Lego: (full disclosure - Lego is a ChannelAdvisor customer and I'm a Lego customer).

As you can see there are three lego items InDemand, two video games and one toy.  If you click on the toy item, the details are displayed:

So now I know exactly what SKU we are talking about.  Next, I click the 'currently on eBay' and am tickled that there are none on the site.  At this point, I may check pricing on other sites to get a feel for what the item is going for and where I need to be competitive on pricing.

(Interestingly enough, when I do a text search on eBay for "Lego Star wars jedi starfighter hyperdrive" I get 14 core results and 15 store that look like the exact product.  This points out the tough transition eBay faces form text-based wild-west to catalog-based organization.)

Anyway, pretend there aren't already 30 of these on eBay, I go to my supplier, source this item and now am the first to sell it here (at least in the catalog) and enjoy the benefits of any reduced fees as well as what should be some fast selling product since eBay is telling me there's lots of demand and a lack of supply.

eBay tells me InDemand has triggers that will monitor the supply and pull the item once the desired number (not published) are listed.

How do the fee discounts work?

I suspect the top of mind question for most readers now is how does the fee piece work.  Here's a brief excerpt from the InDemand FAQ:

"When do I receive the discount?
If an Insertion Fee discount is offered, you'll receive the discount at the time of the listing. If a Final Value Fee discount is offered, it will applied at the time of the sale.

How long does a discount last?
A discount is valid if units are still needed and the promotional period has not ended.

How do I find out the quantity needed for a certain product?
The first line of the listing requirements indicates the quantity of a product that eBay is looking for.

Do I still receive my PowerSeller discount?
Yes. Any In Demand discount will be in addition to your PowerSeller discount."

I also asked eBay:

Q: Do sellers have to list the item via InDemand to receive the discount?

A: No - as long as you list using the catalog/item specifics during the promo period (live on InDemand), anyone will receive the discount regardless of if it originates via InDemand.

So think of InDemand as a guide to items that are 'on sale' from a seller's perspective on eBay and you are free to list those items however you want.

How does eBay determine what's 'in demand'?

The next series of questions I had were around the demand calculations.  eBay was pretty closed lipped on this, but I get the feeling they look at several sets of data including:

• Catalog coverage - one of the nice things of having a catalog is you can run queries such as "how many catalog items have zero listings".  That's an easy one.
• Search data - ebay has a wealth of on-site and off-site search data and subsequently knows how many results are returned.  Another interesting query would be: 'show me the top search terms internal+external that have null search results.
• Closed loop data -  John Donahoe (JD)  has been saying for years that ebay has the most ecommerce data on the planet and I agree this is an asset that has gone somewhat unused at eBay.  This data is a great gauge of supply and demand. Historically eBay has licensed it out at very expense rates to tool providers with somewhat mixed results.  At ChannelAdvisor we have elected to not license this data because of the lack of structure and usefulness at the end of the day. With InDemand, you could really finally see eBay using this data to figure out which products have unusually high conversion rates and then make sure the marketplace continues to fuel that demand such that it doesn't go off-site.  

One item to watch is how automated the indemand listings are.  I get the sense that there's some manual steps to the 'demand calculation' process so we may not see ebay update the list as frequently as you may like going into the holidays.  That being said, I'm sure if this product is successful (easily measured BTW), then I could see eBay making whatever the next step of investment is to automated the calc+gen of the indemand listings.

Yes it works with third party software! (but we want APIs!)

While InDemand has a handy link to the SYI form for those sellers that use SYI, eBay assures us that a listing of an InDemand item via ChannelAdvisor and other third-party software will receive the discounts.

Long-term what we would love is APIs into the indemand items. Here's why. Our customers typically have their entire inventory in our software (hosted or via a datafeed) and then they send subsets of that inventory to different channels. Imagine if we were able to ping the Indemand database and highlight in the CA complete inventory screens the items that are 'InDemand'.  This would cut out several steps for the sellers of going back and forth which in today's time-limited world can be a big friction point for new systems like this that do things onesy-twosy.

What does this mean for the eBay/Amazon battlefield?

As far as I know, Amazon doesn't have an equivalent to InDemand, but they do provide a very rich set of APIs that provide lots of transparency on demand.  For example, as a developer you can call APIs that tell you which items in the catalog have zero listings, which ones have 'wish list' items set, etc.

Thus it seems Amazon is taking more of a platform approach here - provide the APIs and third parties will innovate whereas eBay is taking more of a 'if we build it, they will come' kind of approach. 

Also with Amazon as I mentioned because of the fee structure, sellers spend zero time worrying about which products to list there, because they just list them all.  So something like InDemand would only be interesting to Amazon sellers that are looking to source more specifically for that channel, vs. identifying items they already carry that maybe a good match for the marketplace.

On eBay I suspect the InDemand usage will be both for items in-stock and for sourcing.

Conclusion

InDemand is an interesting step from eBay because it shows eBay is willing to head into some previously unknown ground:

• InDemand is the first eBay foray into SKU-level fee discounts
• InDemand is the first time eBay has focused on selection at such a granular level
• InDemand gives us a glimmer of hope that eBay is opening the kimono on some of the great 'demand data' they have kept behind iron curtains for 10+yrs.  I'm a strong believer that marketplaces thrive in transparency so hopefully this InDemand experiment will finally convince eBay that's the way to go.

For these reasons, I think its going to be a very interesting offering to keep an eye on and you can count on eBay Strategies to continue to keep you up to date on it.  You can see a path (small probability, but it's there), that InDemand can be like a lizard and help eBay regenerate it's chopped off long-tail, but we've got a good 12-18 months before we can see if that's happening or not.

Stay tuned and as always I'd love to hear your thoughts in the comments.

SeekingAlpha Disclosure - I am long Amazon and Google.

Comments

[Mike Lee]

I am an EBAY seller for over 10 years,
nearly 100% feedback over 1500

Now in October, 2 unknown buyers slammed me with low DSR ratings,
as result I am banned from selling, and because I had less than 10 DSR in the last mouth the whole year is rated, not just the last month, so because Im a small seller, I will be banned for the whole year, until those two bad dsr have dropped off,,,,
I was told some buyers are intentionally giving low DSR's to hurt other sellers so ebay is force to look at it's bad policy.

I won't do that, because it is hurting other sellers.

Super foolish policy, very unfair.

[Fight Vero takedowns]

Fight that Ebay Vero takedown - http://www.Bogustakedowns.com

[MR SMITH]

This post was removed by ebay from ebay forums on 11/7/2008 the original poster is a hero!! Everyone is complaining, this poster told us exactly what is wrong with the new search.
THIS IS A MUST READ!!!
Are you experiencing slow sales?, look at your item views, they are
not being viewed. The ebay policy which was suppose to give the
buyer a good experience and reward you for giving good service and
free shipping, is in conflict with the new search. Have you worked
hard to keep up your dsr's and positive feedback? It does not matter
with the new search, Is your search standing raised? It does not
matter. Did you offer free shipping to get a better search standing ,
It does not matter. Here is the cold hard truth. The new search
rewards sellers with lower feedback, lower dsr's, and policy
violations. Here is how it is. Those sellers are pricing their items
dirt cheap, when they do so, they sell more. They are placed as the
first item at the top of the page if they sell more, no matter if it
is bad quality, bad customer service, bad shipping , or whatever,
they get top search because they sell more. So ebay telling you that
you have a raised search is not true, the truth is if your cheaper
and I mean a lot cheaper, you are number one in the search standing in ebays eyes. If your
selling a better quality item you are cheated. I urge you to
COMPLAIN TO EBAY. Contact ebay customer service and complain
today!!! Contact the BBB in San Jose CA. This is absolutely true I
have had several people investigate, I JUST SPOKE WITH EBAY, THE REP
AGREED IT WAS WRONG AND THAT IT WAS VERY UNFAIR, THE REP CHECKED
ACCOUNTS AND AGREED WITH ME AND SAID SHE WOULD PASS IT ALONG. IF
THEY ARE NOT LISTENING TO THOUSANDS OF SELLERS, THEY ARE NOT GOING TO
LISTEN TO ONE REP. MAKE A COMPLAINT! DO IT! IF YOU DO NOT, NOTHING WILL
CHANGE. This was all planned, it is a scheme to get you to list
more, list with free shipping which raised your FVF, didn't it. It
all did not matter, it increased ebays revenue, and your sales have
nose dived. I fell into the trap I have 900 listings with free
shipping, and my sales are way below what they should be. I looked at
my active listings no views.

The seller posting this is completely right.
We also recommend you contact the District Attorney's office in the county where the business is located to file a complaint. Many local district attorneys, through consumer fraud units, prosecute fraudulent practices in their communities. You may contact the Santa Clara County District Attorney's office at the following:

County of Santa Clara
Office of the District Attorney
70 West Hedding Street, West Wing
San Jose, California 95110
Telephone: (408) 299-7400
E-mail: webmaster@da.co.santa-clara.ca.us
Web site: http://www.sccgov.org/portal/site/da/

In addition, we suggest that you contact the California Department of Justice, Office of the Attorney General (AG). The AG's office establishes and operates projects and programs to protect consumers from fraudulent, unfair, and illegal activities that victimize consumers. The AG enforces consumer laws by seeking injunctions and civil penalties and has jurisdiction to stop a particular business practice and seek penalties for violations of the law. For more information, please visit the AG's Web site at http://www.caag.state.ca.us, or contact the AG directly at the following:

California Department of Justice
Office of the Attorney General
PO Box 944255
Sacramento, CA 94244-2550
Toll free: (800) 952-5225 (in California)
Telephone: (916) 322-3360
Web site: http://www.caag.state.ca.us

You may use the following link to the California AG's office to file a complaint:
http://ag.ca.gov/contact/complaint_form.php?cmplt=CL

We hope this information is helpful.

[Kirk Holbert]

That margin between a 4.6 and 4.8 DSR is HUGE and I suspect that it would take FREE Shipping to gain such. Amazon is a far better market for me.

[popular ebay item]

ebay should open the demand data to all the users. At least some applications like google trends.
BTW, DSR is total a mess and it will cut lots of small casual sellers and the wonderful items on long tail .

[joe]

Yeah, they won't let me in, though I think I have all the proper stats. I only sell in Motors, most of the time, so maybe that's it.

I SO love Ebay, again. My hometown, too. Very sad.

JC

[Carolyn]

Maybe eBay should split into two divisions: one, an etail venue for power sellers and the other, the old original, FUN eBay for smaller sellers.

[CJP]

This page http://indemand.ebay.com/faq.php claims you have to be a GOLD Powerseller to qualify. Can that possibly be true???

[Brian]

Apparently you have to be a GOLD powerseller to qualify! That sucks!

[Independent Seller Who Qualifies But....]

This will be of great use to high volume, virtual-only inventory, ebay sellers like Buy.com whose DSRs stay mysteriously locked at 4.8 and above. :-)

We all know that Buy's permanent 4.8 for shipping time is fiction. Can't wait to see the DSRs for the upcoming corporate diamond sellers class of 2009.....

[Mike]

Does In-Demand apply to eBay Motors?

[C]

Typical, eBay says my 4.8's and 4.9's are not high enough to qualify.

[Joe Imhof]

Two things...

Regarding when you say "(Interestingly enough, when I do a text search on eBay for "Lego Star wars jedi starfighter hyperdrive" I get 14 core results and 15 store that look like the exact product. This points out the tough transition eBay faces form text-based wild-west to catalog-based organization.)"

Just a note on that, Amazon also has LOTS of problems with that. Correctly matching items NOT matched, and even worse, they often match incorrect items, and customers get wrong stuff because Amazon incorrectly combines for example as happened yesterday, A Notre Dame Dog Collar with my listing which is a set of Collar, Leash, and ID Tag. So its not just ebay...

Secondly, How will we do this matching when using CA for above? Create the item and ad, and then go into the Item specifics on the Channel Advisor ad page, and what, look for the specifics that are same as noted in indemand?

Thanks

[Dave W]

Scot

One thing you failed to mention is that this program is only open to PowerSellers with 4.8 and above DSR's and have an Excellent or Good rating.

It also has very little value in my mind for antique and collectilbes sellers, but will wait on my final decision on this for reports from sellers who can access the tool.

Again, another step towards etail and away from the sellers who made the site what it ONCE WAS.

[HarleyGlasses]

Scot interesting.... Amazon does have an In-demand feature. It's called the top 100 in each category. Ranked by real sales data. Buyers vote the item up with their dollars.

If I were launching a new wiget, I'd hire some bots and farmers to "search" for my item on eBay. This biatch will be gamed in no time, making it totally usless.