2009 a Bumper Year for smaller online venues

By Garry HJ | January 25th, 2010 | Category: Commentary | No Comments »

Anyway you look at it, the two years of disruptive innovation at eBay have created a new form of virtual communism.

Both buyers and sellers, disenfranchised by the sweeping changes to the culture, ethos, and operations of the auction giant, have migrated out across the web, clustering in new homes in a commune-like fashion. Whether it is a form of digital kibbutzism, with new devotees to each marketplace working feverishly for little or no reward in order to build their nirvana, or simply Stanford Leninism sharing out the workers and inventory across a wider pool of workplaces, there can be no argument that smaller online sales venues have benefited from the great eBay shake-out of 2009.

The success stories of 2009 are well known amongst the online sellers – ArtFire, Bonanzle, eBid, eCrater, Etsy, RubyLane and others – they all moved from “also-ran” status into a distinct tier-2 level in the global 3rd-party marketplaces world. Yet it is in the tier-3 zone, which they left behind, that some of the best and steadiest growth has been demonstrated, and some of the harshest culling.

Tazbar, the darling upstart of the UK eBay PowerSeller revolt of 2007, closed mid-2009. Wagglepop yoyoed in an out of existence befor finally shutting its digital doors last summer. A Tazbar-associated site (zolanta.com) also began, faded, and appears to have sneaked back into the scene in 2009. Zolanta uses an effectively out-of-the-box auction website script, like many others in the lesser-marketplaces sector, but that has not stopped it from gaining base-level traction.

Other sites fell by the wayside, and yet others continued to cling on. Ina Steiner of Auctionbytes revealed their results for the Seller Survey of venue sites today. One of the stand-out comment trends (from the sellers) related to sites that felt abandoned by their creators, heavy ratings punishment of those sites. In the basement-tier of elsewhere-sites, this is far more noticeable as there is no strong “community” to support and encourage newbies whilst masking the lack of management leadership. In our own BuildaSkill forums, where members regularly return to fledgling venues to assess them, a couple of venues are emerging as the ones to watch for 2010.

WeBidz.com was first flagged in our forums, by Ed, in December 2008. During that year, they’d seen membership double (to almost 30,000) and listings nearly quadruple to over 116,000. Last year they continued this 3-digit growth rate (far outstripping the ecommerce average), with reported membership reaching just under 30,000 as of this week, and listings surging to 225,000. These numbers may seem insignificant compared to the tier-1 and tier-2 sites, yet they are very similar to eBid’s when I joined them in early 2003. During my first two years on eBid, I made substantial money before becoming “addicted” to the larger marketplace on eBay.

My anticipation is that WeBidz is on the cusp of the explosive growth eBid saw in 2004-5 and again in each summer of 2006-9 following eBay’s seller-angering announcements. Browsing the WeBidz site, I like the compact, max-data-on-screen style – this is the original Web 1.5 style that everyone used several years ago. It is efficient, fast, and encourages participation – none of the glitzy wide open spaces, mega-scrolling, eyeball gymnastics that web 2.0 website design encourages. It’s a “here is the info, which bit do you want” layout – and for busy people, that is far more effective and friendlier, than current image-intensive, bandwidth-gobbling, and cookie-loaded sites built for millionaire users with 200-inch wide-screen monitors.

This “back to basics” design method of the out-of-the-box web scripts is important to the original users that eBay have lost. The pioneers and early adopters were the geeks and near-geeks of their day. They cut their teeth on simple, information-dense, web page usage. They have a nostalgia for it, a “lost love” called Simplicity has increasingly eluded them for years now.

It is in the smaller, underfunded, under-resourced, channels and venues where Simplicity can be found, and the original followers of Pierre Omidyar and AuctionWeb are migrating back to their yesteryear experiences – not in dribs and drabs, but in whole commune and kibbutz migrations of the style that parted the Red Sea and brought down the wrath of the heavens on Sodom and Gomorrah. These “traditionalist” web users are seeking comfort in a familiar environment, and base-level venues are providing them with that, at a cost-to-use that eBay only matches in it’s Oriental sites.

It’s true that sales on these lesser sites are not present in the volumes of the major channels, but that is not the point. Community, and a sense of being respected, are just as important to many people. For pro and full-time sellers, these smaller venues also offer the opportunity to experiment with listing design and verbiage, without disrupting their main revenue channels. For assured-inventory resellers, and self-manufacturers, they offer additional exposure and marketing at zero or near-zero cost beyond time to create the catalogue. And, as more of eBay’s early sellers diversify into having their own website or hosted independent store, that additional online presence is vital.

Increasingly the third-party sales-venue market is fragmenting into niches, and into “local” venues. This too adds to the opportunities for smaller sellers looking for further revenue streams. Any affiliate marketing webmaster will tell you that success comes not from having a single website that millions of people visit daily, but from having a wide portfolio of smaller sites that each receive small numbers of focussed, action-ready, visitors. Online Merchants have gradually and tentatively come to realise the same applies with their virtual and tangible product sales, yet many still don’t think this way and moan about inventory management, and “spreading themselves too thin”.

I expect 2010 will continue to see new sites come and go, and that some sites heading for tier-1 will continue to emerge, while the mid-level players will either move up, or crash and burn to much media coverage. These obvious channel changes will continue to make space for emerging marketplaces at the entry level, but the exciting opportunity remains (as it always has if you think about it) in the “founded-already-now-it’s-growth-time” venues.

Other non-venue sites and services also gained much in 2009. Social marketing tools like Payvment (for facebook) took large bites out of the then tier-2 cross platform service Shopit. Mobile payments such as OboPay and their ilk, emerged so strongly that eBay was forced to introduce a mobile services division. eBay’s allowance of MoneyBookers and PayMate onto the US site allowed both to grow much faster than would have otherwise happened … and 2009 has irrevocably demonstrated that customers like a choice of payment methods. On my own websites, I’ve seen a resurgence in payment by cheque and bank deposit/transfer to levels approaching the days before PayPal existed.

The question all online sellers must ask themselves, is whether they want to ever again be as reliant on a single site (or payment service) as they were during the marketplaces’ golden years of 2005 and 2006.

Those who insist they have diversified, yet remain with the topmost two or three channels only, have not diversified as much as they think they have. How often do we read online lamentations that a top Amazon seller is now being competed against by Amazon, for a product the site never used to personally inventory? How many more changes to punish non-megasellers will eBay roll out next week? Is it true that PayPal will be introducing 21-day holds for ALL payments, on and off eBay?

The steadfast rule of 80:20 – that 80% of revenue comes from 20% of venues, must be kept in mind – if Amazon, eBay, and your own website are your 20%, that means your products need to be on an additional 12 venues to protect sustainability of your business – regardless of the workload involved.

That is where the smaller near-free, or free, start-up and emerging venues can often help – with listing-importers, and the ability to turn you into a big fish in a small pond.

With eBid now hosting 3 million+ listings, my inventory (which peaked at 3,000 items on eBid several years ago) is now a drop in the ocean, and will perform better on smaller still-developing platforms. On eBay, where my listings peaked at 16,000 concurrent titles, I am not even a drop in the ocean compared to the Diamond Sellers which listing volumes run well into 6 digits amidst total (US) site listings of over 40 million, with a prejudiced and unreliable search system.

If I had those former inventory numbers on a site like WeBidz today, I’d have either 3% or 15% of their marketplace to myself, depending on which inventory set I used. That would guarantee me better sales per month than eBay delivered for the whole of 2009, even on a base-level marketplace. Just as eBid did for me in 2003-4 before the first large influx of disenfranchised eBay sellers, and like eBay did in 2005-6 before they began messing with search and stores.

Gaz

You can find information and links to almost 200 lesser and mid-tier marketplaces in the BuildaSkill forums, using the link at the top right of this page. Forum registration (free) is required to access some boards and categories, and minimum activity (forum posts) are required to access prime content areas.

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