eBay if you cant beat it, join it

Online giant goes on creating marketplaces

Its like asking if youve heard of a supermarket

Who hasnt heard of eBay? Surprisingly, there a lots of people who havent yet come across whats credited as being the worlds fastest growing business. Many more have heard of eBay, and know its got something to do with buying things online, yet they havent thought of using it themselves. But ask the same question in a few years time and you can expect the answer to be very different. In fact, just asking the question might sound strange a bit like someone now asking: Who hasnt heard of a supermarket? eBays on a roll. It was only formed in 1995 and its fast becoming a household name. There are countless other online businesses and the growth of Internet retailing (e-tailing, theyre calling it) will be massive, but dont be surprised if eBay becomes some sort of generic term for e-tailing. Results for the third quarter of 2004 showed revenues $805.9 million, up 52 percent year on year and that from a company that, in its formative years, didnt even bother to advertise. Ask the question Whos heard of eBay and uses it? and the answers probably close to a hundred million and growing and the phenomenon spreads worldwide, with those users doing for nothing what traditional retailers have to do for the customers things such as xing on a price and doing the selling. eBays customers even sort out amongst themselves how its delivered. Buyers attract sellers, sellers attract buyers, buyers become sellers, sellers become buyers and the whole thing grows into something quite remarkable and so commercially attractive that it was nearly sold to AOL and Yahoo.

Whats sold? Well, what isnt?

Those people who still somehow havent heard of it might also want to know whats sold. What isnt? sets the right tone for an answer. Press reports abound with tales of eBay transactions. Such as the man who tried to sell his kidney for charity, the company which runs the London Underground transport system allegedly seeking spare parts and a British police chief saying eBay was a popular place for thieves to sell their stolen goods.

Millions more transactions are much more mundane and its not every day you nd a Royal servant trying to sell his portion of Buckingham Palace Christmas pudding online.

DOI 10.1108/02580540510594110

VOL. 21 NO. 6 2005, pp. 11-13, Q Emerald Group Publishing Limited, ISSN 0258-0543

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Millions more transactions are much more mundane and its not every day youll nd a Royal servant trying to sell his portion of Buckingham Palace Christmas pudding online or being told that Prime Minister Tony Blairs wife has bought a Winnie the Pooh alarm clock on eBay. It made a name for itself by specialising in auctioning collectables, but times have moved on apace and will continue to do so. While collectables still play an important part in the business, last year about a third of eBay goods were priced, rather than auctioned, with many for sale on branded sections of the site. Amanda Aldridge, head of retail at KPMG, has a warning for retailers not to underestimate eBay and says that if they dont regard it as one of their main competitors now, perhaps they should.

Big names set up stores

Noting that Vodafone, Carphone Warehouse and Thomson Holidays have all opened stores on eBay, along with a huge range of start-up or small businesses, she says: While such big names are relatively rare, it must surely only be a question of time before others follow suit. A number of retailers in all sorts of sectors should see eBay as simply another channel. Yes, it could theoretically involve giving away some margin and potentially cannibalizing store and online sales. But wasnt this the same argument retailers put forward for not developing their online presence when the Internet emerged? And just how foolish does that argument look now? Ralph A. Oliva, executive director of the Institute for the Study of Business Markets, takes up the theme that eBay, has much, much more to offer. He says: Some of the same sorts of benets and innovations eBay brings us as individual buying consumers are now reaching out and touching small business. Its creating a new marketplace for the sorts of things small business people need: ofce equipment, manufacturing equipment, even direct material. Along the way eBay is creating a valuable secondary market for certain sorts of equipment by opening up a used equipment market. This important change of market approach for certain categories of equipment is enabling new sorts of commerce.

Now for B2B

eBay quickly established a reputation as the place to go online for a multitude of products including sports memorabilia, jewelry, watches, toys, games, pottery, rug-making equipment and Winnie the Pooh alarm clocks. But how quickly and effectively can it establish a reputation as the place to go for B2B? Ralph A. Oliva is optimistic, noting that eBay Business already offers to the entrepreneur:
B B B B B

a powerful way for B2B buyers and sellers to nd one another; a mechanism for establishing prices; a mechanism for enabling the transaction and the exchange; an approach to building the reputation and measuring the quality of the transaction; and much lower prices for the buyer.

Such online success stories provide challenges for marketers and, as Glenn Baker asserts: Today, if youre in business and you dont have an online e-marketing strategy built into your marketing plan, youre in danger of missing the boat. While Dhruv Grewal et al. and Amanda Aldridge all assert the need for it to be viewed not as a threat but as part of a multi-channel approach to retailing.

How marketers can benet

Glenn Baker says its not just online businesses which should take full advantages of exciting new technology, but also the marketers who can benet in various ways including automating routine marketing tasks, improving targeting to reduce mail volumes, and making more use of email marketing and advertising and contextual advertising (placing an ad on a web page which is based on the specic context on that particular page).

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 Some of the same sorts of benets and innovations eBay brings us as individual buying consumers are now reaching out and touching small business.

He says: Once upon a time, getting the right marketing mix merely involved getting the best deals across television, radio and print and you could just about guarantee that the majority of people heard or saw your message. More recently the relentless fragmentation of traditional advertising mediums, and the arrival of the Internet, have turned marketing upside down. Dhruv Grewal et al., while endorsing the view that e-tailing is here to stay, caution that there are many important limiters of Internet retailing growth. These include not being able to try out goods as you can in a shop, a more complicated way of dealing with product returns or refunds, not having salespeople there to offer help when choosing, and other disadvantages. But there are advantages, too, including access to masses of information online, greater accessibility and convenience and the sheer pleasure of what is still a relatively novel experience. What you cant get online, however, is that buzz of a trip the bricks and mortar shops, mixing with other shoppers and salespeople, chatting, smiling and maybe having lunch. That trip to the shops so beloved of many shopaholics just isnt the same online but at least you dont get sore feet,

Comment
This review is based on eBay is emerging as the new channel to market by Amanda Aldridge, E-tools for marketers by Glenn Baker, Internet retailing: enablers, limiters and market consequences by Dhruv Grewal, Gopalkrishnan R. Iyer and Michael Levy, B2B for sale by Ralph A. Oliva and eBays secret by Patricia Sellers. Amanda Aldridge notes that, as well as being an online auction, eBay is increasingly acting as a shop-front for new goods sold by professional retailers at xed prices. She recommends that retailers start selling small batches of goods on eBay and to consider how to integrate this with their existing multi-channel strategies. Glenn Baker warns that, with the fragmentation of traditional marketing media and the rise of the Internet, any company without an e-marketing strategy may fall by the wayside. Dhruv Grewal et al. suggest that although online retailing started out as a separate retail format, it has now become part of a multi-channel strategy. They list, and explain, various limiters and enablers to Internet retailing growth. Ralph A. Oliva says that some of the benets and innovations being brought to individual customers by eBay are now available to small businesses, and that eBay is creating a new marketplace for the sort of things small businesses need. Growth to service bigger industries is a distinct possibility.

Keywords: Internet, Organizational performance, Marketing, Small enterprises, Business-to-business marketing

References
Aldridge, A. (2004), eBay is emerging as the new channel to market, Marketing, August 18, p. 15, ISSN: 0025-3650. Baker, G. (2004), E-tools for marketers, NZ Business, Vol. 18 No. 6, pp. 23-6, ISSN: 0113-4957. Grewal, D., Iyer, G.R. and Levy, M. (2004), Internet retailing: enablers, limiters and market consequences, Journal of Business Research, Vol. 57 No. 7, pp. 703-13, ISSN: 0148-2963. Oliva, R.A. (2004), B2B for sale, Marketing Management, Vol. 13 No. 5, pp. 48-9, ISSN: 0161-3846.

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