On September 16, Ebay will cut fixed-price listing fees by 70% to lure more sellers to the site. As Ebay seems to be going into hand-to-hand combat with Amazon, this move comes as no big surprise — particularly amidst all the complaining that accompanied multiple price increases over the last few years.
With the new pricing structure sellers will be charged a flat rate of 35 cents to list an item for 30 instead of seven days. They will also be allowed to list multiple quantities of the same item for a one time listing fee of 35 cents. Listing fees in popular categories like movies, music, games and books will be lowered to 15 cents.
Prior to this, sellers paid between 35 cents and $4 to list an item for one week. The huge range is dependent on the item’s listing price. Commissions at the close of sale are also changing with most items like computers and electronics going down. However, books and DVD’s will go up.
Pricing for items sold in eBay stores (which are separate from the company’s core listings), will not be affected.
Today Ebay has over 430,000 ‘mom and pop’ stores that account for over 95% of the $60B plus transacted. Those are some big numbers to top!
According to information provided at the 2008 Amazon Seller Conference back in July 2008, there are 79 million active user accounts on Amazon. That’s a whole lot of buying going on. And, what continues to amaze me is that I’ve spoken with countless people who aren’t aware that they’re buying from individual merchants, not the ‘Amazon company’.
With over $14.9 in revenue in 2007, Amazon now has 1.4 million seller accounts. They’ve just surpassed Ebay that reportedly has 1.3 million. These numbers were reported at the conference and also confirmed in an article published by TheStreet.com, which states that worldwide active seller accounts were up 14% in 2008, as compared to 11 percent in 2007.
In an analyst note, Piper Jaffray analyst Gene Munster estimated that Amazon has sold $6 billion in goods by third parties in the last 12 months. That tally is still well behind eBay’s $62 billion worth of goods via third parties, but Amazon is poaching market share.
Ok, I promise to keep it brief this time. Bullets are my life…
From Forrester report, “Using Promotions to Cut Through Ad Clutter”
- Consumers go to great lengths to avoid ads. From 2002 to 2004, their attitudes toward advertisements plummeted as their drive to block ads increased.
- We asked North American online consumers how they heard about the last promotion they used. Responses included both online and offline channels- 20% heard about the last promotion they used through an ad on the site where they were shopping, 14% heard through an email from a retailer, and 16% heard about the last promotion they used through a print ad
- We asked online promotions users how frequently they participate in different online activities. 11% said they read blogs once a week or more frequently. Additionally, 6% of online promotions users are interested in reading blogs from their favorite marketers, and 9% are interested in receiving RSS feeds.
- Product awareness and promotions to drive purchases used to be separate functions. In the online
environment, these two functions are now closer together.
- While demographics provide some insight into the promotions and channels that are preferred by different segments, marketers prefer behavioral targeting because it generates more click-throughs and conversions.
- One of the largest challenges today between marketing and IT collaboration is how to make sense of increasing volumes of customer data. The Marketing Technology Backbone — a technology infrastructure that supports an integrated approach to marketing strategy, development, delivery, and measurement across the marketing mix — helps ameliorate this issue.
- Current efforts of “customer listening” fall short and should be replaced by Social Computing tools that involve consumers in the innovation process in more spontaneous and continual ways. Brand monitoring
I ran across this great Forrester Research study, “Using Promotions to Cut Through Ad Clutter” and thought some choice tidbits were worth sharing….
AD-WEARY CONSUMERS STILL VALUE PROMOTIONS
In today’s climate of marketing message overload, marketers are constantly looking for ways to stay relevant to consumers who avoid ads. We looked at consumers’ use of and attitudes toward promotions today and compared them with those in 2001 to see how promotions should fit into the marketer tool kit. We found that promotions work for marketers because they:
Appeal to consumers. Consumers value promotions more today than they did in 2001. Nearly half of consumers — 47% — are always looking for promotions, and 74% more consumers make time for promotions today than they did five years ago. Most importantly, promotions drive incremental sales activity. Today, almost 50% more consumers than in 2001 are likely to buy more in order to take advantage of a promotion.
Drive awareness and purchase. Promotions work best at the ends of the marketing funnel. Online promotions drive awareness for about one-fourth of promotions users. Twenty-three percent say that promotions sites like CoolSavings introduce them to new products, while 18% use promotions from new retailers.
Cross generations and gender. Men and women of all ages value promotions — especially flat discounts and free shipping. Preferences for other promotions vary by age and gender. Women and younger consumers prefer free merchandise, while consumers aged 55 and up favor mail-in rebates. Loyalty programs are the least well-regarded promotion. Only 25% of men and 29% of women value them.
Marketers Should Embrace Online Promotions
Online promotions engage consumers. In fact, 58% of all promotions users heard about the last promotion they used through an interactive channel like display ads or email marketing. And Forrester expects this trend to grow as consumers adopt new media. Almost one in 10 online promotions users already embrace emerging channels like blogs and RSS. Why adopt interactive promotions? Because they provide:
Access to attractive customers. Online promotions users make more money, are better educated, and go online more than offline promotions users. Although on- and offline promotions users are the same age and gender, online promotions users make almost $10,000 more annually and spend $73 more online per quarter. Plus, they shop online regularly, and 40% are college-educated.
Ways to track customer response. Interactive channels solve one of marketers’ greatest challenges with promotions: closing the loop between offer and sale. Tracking codes can be written into online promotions to tell merchants when particular offers are redeemed on- or offline. Plus, incorporating coupon redemptions into user profiles provides additional data that marketers can leverage to target future promotions. Alamo Rent A Car targeted previous car renters with a “free day” offer to encourage incremental three-day rentals. Users could book via email, Web, or phone. But the coupon — with a unique offer code — had to be presented at car pick-up for redemption.
Two-way customer conversations. Interactive promotions help marketers listen and react to customer responses. Using promotions to respond to customers’ previous behavior not only improves promotions‘ relevance and profitability, but it also creates a dialog with customers, making promotions part of a relationship marketing strategy. Peet’s Coffee tested free shipping offers to consumers with different order sizes to see where it had the greatest sales impact and profitability. Offering free shipping only to customers ordering more than a certain amount increased the company’s revenue per visit by 21% and encouraged visitors to venture deeper into the site to increase their basket size.
The more strategic use of promotions to engage new and existing customers in an interactive dialogue will position promotions as a prime player in the cross-channel marketing mix. We expect that:
Promotions will secure a spot in the online marketing suite. Left Brain marketers tuning in to the relationship building power of promotions will look to incorporate promotions data holistically into their marketing databases. But simply layering more data onto their growing mountain of consumer data doesn’t make the data usable. Marketers will need help structuring, managing, and analyzing promotions data alongside the behavioral and demographic elements they already have. This means that promotions data will tie into the online marketing suite to enable more integrated messaging across interactive channels. We expect Web analytics companies like Omniture to partner with online promotions developers like Promotions.com as they build out their platforms into the foundation of the online marketing suite.
Newspapers and circulars will retrench or RIP. As broadband penetration increases and marketers realize that online promotions can be targeted behaviorally and contextually, as well as by location or demographics, investments in newspapers and circulars to deliver promotions will plummet.
Marketers will use Social Computing to guide promotions strategies. Consumer engagement with Social Computing technologies like blogs or social networking sites like Facebook is intensifying. Blog readership is up 100%, and use of social networking sites has nearly doubled since 2005. Adoption of these tools makes it easier than ever for consumers to share their take on products with peers and marketers. We certainly expect marketers to tap this energy by increasing promotional incentives to encourage viral marketing. But we also anticipate marketers to use buzz to inform when and how to use promotions. If the vibe about Tide is strong, Procter & Gamble may shift its promotional spend from that product to another one that is in greater need of a sales catalyst.
Get to know your customers, get more sales. Sounds simple enough, no? Yet the prospect of using ‘business intelligence’ or BI tools is enough to send most small and medium-sized eTailers screaming for simplictiy…and for good reason.
Many of the self-proclaimed tools out there are ridiculously complicated and expensive. Take a look at Omniture’s SiteCatalyst solution for example. It’s one of the leading BI solutions for large retailers and is a preferred Amazon partner.
SiteCatalyst provides (taken directly from site):
- Real-time data to make timely decisions
- A quick snapshot of the key performance indicators (KPIs) for your online efforts in a reader-friendly dashboard
- Automatic alerts anytime a KPI moves to a dangerous or impressive level
- One place to measure, analyze and optimize all of your online and multi-channel initiatives
Any idea what your KPI is? Me neither. I want the company who holds a broader DB of info to set the benchmarks not me! Unless you have a massive customer base, years of history and a slew of tracked behavior and testing to model against, this type of solution is like fixing a scrape with invasive surgery. It’s overkill, wrapped in complexity, proffered by overzealous sales drones.
It just doesn’t work for a small operation. And the price alone is enough to choke a rational retailer… $5,000 sign-up fee PLUS @$600 per million page views. Give me a simple, affordable tool like Trendient any day, so I don’t have to spend $10,000 a year to test assumptions!
BI works. There’s no disputing it. Any and all information about customers (as long as it’s statistically significant) will help conversions and sales. According to an Aberdeen Group study that studied 200 large companies, almost 70% were already using BI tools and 26% had plans to adopt some kind of solution shortly.
Yet, another study by Forrester Research said that 73% of employees at large companies using complex solutions like Omniture and NedStat have no idea what they’re looking at. The analytics reporting and dashboard features are so overwhelming that employee training and reference manuals are required.
One point I do want to be clear on is that BI is not a single reporting or analytics application applied to a specific set of data. Instead, it’s loosely defined as information that can monitor, reveal info or improve multiple parts of the business. For example, by understanding the seasonality of your business based on order history, you can plan inventory and SEM buys more efficiently.
Another key finding in the same report, that applies to smaller online merchants in particular is the value of hyoper-reactive customer service. This goes beyond just being responsive and biting your tongue while an irate customer rants, but includes following up and staying in contact. The same goes for your entire customer base for that matter. There’s no better way to build lifetime value and repeat sales then rewarding customers who have purchased from you in the past.
No doubt about it, Amazon is the Walmart of the online retail space. They grew 38% this year up from $10B to $14.8B in the last year. Few companies outside of Walmart in the ’80’s have seen this kind of growth. Amazon built on it’s mix with books, cds, dvds, and is continually perfecting it’s model. Now they’re getting into office supplies.
Why? Interestingly, 3 of the top 10 eRetailers are office supply stores (Staples, Office Max and Office Depot). Crazy. The Web accounts for 37% of all office supply sales. So basically, when you go to an office supply store you’re walking through a future graveyard.
According to the publisher of InternetRetailer, the other large segments are all up for grabs. The chain stores are coming back online with renewed seriousness, but their not going to dominate the business sectors. In fact, the chains are growing at the slowest rate, 18% overall vs. catalogers which grew 33%. Pure plays came in at 22%, and branded manufactures at 22%.
Walmart is starting to heavily invest resources into their online business. They grew grew 25% last year, but on much smaller base than Amazon. So far overall online retail sales are down 11% for 1st Q’08. We shall see!