Mobile Sales Give eBay a Boost, but Competitors Say the Economy Is in Their Corner

By Trina Robinson  NOV 02, 2012 10:00 AM

The trend toward economic recovery has likely helped boost sales at sites like uBid and RedTag, where buyers set the sales prices.

 


MINYANVILLE ORIGINAL The online auction and marketplace site eBay (NASDAQ:EBAY) has a great reason to celebrate these days. Earlier this month, the online sales site reported that revenue for the third quarter reached $3.4 billion, representing a 15% increase over the same period last year. Could this boost in profits be a sign that we're moving out of the recession? Perhaps the data suggests that people are ready to spend once again. Or is the jump in revenue largely due to the company becoming more tech savvy?

Spokesperson Kari Ramirez says the existence or nonexistence of a recession has nothing to do with the company's recently reported numbers. “Business does not fluctuate with markets and the recession,” said Ramirez via email. Instead, she says, eBay’s multiple platforms now have a global reach, creating an international marketplace. “Our platforms enable us to connect buyers and sellers anywhere in the world as we are delivering multichannel commerce innovation through eBay Marketplaces, PayPal, and GSI.“
 
Mobile sales have been the main driver of growth at eBay. As of mid-October, 383,982 car parts and accessories and 9,200 vehicles were being sold every week, and 107 pieces of clothing, pairs of shoes, or accessories were being sold every minute exclusively through eBay's mobile apps. It helps that eBay's customers can land on the site ready to spend a few dollars or a few thousand. “As of October, we had 350 million listings on eBay.com and have a wide range of items, including cars that could be priced for $100,000 to a hair accessory priced at $0.25,“ says Ramirez. 

At the online auction site uBid.com, however, executives feel that a slight recovery in the overall economy has helped sales. The eBay competitor launched in 1997 with over 5 million members. It says that the company, along with its sister site RedTag.com, does not currently have the data to comment on a connection between its business and the recession. However, says uBid.com's Nancy L. Ragont, Vice President, Marketing: "Anytime people are buying outside the consumable realm shows economic optimism, really.

“People are still a little leery about a bounce back and therefore are looking for ways to shop for less this holiday season," she added, so uBid and RedTag -- where buyers essentially set the price -- are gaining popularity. Like eBay, uBid and RedTag regularly feature top manufacturers including Apple (NASDAQ:APPL), Microsoft (NASDAQ:MSFT), Dell (NASDAQ:DELL), and LG. However, uBid’s websites stand out with a focus on refurbished merchandise for a large segment of its product sales. Also helping it to stand out are its special promotions, including flash sales, a Deal of the Day, and celebrity-promoted auctions. “The uBid excess, overstock, and refurb strategy is a sustainable model that offers a true recycling facet to their offering,” says Ragont. Michele-Louise Ridley-Cook of La Bonne Vivant, a Virginia-based business, is one business owner who felt the effects of the recession on the eBay portion of her business and made some big changes to her business plan as a result. Cook, who left the corporate world to launch her small business in 2004, deals in antique and vintage photographic images and ephemera dating from the 1800s to the 1940s. Her items have a focus on the African-American experience, and items typically sell at a high price because of their scarcity. The economic downturn forced to her to make some tough business decisions, including closing her eBay store. Cook found that for her business, eBay was too expensive and restrictive. Once the economic collapse happened, business slowed immediately because her customers use discretionary income when buying her merchandise. Eventually, it became clear that it was too much work to focus on both her website and eBay store.

“This is my passion and I am determined to make it,” says Cook, who quickly changed her strategy. She began focusing on other ways to invest in her small business to give her online shop an edge. She began paying close attention to the details and highlighting the high quality products she sells. For example, all her photographs are packaged in museum grade archive materials because she does not like to send anything that is not high quality. Cook also acquired an office space in 2011 where she schedules in-house appointments with clients. She even hired a paid intern to help with day-to-day operations including archiving, filing, and scanning. She also knows the importance of building relationships with her clientele, noting that 30% of her customers provide 80% of her business, with many coming back to her every week. She is focused on nurturing her relationships with her customers. When mailing out orders, she will often tuck an additional photo inside the package as a special gift.

So far, eBay has not won her back -- perhaps a sign, also supported by recent polls, that for small business owners, the recovery is still nascent or non-existent.
No positions in stocks mentioned.

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