The eBay Factor

July 31, 2006  by in UnCategorized   

By Home Furnishings Business in on August 2006 Many of us enjoy and even prefer to have things delivered rather than shop. If you are a person who savors the experience of having steaks air-shipped from Omaha, instantly recycles catalogs but loves to browse L.L.bean.com, and generally thinks of any time spent waiting in line as a waste, you are a consumate online consumer.

Have you made the switch to buying home furnishings online yet? Have your customers? If you aren’t sure, find out. Because, like almost every other market, buying furniture online is becoming shockingly easy. And if retailers don’t catch up, they’re going to be left behind in the Internet’s dust. Mainly eBay’s.

Even if you think of the hugely successful auction site as an online garage sale crammed with random treasures (or, the other t-word), eBay does not care, because with stock at $25.91 per share as of press time, eBay just moved quietly ahead of their predicted quarterly earnings reports in July.

Currently at 193 million users, eBay keeps growing. And eBay’s growth could shrink your business. Or, you could harness its power while there is still a ground floor to get in on.

While there is not one designated furniture category on eBay—there are three, one under Antiques, the primary category under Home and Garden, and a third under Patio Outdoor—it’s well worth looking at, if you haven’t before. At press time, there were just under 50,000 listings for furniture items: 49,700 according to Jeannie Reeth, the eBay Home & Garden category spokesperson (newly hired is Shawn Henderson, who will represent eBay’s home furnishings division on television and other media outlets starting this month).

Reeth says that furniture is fast replacing DVDs and CDs as one of eBay’s strongest catagories

“We’ve experienced very strong growth in this category. About $2.9 billion in annual sales—that figure comes from our Q1 earnings. It’s a gross merchandise volume measured between buyers and sellers.”

One advantage of eBay is that shoppers can buy Christmas decorations in July, or patio furniture in January. Reeth said, “While we absolutely do see seasonality, we’re strong all season long. We can think about nearing the seasons of traditional retail when it comes to plants, but with furniture, we’re breaking out of tradition.”

Strangely enough, buying through eBay may beat traditional retail when it comes to customer service and satisfaction. While Reeth says they aren’t sure yet if people come to eBay looking for product information as they pre-shop (Reeth says they get some traffic simply from people searching for items like “sofa”), anyone looking for furniture can benefit from the many guides eBay has published. Much like a review on Amazon, the eBay guides vary between the ones produced in-house and guides published by users or sellers.

“For the most part, the reviews and guides area is up to the eBay community to use, or discard,” said Reeth. “There is a ratings system for guides, then those top-rated guides float to the top. It’s meant to be a self-regulating mechanisim. It has been successful so far, it’s something that offers info for buyers, and the guides also serve as a way to drive additional traffic to the site.”

If your have no Web presence for your retail store, and want to set up a shop to sell furniture online, setting up an online store with eBay is certainly an option.

Reeth said, “It’s been a really nice way for people to enter online sales, it’s so low cost, and you have access to that 203 million person buying audience. It’s an inexpensive way to get in and dabble in it and let your business grow.”

There are a number of tips for sellers first trying out eBay sales.

The first is to be very clear about store policies, shipping timetables, and returns. “Buyers are very understanding about these, as long as the seller is very clear. When sellers violates those terms, or don’t clarify what their policies are, that’s when you get into trouble,” said Reeth.

And in eBay terms, trouble means only one thing.

“If you’re an eBay user, you know the value of feedback,” said Reeth. “Sellers want to make sure they’re being proactive, almost more so than in their brick-and-mortar store. Because they don’t have a sign in their window with complaints from dissatisfied customers. Feedback is a very public airing of their dirty laundry that they may not have otherwise.”

Then there are companies who have nothing but fresh linens airing. MBW Furniture is just one storefront on eBay, but the furniture it sells is grand—a lot of rich woods, solid mahogany bars with marble tops, dining room tables, bedroom suites, curios, china cabinets and tables, from occasional to dining. Most of its pieces are in the high-end, $10,000-and-up range—hardly garage-sale prices.

The 8-year-old MBW has an overwhelmingly positive feedback rating of 99.5 percent. Out of a total feedback score of 1891, it has garnered only two negative pieces of feedback during the last 12 months.

Though MBW has a warehouse in Atlanta, Ga., and a phone support system for customers, its only online retail presence is on eBay. It ships all over the world, to the United Kingdom, Middle East, Latin America, South Korea and Japan.

Basil Halta is MBW’s president, and he says he wouldn’t have it any other way.

Why eBay? Halta says, “We wanted to establish an online presence, (and eBay) seemed like the best way to proceed with that. We saw a lot of people were buying antiques on eBay, so we decided to do a few listings.”

Now MBW has more than 2,000 listings. That’s a big deal.

And to show its customers how much it values them, MBW has created several buyer’s guides to help them better understand the product they are shopping for. A single MBW staff member, Martina Gousha, creates the guides, which are available to any eBay surfer 24 hours a day.

Halta says eBay is a good way to start having an online presence

“It’s been an excellent experience for us so far. Building your own onlne store from the ground up is complicated. You need a full staff to handle your online sales. A great way to start is on eBay, (but) you have to expect to put a lot of work into it.”

While Halfa says eBay is an effective means of selling, it’s also very expensive.

A single listing costs $5.80, and at a 3 percent selling fee for each item sold, eBay takes its cut.

Halfa adds, “You have to cross promote, you have to link items to each other, you have to know what to keep in their store, what to have in auction mode. The rules change all the time. It’s a lot to keep up on. You have to familiarize yourself with how eBay operates and know that it changes.”

One thing doesn’t change - the high volume of eBay users.

In spite of MBW’s international success, Halfa has to remain focused on the pitfalls in order to remain vigilant.

“Fraud is very big on eBay,” says Halfa. “I think the risk of hacking is probably higher with eBay than with your own store. You’re going get more spam emails and messages on eBay than with your own site. New users could fall for a scam.”

The threat of failure isn’t enough to stop a new business venture. And MBW has noticed new online competition.

“I think there are a lot of online stores, and there is a lot more competition than we had 6 years ago. There’s a lot of new online stores, but they don’t make it and drop off after a while. They don’t know how to approach it professionally, and that’s key.”

For those readers who still think eBay is not a force to be reckoned with, there is a similar site called alibaba.com; like eBay with more of a global focus - mainly China. And, one store dedicated to furniture sales, at press time with over 54,000 listings and 45 participating companies. Alibaba is different from eBay in that it is not an auction site, but it is good to navigate and shop for items. And alibaba.com is evidence that buying furniture on-line is a growing trend globally, not a flash in the e-universe. HFB