Brands to sell directly to consumers on eBay’s Plaza
A new online marketplace planned by eBay would give consumer brands a channel to sell goods directly to consumers, according to a new report by Macquairie Capital analyst Ben Schachter.
The new marketplace known as The Plaza is expected to allow top brands to sell goods directly to consumers without being grouped with sellers of second-hand goods. A retailer, Mr. Schachter told the Wall Street Journal, selling products in this environment would alleviate concerns companies might have about "weakening their brand."
Several reports said The Plaza was being modeled after Alibaba’s Tmall. According to another Journal report, Apple recently opened a store on Tmall, which currently has more than 70,000 merchants selling directly to consumers. Gap and Nike also have Tmall stores.
The challenge, according to a TechCrunch article, will be for eBay to convince companies such as Apple to open storefronts on its site when they have robust online sites of their own. On the plus side, according to the same piece, eBay has been growing its eBay Stores business and has seen "strong adoption of its mobile apps."
According to TechCrunch, eBay did not exactly offer a denial when questioned about plans for a new marketplace. The company replied, "eBay partners with brands, designers and retailers – and sellers of all sizes – to help them grow their business. As such, we are always exploring new, innovative ways to help them market directly to eBay’s global audience and connect them to the things they need and love. We don’t comment on industry rumors or speculation."
- EBay to Introduce New Brand Mall, Analyst Says – The Wall Street Journal (sub. required)
- Report: eBay to Launch ‘The Plaza,’ A New Brand-Focused Online Mall For Retail Goods – TechCrunch
- Apple Opens Store on Alibaba’s Tmall – The Wall Street Journal (sub. required)
- Apple Store – Tmall
- Gap – Tmall
- Nike – Tmall
Discussion Questions
Would an Alibaba Tmall-like marketplace work on eBay? Do you think it would attract brands that have not traditionally sold directly to consumers or those that have only dipped their toes in the water?
From all the data I’ve seen, Alibaba Tmall will quickly surpass Amazon in revenue and scope. They’ve developed a successful model of brands selling directly to consumers (as well as B2B).
While Amazon has its own “market place,” many brands are wary of Amazon’s ability and track record of coming in and quickly dominating an emerging category.
On the flip side, eBay still has a US brand image of an “auction site.” If eBay is to succeed in bringing in top brands such as Apple, they have to re-message their brand that they are more than just auctions … and a market for low priced “grey goods.”
In the US, eBay is one of the few online competitors that can challenge Amazon. They have the size and scope. However, they must also have the quality end-to-end experience that Amazon has delivered in order to attract loyal customers vs. occasional price shoppers.
This may be a difficult sell for brands that already sell online. However, it may be an attractive option for brands that sell through retailers and do not currently sell directly to consumers online. Depending upon what is available and how it works, consumers may be more or less attracted to another source for buying products online.
No reason why it shouldn’t. Of course it moves eBay away from an auction model and closer to pure retailing, something the “Buy It Now” sellers have been practicing for years.
And, yes, it might provide some cautious branders a chance to stick a digital toe in the direct-to-consumer waters.
With more and more CPG brands selling Direct-to-Consumer (D2C) globally, I believe this is a great way for brands to dive into the D2C channel quickly. Great idea by eBay.
I am disappointed in the TMall user interface, but that does not mean the concept is wrong. I think eBay has a great consumer franchise and is well positioned as an “efficient market place arbiter” for both sellers and buyers. But I think the requirements are much bigger than just a great technical platform.
In order to make any kind of marketplace work, it must benefit both sides of the transaction. Sellers must see it as an efficient way to reach consumers at a reasonable cost. Buyers must see it as offering good product mix but also the services they need to compare products, make transactions, and resolve problems. Ultimately, it must provide for the efficient exchange of financial assets for goods and services. Just as Amazon offers their notorious “one-click” and free doorstep delivery, any potential competitors must do the same.
I don’t understand the concept completely, but if eBay is hoping to make their market an alternative for companies that are already using Amazon they have a lot of work to do in the physical world. There is always room to improve the user interface, but these effects are marginal. It seems the greatest vulnerability Amazon still has is in the notorious “last mile” (ignoring drones). If eBay can do something to improve the transfer of goods from the distribution network to the consumer they might be able to make an impact. One possibility is the expansion of the eBay outlets to offer a channel not only for OEMs, but also regular customers who want to offer a few things for sale.
I have never actually visited one, but I understand there are eBay locations that help customers both as sellers and as buyers. Opening up these locations to act as distribution hubs in small towns and even large apartment buildings could go a long way to address the last mile issue. It would also give eBay a unique edge.
Ultimately, consumer brands will find ways to sell directly to consumers. It may be this or it may be another venue. And why shouldn’t they?
I think like almost any new digital direct-to-consumer opportunity you’ll see a lot of CPGs dipping their toes in this water. E-commerce sales for CPG remain a small percentage of overall sales but this would offer an easy, low risk outlet to experiment, collect data and learn what works and how this balances with traditional retail sales channels.
Regarding data, it would be interesting to see how much data is shared or exchanged between eBay and the manufacturers, and who ultimately has ownership of the consumer relationship.