Best Buy sees a future on eBay, with current as well as end-of-life product

Best Buy Co. Inc. has been pleased with its liquidation initiatives at eBay and is planning to expand what it sells there to include new products, Brian Hungerford, director of inventory for Best Buy, told attendees at eTail 2004 East in Fort Lauderdale Tuesday afternoon. “We see a future on eBay where it’s not just end-of-life products that we sell, but new as well,” he said.

Best Buy, No. 9 in Internet Retailer’s Top 300 Guide to online web sites, debuted on eBay last October with a scratch-and-dent assortment that it sells at a so-called regional outlet store serving Baltimore. In January, it expanded to new, end-of-life products still in their boxes. Those include consumer electronics that have been on the market for about a year and computers that remain unsold after 13-26 weeks. “We’ve done extremely well at eBay and we’re excited about it,” Hungerford said.

Best Buy’s strategy with end-of-life products is to send them directly from the warehouse or distribution center sale on eBay, rather than removing inventory from stores. “We’re not pulling from stores, we’re pushing to eBay,” Hungerford said.

Best Buy’s cost recovery on eBay products is about equal to what it achieves when it sells in markdowns at stores, Hungerford said. The real benefit is that the inventory moves faster and selling products on eBay leaves floor and shelf space in the stores free for more current, higher-priced products. “It encourages the sale of in-season products and optimizes square footage,” he said.

Another major benefit is that the approach is bringing new customers to Best Buy. Two-thirds of eBay buyers are new to Best Buy.

With this success, Best Buy is considering selling new products at eBay, primarily in the form of cross-sells and upsells.

Bob Hebeler, vice president of categories at eBay and who was on the panel with Hungerford and Scott Wingo, president of ChannelAdvisor Corp., which develops technology for sellers at eBay and other marketplaces, reported that 50% of all products sold at eBay are new, in-box items.

At the same session, Wingo reported on a Forrester Research Inc. study that showed online marketplace revenue will reach $28.2 billion this year, up from $12.9 billion in 2002. It is expected to grow to $54.3 billion in 2007, when it will account for 27% of e-commerce sales. “Anybody who’s not selling this way is missing about 25% of the market,” Wingo said.