How shrinking margins are shrinking one retailer’s listings on eBay
Todd Rath first launched his discounted golf equipment business online in 2002, with eBay as the exclusive sales outlet. Three years later, he’s pushing to move more of his $14 million-plus annual sales off eBay and onto other online platforms, including his company’s own web site, Rockbottomgolf.com, launched in 2003. The reason? Smaller margins on eBay. For Rath and some other eBay sellers, the auction site’s recent announcement of fee hikes is just one more reason to keep moving in the direction of finding additional sales channels and building their own brand.
“What I’m starting to find the farther I go down the marketing path is that you can actually create traffic on your own site for almost the same as it costs you to get sales on eBay,” he says. Rath estimates that eBay’s various fees cost him about 7% of the gross merchandise value of each transaction and that by contrast, each transaction on his own site, a Yahoo storefront, costs about 0.5%, Yahoo’s share of the transaction. Rockbottomgolf.com also pays Yahoo a monthly subscription fee for the store, an amount he terms “minuscule, when you think about how much we run through the site in a month.” In January, for example, he sold $270,000 in merchandise on Rockbottomgolf.com, and about $500,000 on eBay.
Using the services of provider Channel Advisor to syndicate the feed of its electronic catalog, Rockbottomgolf is now also selling on additional platforms such as Shopping.com. “If I list at Shopping.com, my ROI there is sometimes better than on eBay because my margin is higher,” says Rath. “In my opinion, that’s where eBay starts to break—when it costs me more to create the sale there than when I can go to Shopping.com, BizRate, and Froogle to post my catalog and drive traffic to the site, and the return is there.”
Though pushing more sales to higher-margin channels, however, Rath says Rockbottomgolf will always keep some listings on eBay. His eventual goal is to use eBay primarily as a liquidation channel and for specialized merchandise that requires market exposure on eBay’s scale to move—like left-handed golf clubs, for example.
“I will never ignore the hits eBay gets in a day,” says Rath, about 10.6 million unique visitors on an average day, according to February figures from ComScore Networks. “I’ll always have product on eBay for brand recognition, and to acquire customers. When people find out that we have a web site, they go to us direct. The price might not be lower, but the service is going to be faster.”
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