How Can eBay Regain Its Throne?

Can eBay close the gap with Amazon?

I believe eBay can !!!

Since 2014 Amazon marketplace sales are higher than eBay, reaching $177B in 2017, more than double the eBay $88 B sales last year. On my previous article I have demonstrated why Shipping is the key to eCommerce, which is one of the main reasons for Amazon intensive growth.

Amazon gives very competitive shipping terms, by centralizing most of their inventory in their warehouses in order to give a complete fulfillment service. This includes picking and packing orders, shipping and handling, customer service, and product returns.

But, it has its toll….

1. Amazon selling fees are high, increasing products prices.
2. Amazon cannot offer this service worldwide.

eBay’s Opportunity

Instead of huge fulfillment centers like Amazon does, eBay should build within its website a secondary marketplace for fulfillment services. Meaning, offering existing stores and warehouses worldwide the opportunity to run a small scale fulfillment operation for eBay’s sellers that will be willing to pay a small fee so their products will be stored and managed next to their customers, and therefore offer deliveries within hours.

Instead of centralizing the fulfillment operation in few big hubs, eBay should scatter it and create the ecosystem of tens of thousands of hubs (I call it “Scattered Operation”).

Many stores already have the fulfillment capability, but they lack the infrastructure to connect with sellers globally. Such stores will compete on sellers inventory with better quality and fulfillment prices. This way eBay reduces fulfillment costs and offers sellers the option to stock their inventory very close to their customers, wherever they are.

eBay is the best candidate at the moment to execute such an operation, and I believe that it’s even a must do for its survival in the coming era, where 1 day shipping of any product is too long, and when consumers will require a delivery within hours, not days!

If eBay decides to pursue this direction, I believe that it will secure its future and most likely regain its throne as the leading eCommerce site in the world.

 

Why eBay?

A company that can build such an ambitious marketplace, that can change the way global eCommerce is done, must have:

1. A successful marketplace that serves millions of buyers and sellers – In order to enable a significant amount of traffic that will pull into the marketplace the small fulfillment centers.
2. A massive software development capabilities can build such a big innovative platform.
3. A well funded operation, to fund such a huge initiative.
4. Perfect synergy with its current operation.

eBay poses all the above and isn’t bound to any other solution like Amazon is (highly invested in its operation).

eBay currency has 3 times the amount of active sellers of Amazon, serves both B2C and C2C sellers globally. Such fulfillment operation is suitable also for C2C and not like Amazon that is B2C oriented only.  In addition eBay is based in the US which is the perfect place to start such an operation.

eBay is on a constant quest to differentiate itself from competitors and such innovative operation will support its investors expectations for groundbreaking innovation.

 

Additional Opportunities

Scattered Operation solution increases the amount of participants in the eCommerce ecosystem, it drives forward physical stores to post their own inventory on eBay and therefore put more money on the table for eBay.

Also I believe it can be a very good solution for C2C 2nd market eCommerce that is currently blocked mainly by the lack of good fulfillment solutions. Private people that have products to sell (new or used), don’t have the time or capability to do fulfillment.

I do see the need for a small fulfillment center close to their home that will do all the work for private people.

 

Ori Feldstein is a senior manager, experienced in eCommerce and in management of multi-million dollars programs in several industries – Big data, e-commerce and Defense. He is a co-founder of two family owned websites in the B2B eCommerce of chemicals (cheta.biz ; chemcenters.com). Follow him on Linkedin, @ori-feldstein.

Disclosure

These days I currently work at eBay, on its Structured Data domain. This article does not represent eBay nor any eBays business information in any way. This Article share my personal opinion regarding eBay and Amazon as key players in the eCommerce market based on public sources, and my own opinion and insights regarding future opportunities in the eCommerce market.