posted on January 31, 2001 03:53:36 AM new
I admit the idea of a co-op really excited me but sitting here thinking all about it this morning in the rain(maybe that's why I am a wet blanket)I am wondering if it is at all economically feasible as well as physically possible.
Where is the money coming from after our first little $100 is spent? How do we pay staff, huge hardware,hardware techs,advertising, ect,ect.
Let's face it, we had our chance with Gold's and we flubbed the ball on the 10 yard line.No listing fees, easy to browse, few rules, but except for a few hardcore dedicated sellers, there wasn't enough dedication to keep it going.
Oh yes, I threw a few bones their way but I was not dedicated. True dedication means you put all you merchandise there, true dedication means you let all your customers and past customers know where you are at and how to get there. You talk it day and night to pass the word, maybe you even pass the hat for donations for more advertising.
A few of you did this, no doubt, but not enough of us obviously. And no site,not even a coop can run without money for very long.Perhaps we should form a committee to investigate the 100 or so auctions on the web already and find out if any of them fulfill what we seem to be looking for. No Listing fees being one of the items among others.
You don't want to build up another site that only turns into another ungrateful egreed? Well, that could be all worked out in an agreement in advance you know. We bring xx amount of sellers and all our buyers and we get x and x for x amount of time. It's unrealistic that we pay no listing or FVF fees forever, THERE AIN'T NO FREE LUNCH!
So whatever we do, whether it be a coop or finding a new home,it will only succeed by doing it en masse, probably at least 2,000 sellers and complete dedication of time, money and listings. How many of you are really ready for that?
posted on January 31, 2001 04:20:31 AM new
I am willing enough to go pin ads up in the park for free. I would print a bunch of sheets up and keep them in the car and post them everywhere I go. There are free boards all over the university and in a lot of the stores I go to.
Other co-ops would probably be willing to give us a mention in their sites and publications.
2000? I think that would be easy. 20,000 sounds more like it. 20 of the 25,000 power sells on ebay who account for 80% of the business would do nicely for a start, and then another 80,000 hobby/part time sellers. 100,000 would be a good base. If each could recruit 10 buyers that would make a start with a milliom + users.
posted on January 31, 2001 05:26:29 AM new
Well said Deco100;
I have also been following the threads on the Co-Op offer. While the thought of the Co-Op is great, the plan will fall on itself and is doomed for failure before it hits the planning tables. It is very clear to me (and several others) that the persons(s) who have this plan have not done their homework. Nor have they established a viable business plan.
Gather $100.00 from interested parties, from all over the country? Then what? Will all of these people have positions on the management board? What ever happened to centralization? In the case of managing a “quality” auction site, centralization (at the start) is optimum. Managing a “quality” auction site is also a full time job.
“Let's face it, we had our chance with Gold's and we flubbed the ball on the 10 yard line. No listing fees, easy to browse, few rules, but except for a few hardcore dedicated sellers, there wasn't enough dedication to keep it going”.
”Oh yes, I threw a few bones their way but I was not dedicated. True dedication means you put all you merchandise there, true dedication means you let all your customers and past customers know where you are at and how to get there”.
Deco100 summed it up very well. There were several auction sites out there up and running that were “ripe” for your use and “support”. Most folks laughed, and we heard the usual statements: “They have no listings”, “I am not getting any bids (Most of these folks probably posted one item), “Their site does not look and feel “just like eBay” and blah, blah, blah. Take a close look at some of the supporters for this “Co-OP” site. Some of them are the same folks that complained and would not support other “eBay like” sites.
The Internet is littered with closed down and “dead” “We Have Everything” auction formats. Forget about trying to establish another “We have everything” auction format. EBay and a small number of other power hitters have gained dominance in this market. You too will face the doubters and non supporters that will state “They have no listings”, “I am not getting any bids”, “Their site does not look and feel “just like eBay” and blah, blah, blah.
There is no question that the big auction sites have the most visibility on the Net. People tend to stick with what is comfortable. However, that does not mean larger sites are more qualified to serve the needs of specialty collectors.
So where am I going with this? Specialty, Vertical, or “Niche” auction sites are an always an option. In fact, many of these smaller sites are survivors. Many of these sites are not popping up on eBays radar screens, as possible take-overs and or buy-outs. Do they pose a threat to eBay, I doubt it. However, some of the “Niche” sites continue to grow.
If “real” collectors embrace the specialty, vertical, or niche auction services, the entire market will profit, growing in both size and legitimacy. In closing, specialty sites are uniquely qualified to meet the needs of collectors in a specific category.
Those of you that plan to establish this “Co-OP” site, I wish you success. Those of you that plan to “blindly” throw your hard earned $100.00 (or whatever fee they plan to ask for), proceed with caution. As an alternative, retain your funds. Take your items, and most important, your “customers”, and start supporting other established sites.
posted on January 31, 2001 05:48:00 AM new
"Perhaps we should form a committee to investigate the 100 or so auctions on the web already and find out if any of them fulfill what we seem to be looking for."
The worst problem with the other sites is that THEY ALREADY ARE OWNED by somone else. And nobody wants to put effort into building someone else's business.
"No Listing fees being one of the items among others."
As my other thread says "There are NO FREE LUNCHES!" Gold's folded because they started out FREE instead of with a (smaller than eBay) listing fee. They ran out of money before they got a critical mass. Sellers had no stake in the success of the site ... just the horde of lemmings migrating from one free service to another.
Can ANY of the niche sites handle an extra 1500 HEAVY listers without suffering the way Golds did ... the early site failures and slow response is what kept Golds from getting under way. And it takes income to buy hardware and pay for geeks to run the site.
posted on January 31, 2001 06:06:44 AM new
Deco100, that's a good question. How can a sellers co-op succeed where many (all) other small auction houses have failed?
You mentioned dedication. That's an important point. Golds sellers didn't have an interest in Golds. Most Golds members were simply eBay sellers boycotting the new reserve fee. Although Golds started out free, there was never any guarantee that free listings would continue. Golds members never had a stake in the site.
The co-op, on the other hand, is designed to be a "safe haven" for sellers. Sellers pay only the actual cost of listing. There's no worry that tomorrow or next week the listing fee will go up because the CEO wants a new Mercedes. Not only do sellers get a better deal, but they also participate in decisions that affect their own future.
How do you define success? If the co-op allows sellers to save costs by pooling resources, then it has served its purpose and is successful. The co-op should provide education for sellers, but it is not the job of the co-op to sell products. No one will make any money from the co-op. Not the planners and not the board of directors.
We're talking about an organization that is built to last. The advantages may not be obvious to a casual seller. "I pay a quarter at eBay, and fifteen cents at the co-op. What's the difference?" Consider the value to an average eBay powerseller. He's paying $20,00 per year to sell at eBay. At the co-op, he'd pay $10,000. That's a very significant difference. Suddenly there's a big incentive for that seller.
As for "what happens after the $100 bucks runs out," we can't talk about that until we've done (a lot) more research. We don't know what our costs will be. I believe this will cost less than anyone imagines. We haven't even looked into grants or other resources yet. The key at this point is research, followed by careful planning. I would guesstimate a membership of 10,000 members within 2 years. That's $1,000,000 operating funds from membership dues alone, not including money from listing or FVF fees.
posted on January 31, 2001 06:37:27 AM new
Hi deco100,
The co-op concept has something that all the other (failed) sites lacked: seller ownership. Gold's didn't have that. They followed the same old tried-and-failed business plan that all of the other wannabes tried.
Seller ownership has benefits that no amount of money can buy. To wit:
1. Economics -- With no middleman profiteers, a co-op can deliver better services at lower costs. Yes, fees will be charged, but only an amount sufficient to keep the site operating well. There are no billionaires to create here.
2. Structure -- BY sellers FOR sellers. Who knows what goes into a good auction site more than the sellers who use it everyday? One member, one vote. No more shouting into the wind; make your wishes known with your vote.
Will sellers use a site that 1) charges reasonable fees in return for delivering reliable service, and 2) goes beyond lip service, allowing its users to make management decisions? I think it's a no-brainer.
Sellers desperately want it and need it. Can it really happen? With slow, careful planning I think it can. Remember how Pierre started -- with piecemeal equipment, his own software, voluntary payments and a limit of 10 (or thereabouts) listings per seller per month (limited server space). Starting small served him well, and I think it will us, too.
We need a Steering Committee that understands the intricacies of the co-op concept, as well as computer, business, finance and legal knowledge. They need to have time to research and lay the groundwork and come back to us with a proposal. THAT will be the proper time, IMO, for the rest of us to throw our hats in the ring and pay our membership dues.
posted on January 31, 2001 06:38:56 AM newdeco100Where is the money coming from after our first little $100 is spent? How do we pay staff, huge hardware,hardware techs,advertising, ect,ect.
Advertising is one element that is really critical. You want to compete with eBay then get ready to spend a fortune letting people know where you site is. I'm not talking about advertising on a telephone pole, I'm talking about having ads on AOL. I doubt you could raise enough money from all the supporters of a co-op to pay for one single ad that would have any exposure.
You can put messages on AuctionWatch, OTWA, even the usenet all you want only high profile advertising will have a snowball's chance in hell, and it is very expensive.
posted on January 31, 2001 06:49:29 AM new
Good title.
There is no free lunch.
The $100.00 is just to start. If we get 1000 members in 30 days how many will we have in one year??
And all of these members will be paying fees for their services.
And all of these members will be telling folks about this site and helping to build it.
And all of these folks will benefit from not having the rug pulled out from beneath them when it becomes a success.
Their customer support won't be shut down because of imcompetant management. They won't have fee hikes because they want a spike in the stock price so that they can buy out the competition.
If you can't see the benifits of all this then perhaps you should read through the threads or sit on a mountain and contemplate it?
It's very clear. It's not going to be easy but it's very clear.
posted on January 31, 2001 07:02:02 AM new
deco - Well said. I'm mostly in agreement with you here. When I posted awhile back to a thread regarding eBad's new spam/fee avoidance dictates, I, too, mentioned sellers banding together to make an impact on an alternative site. I asked what could "we" do to take control of our destiny so as not to fall victim(s) to the fleeting whims of the eBad's and YaWho's? of this business. My thoughts were if a site lost a few sellers due to implementing unreasonable dictates, it would make little impression on them. However, if the site had to worry about a group of sellers (say a Co-Op of sellers) leaving, now that would make a huge difference.
I'm in agreement with checking out other established sites and possibly negotiating with their owners for an agreement of sorts. But, basically, if a Sellers Co-Op were established prior to negotiation, the leverage would be phenominal possibly negating the need for even having to ask for what we wanted. The alternative site of choice should be begging for us to come there.
"Sellers in numbers" moving at least 10 or more auctions to ONE site, even while continuing to sell in their comfort zone site, will establish a new marketplace without a doubt in my mind. Word of mouth and dedicated hard work will accomplish the transition. It will not be an overnight experience to get our bidders there but IT WOULD HAPPEN.
Thus far, the most congenial site with excellent customer service that I and many others have encountered is Bidville (formerly AuxPal). No matter what I and others have asked for, it has been implemented, including free fees for life if you register by March 10 (don't quote me on the date). Now, I, too realize there are no free lunches but, if a Sellers Co-Op was planted there, and a future (unforseen) need arose to start charging fees, I believe the Co-Op could suggest FVF in lieu of listing fees and get their way. Of course, for those who signed up prior to Mar 10, those fees would not apply or they might be implemented on a voluntary basis. It would just all depend.
Having said all this, I'm all for a Sellers Co-Op but hesitant about a Co-Op owned auction site.
Hey, how much money will I get for publishing this book..... Sorry, it's so difficult to get your thoughts out without authoring a book!
posted on January 31, 2001 07:02:51 AM new
Hi all,
I have been lurking on these coop threads, and reading, and reading. There are so many now that I can't keep up. I like the concept and find that there are a lot of good arguments both ways.
I think a valid idea would be to look at already established sites (for now), and pick what would suit us the best and negotiate as a group.
If we could get 2,000 sellers to commit to a minimum of listings to the chosen site, and customer referral etc.. don't you think as an "association" or something like it that we could negotiate something like no listing fees, and anything else we choose for at least a set period of time say 2-3 years. In the meantime the association could proceed to build this co-op, methodically and in an organized fashion. And those who chose could also keep listing on e-bay since everyone still needs to eat. Just a thought.
posted on January 31, 2001 07:40:15 AM new
I, too, have been following these threads with interest. I have also stopped selling on eBay for a variety of reasons, non of which are sour grapes. eBay has been good to me and I have no hard feelings against them. However, it seems to me that the time has come to take a new route, so I am in the looking, testing and seeking stage of the game at this point in time.
What I would like to see is an in-depth report of some of the other sites that sellers have used. Never mind that the bidders aren't there [yet] - we already know that.
I am keenly interested in the eDeal site, as it seems to have many options and alternatives to sellers. I am also very interested in the Old and Sold site.
Rather than rushing off to start a co-op at this time, I would really like to see some serious evaluation of some of the other sites, based on a dedicated trial by serious sellers, and other criteria which would be determined by interested parties. I'm wondering if the OAUA board might be the place to conduct this, as this board deals mainly with eBay issues.
If sellers could reach a consensus, then perhaps the route to take would be to move, en masses, a large number of sellers and auctions to the predetermined site for at least a six month trial period.
To my way of thinking, this would be a lot easier than trying to organize a co-op. I don't mind paying for a service, providing that service meets my needs. The fact that eBay no longer meets my needs is perhaps the main reason I have left.
posted on January 31, 2001 07:40:24 AM new
Golds failed because it didn't gain critical mass. So did AuctionUniverse and it had extensive financial backing and basically provided no fees for listing in an attempt to gain that critical mass.
I think what most people are overlooking in this discussion is that there is only one critical mass and eBay owns it.
Co-ops work because the members are of common purpose. But an online auction sellers co-op essentially excludes most of the critical mass that eBay owns...the buyers.
If a co-op is to work the sellers need to offer something to the buyers that is instantly and easily recognized as something of benefit to them. In a retail type co-op you could offer the buyers reduced prices and better service than your competitors. In an auction type co-op what will you offer the buyers? A lower starting bid?
posted on January 31, 2001 08:23:33 AM new
I don't know, possibly a discount on the final bid? A bonus of some kind?
Not going to get into details as that should be discussed on the other board, but what worries me is what if the seller(s)get outvoted on something they consider crucial? Are they going to take their toys(listings) and go home?
And the fact that 200 people discussing the subject on the first thread, that is about 150 different people, supposedly adults, could not even discuss it rationally without attacking each other.
I'm still hoping it could work but I'm afraid I hear the laughing in San Jose, all the way down here in Florida.
posted on January 31, 2001 08:41:37 AM new
Code: Most sellers are also bidders!
I feel that all of the auctions sites have proven that they just clearly don't represent the sellers or the bidders. The represent themselves and their stock prices.
Even the little ones want to make it to the big leagues.
The fact is that a non-profit online auction house built by sellers and run by sellers would be more stable than any other site online. And as it became sucessful it wouldn't raise fees because they could, they would reduce them because it would be non-profit.
The how's and why are being discussed on twinsoft's message board. Why not drop in and discuss this??
posted on January 31, 2001 10:18:39 AM new
I can't speak for all Gold's sellers but I feel comfortable speaking for the die hards who didn't quit! YES we were invested in the site .. not just ourselves. If the site didn't make it, we didn't make it. It WAS a community!
Most of the things I am reading about self-advertising were tried by Golds sellers .. flyers posted, even ads in local papers.
Someone said they failed because they had no listing fee. Give me a break .. the (proverbial) 'you' wouldn't list there even with NO fees. I DO think there should have been FVF's. Dutchbid IS going the FVF route.
For anyone who agrees that you missed the boat with Golds (hindsight is 20/20) .. think about using Dutchbid...they are a site in transition. Lots of exciting things coming (and no I'm NOT talking about the Gold's software).
I like the idea of a sellers co-op in theory but the logistics of it may not be practical. It sounds like a variation of MAM and Golds(replace with any free site name you like) combined! Not in 'function' perhaps, but in terms of the hurdles you have to clear!
If sellers weren't willing to go to a site like Gold's until there were bidders, what makes anyone think they'll go anywhere else? You WOULD need to attract more than just yourselves. This time, you'll be on the receiving end of 'but there are no bids!'
Despite all this, I say go for it and good luck. Just be realistic about what you're getting into. Don't let the rose colored glasses and the initial excitement and enthusiasm blind you. Bear in mind the saying .. "if you're to busy looking at the mountains ahead of you, you're likely to trip over a molehill!"
I have a memory like a steel trap .. unfortunately it's rusted shut!
posted on January 31, 2001 10:23:38 AM new
Quoting CANVID:
"The fact is that a non-profit online auction house built by sellers and run by sellers would be more stable than any other site online."
_______
Can you elaborate? What makes this a fact? I'm not trying to be argumentative, just curious about the 'whys'?
Stable in what sense .. no price increases or site stability?? OR ??
________
I have a memory like a steel trap .. unfortunately it's rusted shut!
posted on January 31, 2001 11:20:49 AM new
I think listing fees are a necessity, even if it's only a nickel or a dime. The thing that discouraged me from regularly checking out the listings at the free sites was that most of the listings were crap. It just wasn't worth my time wading through a list of items that sellers wouldn't even pay 5c to list just to get to the few good items.
posted on January 31, 2001 11:24:54 AM new
"we had our chance with Gold's and we flubbed the ball on the 10 yard line"
I don't think we even got the ball across centre field.
I am wondering what we all did before eBay came along. Maybe that's what we should all go back to doing. It would certainly solve a lot of problems, and as a benefit, it would force us to relearn how to communicate face-to-face ... a skill that many of us have lost with the advent of the internet.
posted on January 31, 2001 11:30:15 AM new
tuition: Sure. I'll clarify. Let's say we somehow organized and created a site that charged fees. The fact is that we wouldn't have to deal with the stock market. We wouldn't have to push for profits. Our main goal would be to have the best of everything in a site and then as the fees rolled in and everything was paid for (including marketing) then fees would be reduced.
Right now ePAy charges 30 cents for a basic lising + a FVF. Amazon charges 10 cents + FVF and Yahoo 20 cents + a FVF.
Epay is posting very respectable profits. They are also posting these profits while Meg, Pierre and the rest of their eminions cash in huge amounts of stock options.
If they didn't have to keep this profit and other funs stuff there'd be an even larger surplus. This surplus could be used into having support services. Keeping equipment upgraded and making sure that the site didn't have monster outages.
posted on January 31, 2001 11:45:15 AM new
uaru -
" You want to compete with eBay"
We don't want to go head to head ... and we don't have to. This is not another conglomerate, it's a place for buyers and sellers of stuff without all the overhead and hassle of the "eBay experience". It's where we take the experience from all the other sites and build a mature site.
"then get ready to spend a fortune letting people know where you site is."
That is NOT necessary if you 'think outside the box' and don't hire ad agencies that make their money on a % of the ad budget. I am NOT going to mention strategy and methods here, but I will tell you it's been tried and tested by some of the Web's BEST marketing gurus.
CODEASAURUS -
"If a co-op is to work the sellers need to offer something to the buyers that is instantly and easily recognized as something of benefit to them."
To offer:
VERIFIED seller IDs? A voice in the way the site runs? Respect for their privacy and personal information? Easier to find stuff because of fast response and server stability?
Possible rebate based on their buying volume (and the site balace sheets)?
TUITION -
Golds was still an IPO-wannabee ... they were dangling stock options in front of sellers, but they wanted to hit the big time.
GOLDS failed because they got caught with their servers down waaaaay too often. Sellers couldn't list and buyers couldn't buy it was so slow, so few went back.
posted on January 31, 2001 12:59:56 PM new
canvid:
I doubt there are too many sellers who are against lower fees.
However, if you want to capture the interest of sellers, lets talk about higher profits...ie.., revenue minus fees. So the co-op would have to address revenue as well as fees, and to be honest, fees are much smaller than revenue (by about a factor of 10), so promising "lower fees" barely hits the radar screen of most sellers if there is any doubt about the ability to provide revenue that is at least equal to what they are currently doing.
So the co-op would have to be able to deliver equal revenue, meaning equal bid price, equal turnover (sales volume and timing), etc.
Of course, its easier to focus on fees, since that is a an easier promise to make ("lower fees!" ). Lots of auction sites (every one, in fact) offers lower fees than ebay, yet sellers are sparse..due to lower overall revenue.
And talking about stability, your argument that it is a "fact" that a co-op would be more stable still doesn't have much to back it other than vague words. What exactly would guarantee a stable site with heavy traffic? (its easy to have a stable site with no traffic, but that isn't what people would hope for of course...) In fact, one could argue the opposite, that a (perhaps) poorly-funded co-op with no hope of support from venture capital, depending on voluntary contributions from members, would be more likely to lack equipment and skills necessary to keep a site running.
Just my two cents worth.
[ edited by captainkirk on Jan 31, 2001 01:10 PM ]
posted on January 31, 2001 01:20:12 PM new
Captain Kirk:
You're quite right. I think the point I was trying to make was that the co-op having different objectives would devote more resources to making sure there weren't outages.
I've never heard ebay state that as a goal. As an excuse after a crash but that was all.
It won't be easy getting a co-op going but I feel if it's a grass roots supported site then things will work out and once revenues and fees create the enviorment that more bang for the buck would be spend on the actual site.
posted on January 31, 2001 01:44:34 PM new
I truly wish you well on this endeavor.
However, my feeling is that ebay's crashes weren't due to a "bad" set of objectives (i.e., profits), since they had crashes pre-IPO, but rather due to bad management, poor system design, etc. Its not clear that a co-op would, by definition, not suffer these defects as well.
Since ebay loses profits during outages, if higher profits is their main objective, then that kinda implies that not having outages is also an objective.
I think a co-op is just as prone to suffer "loss of focus" as a for-profit company, as different factions of "management" (i.e., the co-op members) argue amongst themselves on matters such as fee structure, banning classes of items, and other such emotional topics that have "graced" these discussion boards in the past.
posted on January 31, 2001 02:02:42 PM new
There is the fact that if it took a year or two years for the site to gain momentum there is no stoclholder pressure to show a profit every month. I have been selling over two years. If it took that long again for this to work well I can survive until then. US businesses have no long term goals at all. Everything is focased on the next quarter.
If they have to throw away a potential long term gain to look good next quarter there it goes. There are other area of the world where it is considered sane to start a business looking at goals that are 4 and 5 years away.
eBay did not start out with mega ads on AOL and TV. They grew because people told their friends and it was different and fun. If we do the same it still works.
And something else eBay may find out. You can spend all the big bucks in the world on ads - and if the product has some major defects that the word of mouth system tells everyone about all the ads in the world won't overcome your Uncle and boowling buddies and cleaning lady all telling you it sucks.
posted on January 31, 2001 05:17:35 PM new
I'm going to throw out some random thoughts. It occurs to me that PayPal achieved critical mass almost overnight without TV commercials or newspaper ads or anything like that. All they did was offer a lousy $5 referral bonus. If you think about it like that, a co-op would save sellers WAAAAAAAAY more than $5 over the long haul and there would be a lot of incentive for people to refer others. If you think about it like that, it does seem likely that the site would reach critical mass relatively quickly.
And every time Ebay threw up a new banner ad, I bet there would be new sellers migrating to the co-op.
I helped build Yahoo's auction site. I referred customers. I referred people here. I referred personal friends and associates of mine. Now that Yahoo has gone to he** I feel like all my hard work has been for nothing. (And I personally don't even oppose fees, but since so many other people do, the site has gone down the tubes anyway.) I am NOT going to go through all that again unless I have a really really good reason to!!!! Yes, I still list at multiple auction sites, my listings are very diversified. But you won't catch me adding links for new sites into my EOA's for just any old site I list on, because I know the exact same thing will happen over and over and over again. Nothing's really free, you know?
A co-op sure would be nice. I'd put the energy into it if I were given the opportunity, like I put my energy into Yahoo. Because I'd know that the energy I invested would pay off in the long run. But I'm not investing my energy in sites like Dutchbid, Pootah, and the rest even though I list there. Because I know that sooner or later what happened to Yahoo will happen all over again to them. Face it, I'd get a "real job" first.
posted on January 31, 2001 05:42:41 PM new
Cap't._K, a co-op might suffer a loss of focus if the membership is not adequately educated. Sellers coming from eBay are going to want to see this as "the same as eBay, but without the bars in the windows." At the same time, we want to make it easy for eBay sellers to transition. However, there are some fundamental differences between a co-op and a typical "business" auction site.
Let's take a simple example. Let's say 10 farmers each pay $1 per pound for feed. They pool their resources and get a cheaper price, say, $.90. For the sake of the argument, let's say the sellers saved an average of $1,000 per year buying in bulk.
Now, the co-op itself didn't make any money. There was some overhead. It took a bit of doing to get the 10 farmers all on the same party line, especially considering the fued beweeen farmer Joe and Farmer Jane. But all in all, the farmers are happy because they saved $1,000.
That's kind of like what we have here. We've got 1000 sellers, each paying $10,000 to eBay each year. They hate eBay, but heck, "it's only $800 a month." Then somebody says, "Look, we paid eBay $10 million dollars last year and another $10 million the year before that. Let's buy our own damned servers."
posted on January 31, 2001 06:06:15 PM new
Okay, so now we've got the eternal objection: "You can't beat eBay. Nobody beats eBay. It's impossible. Rivers will run red with the blood of co-op sellers!"
We're not out to beat eBay. There is a perception that unless we can raise $100 million in advertising and knock eBay flat on their backs, then we have failed. That is not what we are after. We think we can bring the buyers (and the sellers). Whereas most e-business are designed to puff up and explode, we are looking at five, ten, twenty years down the road. We are aware of the need for advertising. Not only do we have to think about the possibility of failure, but also of huge success. We have to be that careful, because we can't simply sell the co-op off after it starts. No matter how much money it makes.
Look at what's happening at eBay. Stocks up 50% in the last 30 days, following the fee increase. eBay paving the way for big business. Does anybody think for a minute that things will get better for us at eBay? Little sellers are already being squeezed out, or set adrift in a sea of "free" e-offers. This is the big kiss-off. Many people simply can't afford to sell at eBay any more.
Actually I believe and I think many will agree that the interent has tought most people who use it more about comunication face to face or other wise then most would have ever tried to learn with out it in 50 life times.
I am not only better at comunication right now then I was 8 years ago before I got on the internet but I am wiser much more sure in what I do it has raised self Esteem helped me to believe in myself and what I Do and made me better at what I do.
What many of us use to do before the internet was to work Eat watch tv sleep the bigest thing was letting the TV suck the inteligents and imagination out of our lives at least here it alive and working .
I understand quite well how a co-op works. I'm just still searching for the "magic" that would convince someone to jump ship (other than just general dissatisfaction with ebay and the famous "I'm mad as hell and not going to take it anymore" response).
Looking at the potential fee reduction, in their last quarterly statement, they earned 25% income pretax. Just superficially, that means a co-op could have cut fees by 25% and broken even. Of course, that assumes the co-op would be willing to run a business with absolutely no surplus cash (risky) and also that they've grown to the size of ebay such that the economies of scale would allow them to achieve such earnings. A more conservative estimate might be a savings of 10% (yawn).
And your farmer analogy is flawed, or at least incomplete, in that you have to consider the risk of starting a venture that competes with an "800 pound gorilla" .
I'm certainly not against co-ops, having been a member of a number of them throughout my life. Some worked very well, others failed miserably. The ones that worked tended to have a clear reason for being, usually involving a focused, small-ish market niche that wasn't being filled by for-profit companies, and a clear business plan. As long as such conditions could be satisfied for this co-op, it might actually work. But "general dissatisfaction" isn't a particularly potent weapon against a market goliath, unless backed up by a focused strategy designed to exploit the weaknesses of same.
If I were trying to compete with ebay, i'd be looking for some "gee whiz" differentiators and try to take advantage of them. Like maybe validating every seller so buyers would have more confidence. or maybe some real-time 3D auctions. But a generic co-op built on "listening to the membership" (there isn't a consensus here, let alone with the thousands of potential members) and lower fees (10% off? yawn) doesn't excite me.
posted on January 31, 2001 07:20:58 PM new
Hello Abacaxi,
"VERIFIED seller IDs? A voice in the way the site runs? Respect for their privacy and personal information? Easier to find stuff because of fast response and server stability? Possible rebate based on their buying volume (and the site balace sheets)?"
As a buyer I can tell you what would attract me to a site. Two criteria are paramount.
Availability and price.
Everything else is secondary. I will go to where I can find what I want. If an item is scarce then price is secondary to availability. If an item is ubiquitous then availability is secondary to price.
Availability and price being equal will bring other criteria into play.
You propose two benefits to buyers, one being ease of locating and bidding on desired items and the other being a rebate based on buying volume.
For either idea to work you will have to find an implementation that the buyer will perceive as an immediate benefit.
Buyers are notoriously fickle and will abandon a site after a few failed searches. I did precisely that when AU failed to provide me with a single hit on the code books I collect.
Also, I doubt if many buyers are interested in waiting to see if they are going to get a rebate. And how would a rebate program be organized and funded? Who would decide how much "profit" by the co-op should be handed out in the form of rebates and how much should be plowed back into capital improvements to the site that would benefit everyone?
In addition, one of the biggest seller complaints heard on eBay Q&A, day in and day out is deadbeat bidders.
How will the co-op handle deadbeats? Will there be a bidder verification program? If so, how will you convince bidders to go through verification when they can completely avoid that onerous process on eBay? And what will the penalties be for non complying bidders? And what penalties for non complyng sellers?
A co-op auction site or organization might be possible but I don't think it possible for the generalized online flea market. Co-ops addressing specific categories of items or niche markets might be possible.
I've had discussions along these lines with Neomax several times when AU was still around. I felt the best way to build AU was to go after and capture niche markets, one by one. Offer a loss leader type incentive to get all or virtually all of the players in a niche market to come over to AU, thus establishing AU as the place to sell or buy widgets. Then go after the next niche market.
As I recall, AU went after markets that weren't what I would consider quality niche markets. Jewelry, beanie babies and sports memorabilia were all promoted at one time or another on AU. But those markets were simply too big to effectively pry away from eBay.
Better to start with a few folks selling (for example) a specific type of pottery. Then try to bring the sellers of another type of pottery into the fold. And so on.
