LSD 010: How The Secondary Market is Changing E-commerce

The secondary goods market, with its overstock and clearance products, is at the moment a significant basis for the growing live shopping business (see for example: "Three US Online Shopping Clubs Want To Exceed $100 Million").

AuctionBytes has taken our first eBay Wow! Report as a reference when taking a deeper look into eBay’s “Secondary Market” strategy (“eBay and Others Eye Opportunity in Secondary Market”):

"In February, Best Buy revealed it was entering the secondary market in electronics to go after vendor overstock, consumer returns, refurbished, and used products that it said were often sold through alternative channels like auction sites, clearance centers and overstock stores."

The article describes the challenges facing merchants and manufacturers and also who is making in-roads with new sales channels:

"Among competitors in the deep-SKU promotional space are marketplaces like Overstock.com with its "RedLine Deals"; invitation-only sites that conduct flash sales, such as Gilt Groupe, Rue La La, and in Europe, Private Outlet; and of course, Woot.com and its imitators."

Besides many other aspects, AuctionBytes highlights the particular dilemma that eBay faces:

"The outlet store concept eBay is trialing in Germany may be seen as the third pillar in its marketplace strategy that had traditionally been composed of individual sellers and PowerSellers.

The question is whether this third pillar will help sales of the other two channels by helping to drive traffic to the site from bargain hunters, or whether the downward pricing pressure from heavily discounted branded merchandise will hurt professional sellers' margins.

Indeed, the shopping experiences eBay has been rolling out, such as Daily Deals, may change shoppers' behavior on the site, leading them to wait for better pricing before hitting the Buy It Now button."

As always fascinating is the broad spectrum of new marketing channels springing up - and it will be exciting to see which new sales opportunities have long term traction and which new business models will be developed.

One can easily imagine that when the bargin basements and dollar shops of the neighbourhood go internet “prime time” such as Vente-Privée or Woot!, that traditional e-commerce will feel the ripple effects.

What effect will these developments have on the e-commerce market, for both the new and incumbent operators? Such are the exact questions which will be covered in the next Live Shopping Days conference in January (in Berlin, in German).

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.