eBay effect: Five Industries Altered by Auctions

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Everybody from the press to your aunt (who just made some serious bank on her antique teacups) seems to have a place in their hearts for eBay. But for those in the following five industries, eBay has caused a bit of stress for those who have failed to adapt to its influence.

1) Computer / Server Hardware
It was 4:00 PM on a Thursday afternoon and it had been a long week. One of my best clients called in regarding a Cisco Switch I had quoted him earlier that month… “I really want to pick this up from you, but my manager searched this on eBay and found it for 10% cheaper. Can you come down a little?”

Luckily, we sell used Cisco and typically have comparable pricing to eBay. If we were a manufacturer or a new reseller, our price probably would have been off by 50% or more!

Manufacturers, resellers and remarketers have all faced price pressure from our clients who compare us to eBay. The fact is, you’ll (almost) always receive enhanced assurance and added value by working with a reseller and forming a long-standing partnership. Nonetheless, it has become imperative that IT Hardware resellers take extra measures to add services, resources and trust.

Back to the example above. My client forwarded me the auction listing for the used Cisco switch. It turned out that it didn’t include power cords and slot-covers and it was offered “as-is” without any warranty…

We got the order Friday morning.

2) Jewelry Industry
Sell an old diamond ring to a storefront jeweler, and you’re bound to get much less than you could reap in an online auction. On the flipside, the jeweler is losing a sale to the person who purchased the used gem. While there are concerns about authenticity and the fact that many like to see a diamond or other jewel in person before purchasing, eBay often still wins out.

Take the following snippet by an online jeweler directly from an eBay review page:

"There was a time when consumers went to what they thought was the ‘source’ (the New York Diamond District) for their diamond purchases, however, over the years, those who want to keep up with the competition (in New York) have actually opened eBay stores and conduct auction events in order to move their merchandise quickly (especially during non holiday seasons).”

Many jewelers have adapted by creating their own eBay stores and others instead decided to focus on the high-end of the market and market their expertise and prestige.

3) Flea Markets
The Flea Market circuit has had to feel the pain of the online marketplace. How would you feel about sitting in the rain, trying to sell vintage road signs and painted hubcaps when you know you could just list them online instead?

I think the flea market is enough of an event to retain most faithful shoppers, but many of those visitors check eBay pricing from home before they head out. Thus, not even the flea market tables can escape the price pressures of eBay.

4) Coin Dealers
Before 1995, there were millions of coin collectors, but only a handful of true coin dealers throughout the world. When eBay came around, the industry was turned on its head.

Individuals are buying coins at online auctions with little education in the process. Some coins might be listed at ridiculous prices online, making them terrible investments. Collectors have reported that lower-priced coins tend to sell for more than they’re worth, while higher price coins lose their value as the miseducated masses become coin “dealers.”

Those coin dealers who have become relentless online marketers have built quite a strong tool to market their products outside of their local shops and road shows. eBay is a huge marketplace for them to draw in buyers to their inventories.

5) Professional eBay Sellers
Ironically, many of those who initially gained so much selling at eBay auctions were unable to adapt to increased competition, changing markets and increased listing fees – and ended up having to go back to their traditional jobs.

In a Salon.com essay, Doomed by eBay, Claudia O’Keefe recounts her success, then eventual failure as an eBay seller.

“It was a beautiful dream, but a stupendously arrogant one on my part. I fell under the giddy, deep drink of individual Internet commerce, and it has to stop.”

In the end, even the everyday auction sellers have felt the eBay effect.

Truth be told, the open marketplace is terrific for the consumer. But most of these markets have felt great pains because they end up essentially being the middleman. However, the leaders in these industries have either learned to adapt to the new marketplace, or have built up added value and assurance to their products.

Later this week, we’ll discuss what Vibrant is doing to add value for our clients and become a leading reseller of servers, storage and networking in the eBay era.

(Article 1 of 5 in our eBay article series)

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