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Mobile underpins eBay’s ambitions to own the direct-to-consumer market

January 21, 2014

EBay's iPhone app

EBay is betting on mobile and its ties to retailers to help compete against Amazon in the direct-to-consumer space, where the auction giant is reportedly eyeing a bigger role.

Last week, a report from Macquarie Capital reported that eBay is working on a new direct-to-consumer product called The Plaza. It is clear that mobile is fueling some of eBay’s moves outside of the auction place market, so it is not hard to speculate that mobile will be one factor that pushes the company further into this new space.

“This is new territory for them, especially if they are planning to move beyond the brokerage role and actually sell and ship items they buy and stock,” said Wilson Kerr, vice president of business development and sales at Unbound Commerce, Boston.

“Mobile is a place they are very comfortable with and their popular commerce-enabled app means they can leverage location-based functionality for push messaging, real-time customized discounts, etc. in a way the competition might find hard to match,” he said.

Mr. Kerr is not affiliated with eBay. He commented based on his expertise on the subject.

EBay declined to comment directly on The Plaza for this article.

Directing mobile sales
The new service will reportedly allow brands to sell directly to consumers through eBay as a network of brands and retailers.

Leveraging eBay’s wide group of users could be an effective method for retailers looking to target consumers who might not be shopping directly from a brand’s mobile or desktop properties.

Retailers could also hypothetically acquire consumers through eBay to push future traffic and sales to branded Web and mobile sites in the future.

EBay’s The Plaza could also revamp the company’s eBay Stores, which is an existent online platform where retailers can sell products.

However, there is not much differentiation between eBay Stores and eBay’s bigger and more recognized Marketplace.

This could be dampening some interest from big brands that do not want to merchandize their new products alongside auction items that eBay’s users are selling.

Therefore, some experts believe that The Plaza could give eBay a fresh start at the increasingly lucrative direct-to-consumer market.

According to a retailer familiar with The Plaza in the Macquarie Capital report, The Plaza site is set up so that retailers can clearly differentiate their products from eBay Marketplace.

If the differentiation between new and used products is strong enough, eBay has the potential to get a leg-up on Amazon that steals a significant amount of sales away from retailers.

EBay has also been working on developing stronger relationships with brands themselves in the past few years, particularly on mobile.

Mobile is a key platform for eBay as the company moves into new markets and offers additional services.

For example, EBay credited mobile in growing the company’s line of local services, including eBay Now and eBay Marketplaces, during its third-quarter results in September (see story).

EBay predicted that its total mobile commerce volume for 2013 hit $20 billion.

As more consumers turn to their smartphones and tablets to browse and buy products, mobile could be a key part in eBay’s success with direct-to-consumer business.

Direct-to-consumer challenges

While there are several opportunities for eBay to take a significant share of the direct-to-consumer online market, the online company also faces a number of challenges in the space.

EBay will have to pitch retailers that there are benefits in having multiple retail stores open on the Web, which would require additional investments from marketers.

Amazon's mobile site

Additionally, eBay will compete with Amazon and other online companies that already established strong direct-to-consumer offerings.

For example, Chinese online retailer Alibaba already offers Tmall, which offers products from more than 70,000 brands.

One of the ways that eBay could potentially work around this is with compelling offers that cannot be found elsewhere.

“Dropping shipping by large brands is the obvious place to start, along with offering a new and different consumer experience and look and feel,” Mr. Kerr said.

“EBay could also be looking to bridge the gap between mobile marketing and mobile sales, by leveraging the fact that they own, a location-based marketing platform in Boston,” he said. “A mall approach could allow them to help retailers use mobile to promote and support in-store sales, where a vast majority of transactions still occur.”

Final Take
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York 

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