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Lessons From eBay U

9 Oct, 2002 By: Kurt Indvik

EBay and its family of transactional Web portals are hoping to convince more video retailers to use the Web to expand their sellthrough business in used and new DVD and VHS, and representatives are busily pitching that idea at trade events.

Founded in 1997, eBay has more than 50 million registered users who are expected to spend about $12 billion on the site in 2002, buying from about 150 million listed products for sale, including about 3 million DVD and VHS movie titles, according to Matthew J. Ledwith Jr., senior category manager for movies and music. Some 4 million users visit the site daily, he told those attending an eBay University session at the East Coast Video Show.

EBay in June 2000 acquired half.com, a fixed-price marketplace and a site that eBay execs feel can attract more retailers who want to move excess new and used inventory without using eBay's auction platform, which requires the seller to post all the product information and conduct the final transaction offline after the auction for the item is closed. Half.com, which attracts about 660,000 visitors each day, does the credit card transaction and takes a 15 percent fee before forwarding the balance to the seller.

“With half.com we offer the ability for retailers to send us a file of titles for sale using UPC codes using a [file transfer protocol] process, so it's as easy to post and sell 10 videos as it is 100,” said Ledwith.

The half.com system automatically takes the UPC codes of the items retailers want to sell, combines it with the requested price and comments on condition, then posts the product for sale along with added information about the movie (including reviews and cover art) provided by the Muse database and others.

The seller is responsible for shipping, but an automatic $2.45 shipping charge is assessed to each purchase, from which the retailer receives $1.89, more than covering the typical postal charge of about $1.33 to ship a movie. The postage leaves a little extra for the retailer and half.com as well. Sellers on half.com do not pay a listing fee as sellers do on eBay.

“We see this as a cost-effective platform to replace the normal manual liquidation retailers do now on their excess inventory, but with the added benefit of typically higher final values for the sale,” Ledwith said. “We also think it really helps level the playing field between the big guys and the smaller retailers,” since on eBay and half.com there are no discounts for volume sellers.

Ledwith said he has identified at least 200 retailers on half.com actively selling now. Video retailers have been using eBay for years to sell product, though there is no way of identifying them by number.

Demand for movies on eBay, half.com and sister site eBay Store (for more volume or “lot” sales) is significant and growing, Ledwith said, with more than 2 million searches for DVD conducted on the sites each month, and a DVD sold every 17 seconds.

More than 400 VHS tapes are sold every hour; 60 percent of the movies sold on half.com are DVDs. On eBay 60 percent of the video dollars are from DVD, while VHS actually accounts for about 60 percent of all units sold.

“People will be selling VHS on eBay forever,” Ledwith said, adding that eBay also does big business in vinyl records. About 75 percent of all movie sales are used, he added.

The eBay Store is a more robust platform for wholesale and bulk sales and provides a way for retailers to extend their brand into the marketplace outside their regions. Lots might be offered in multiple copies of the same title or, say, lots of 100 titles that may include some top sellers and lots of second-tier titles. The seller conducts the transaction offline and handles all shipping.

The eBay Store offers more branding opportunities with each listing and includes an “About Me” page with detailed information about the seller.

One concern retailers expressed is the sale of bootlegged copies and screeners on eBay. Ledwith acknowledged that eBay, for legal reasons, cannot police the sale of these copies, but can remove such items for sale if requested to do so by the copyright owners.

The company is looking into filtering methods it might employ to screen out searches for product that only could exist in bootlegged form, such as Indiana Jones on DVD (which has not been issued, however 35 copies of VCDs of the title were recently counted as available on eBay).

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