eBay (EBAY) sellers’ strike plays into the hands of smaller competitors

04 03 2008

eBay (EBAY) sellers’ strike plays into the hands of smaller competitors

Posted by: in Small Business

Filed under: Products and services, Management, Industry, Consumer experience, Competitive strategy, eBay (EBAY), Marketing and advertising, Small business

For the past several years, eBay (NASDAQ: EBAY) has pretty much cornered the market for on the internet auctions. It has created such big barriers of entry, that smaller sites have difficulty breaking into the market. But this week’s seller boycott on eBay has opened the door for some smaller companies.

We took a look earlier this week at the reasons behind the current eBay strike. We made note at that time, that some of your more massive name competitors, such as Overstock.com (NASDAQ: OSTK) were going to be capitalizing on the sellers’ strike, but now we are also starting to hear about gains made in some smaller companies that you may have never heard of before.

In a recent article from Seattle Post-Intelligencer, two Washington-based companies stated they have been loving all the negative attention that eBay has been receiving as of late.

The first company that the article mentions is CozyBug.com. Never heard of it? Don’t worry, most people haven’t. This small on the internet site is very similar to eBay, but it focuses on selling items that are too big to ship, or items that people usually want to see first hand before making their buy. The site, while being nationwide in its reach, has been trying to establish itself as the web’s “local online flea market and garage sale”.

Sounds like a great concept, but there has been one problem… luring in eBay users and convincing them to switch to CozyBug. Well, this week eBay’s new policies have become CozyBug’s ideal marketing campaign ever.

Just how much of a difference can a week make? The numbers don’t lie. Before this week, CozyBug has been getting about 10,000 visitors per month. This week traffic has ballooned. Its per day traffic has jumped to 15,000 visitors! In case you were wondering, that’s more than a 4,400% daily increase. Not too shabby.

According to the company’s founder and CEO, David Cantu, “EBay is too big… this was bound to happen…” But how has the increased site traffic translated into members? The site has gained 100 newly registered members so far. OK, I know what you are thinking, 100 new members doesn’t sound like such a big change. Fair enough, but consider that in the previous 10 months that the site has been up and running it had gained a total of 700 members, so this week has seen over a 14% jump in members. Yes, that is a material increase for the site to say the least.

Enough about CozyBug, let’s take a look at the next company, MommyAuctions.com. The eBay strike has boosted the number of items listed for sale on the site from 2,500 to 4,000 this week alone. As far as traffic, the site has seen an increase from 3,630 average visitors in January to a current average of 4,650, a 28% increase.

The real question is, what is going to happen next week? Will eBay users go back to what they know ideal, or can we expect to see some of these migrating sellers staying away from eBay permanently?

If you are an eBay seller that is currently involved in this week’s boycott, I would love to hear your thoughts on this matter. Are you basically planning to just boycott the site this week, and return to business as usual next Monday? What options have you been exploring this week for the selling of your goods, or have you basically just taken the week off and not selling on other sites?

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor’s Observer.