EBay Opens Cyber Storefronts With Fixed Prices
EBay Inc., the world’s biggest Internet auction house, took another step Monday toward transforming itself into an online shopping mall, offering high-volume sellers the opportunity to sell their products through their own cyber storefronts.
Under the new plan, sellers can open an EBay store for $9.95 a month plus 5 cents per item listed. Once an item is sold, the seller would additionally pay the standard EBay commission, which starts at 5% for sales up to $25.
IBM and Hard Rock Cafe are scheduled to set up storefronts under the new plan, EBay officials said.
“It gives a seller the chance to say, ‘Hey, if you are buying one of my bicycles you might also like the other products I sell. So come on into my world, where I can show you everything I sell,’ ” said Stephen Fitzgibbons, an analyst with J.P. Morgan Chase & Co.
The storefronts give EBay, one of the few profitable dot-coms, an additional revenue stream that analysts took as an encouraging sign.
“This is a nickel-and-dime business, but we are talking millions and billions of nickels and dimes,” said Faye Landers, an analyst with Sanford C. Bernstein. “If they can figure out different ways to charge people to list items, it’s very good for them.”
The service began modestly on Monday with a handful of storefronts, including Instrumentguy for musical instruments, MoonBuz selling computers and TexasBrit for collectibles. All these initial storefronts were started by longtime EBay sellers.
EBay stock closed at $62.79 Monday in Nasdaq trading, down 76 cents.
The establishment of storefronts, which carry both a seller’s auction and fixed-price items, marks a “logical step” in EBay’s evolution, said company spokesman Kevin Pursglove.
He said the company started out as an auction house but began its move into the “fixed-price model” last year with its purchase of Half.com, an online flea market where individuals can buy and sell from each other at fixed prices.
In November, EBay launched its own fixed-price program, called “Buy it now.” About 30% of EBay transactions are now on a fixed-price basis, Pursglove said.
“The next stage is for us to provide a place for sellers to offer their auction and fixed-price items together.”
Analyst Derek Brown of W.R. Hambrecht & Co. said the establishment of storefronts is another sign of EBay’s evolution from a quaint auction service.
“For the last five years there has been this big misunderstanding that viewed EBay primarily as a consumer-to-consumer franchise,” Brown said. “But it has become an increasingly important center of economic activity for big businesses, government and small enterprises.”
