The Walmart / Ebay Connection

PricesI recently discovered that the Walmart employee who developed the statistical analysis packages that put Walmart at the top of the discount retailer heap, is working on the same type of statistical analysis for Ebay. This started me thinking about comparisons that can be made between Walmart business policy and Ebay business policy. What is the same about both corporations, and what is not?

For starters, both corporations are concerned with profit above all else, and bringing products to the consumer at the cheapest possible price. Both have a reputation for offering products at rock bottom prices. Walmart is known for taking advantage of manufacturers to get the best deal.

I got that far, and an interesting comparision came to mind. Suppose Ebay saw all the sellers on their platform as manufacturers? Say we Ebay sellers were considered the same commodity to corporate Ebay as the manufacturers of goods are to Walmart? Walmart is known to have broken many a manufacturer by refusing to sell their product until they lowered their price. Walmart can get away with this because they have gained control over so many small town retail markets. It hurts not to have your product sold at Walmart.

So how can Ebay break us unruly sellers to make us lower our prices? By implementing a new search that puts the cheapest product, being shipped at the cheapest rate, ahead of everyone else in search? By creating a secret algorithm that allows them to place any seller above all others in search? Will the sellers with the cheapest priced products always be first in search after Finding 2.0 is implemented? I don’t know the answer to any of those questions, but I do know that Ebay goes out of their way to encourage me to lower my opening auction bids.

I get e-mails telling me that if I start my auctions at a lower opening bid, I will get higher overall auction sales. I have buyers who don’t bid the first time I list an item waiting for me to relist my items at a lower price. Ebay allows sniping of auctions at the last minute which lowers final sale prices. And there are many more examples.

Why do both Walmart and Ebay believe that offering products at the cheapest price is a good business practice? Wouldn’t it be wiser to offer quality products at a price that keeps your manufacturers/sellers in business? Ebay could try to raise their profits and reputation by implementing practices that raise buyer awareness of realistic pricing and shipping costs. It would be an interesting Ebay world where they spent more time teaching buyers why products are worth more, rather than training sellers to expect less.


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