Before we consider why charity retailers should embrace eBay as a complementary sales channel to market, it’s important to understand some of the history behind eBay and just why it has become the channel of choice for used goods retailers around the world.
eBay was founded as Auctionweb in 1995 in California and sold it’s first used item – a broken laser pointer for $14.83. The story goes that AuctionWeb’s founder Pierre Omidyar was so astonished that it had sold for so much that he contacted the winning bidder to ask if he understood that the laser pointer was broken. In his responding email, the buyer explained: “I’m a collector of broken laser pointers.”
By the end of 1997, AuctionWeb had hosted 2,000,000 auctions, raised venture capital and changed its name to eBay. The company is now the 9th largest internet company in the world with revenues of almost £10Bn. The laser pointer story says a lot about what has made eBay so successful. Essentially, it has found new homes for many millions of items that might otherwise have been discarded and many more that might have been sold for a fraction of the price in local classifieds or, you guessed it, on the shelves of charity shops.
Charity Retailers and Online Selling
The media, backed by compelling statistics has long predicted the death of highstreet retail and whilst almost every other retailer in the UK has opted for a hybrid or multi-channel retail business model, UK charity retailers tend fall into one of four categories:
- Selling large quantities of donated items online and through stores from a central location or hub,
- Selling modest quantities of donated items online from the shops where the stock is held,
- Selling the odd item on eBay when time allows from the shops or,
- Selling nothing online.
In my last post, I examined the reasons why many charity retailers are still resistant to selling online and I exploded many of the myths that regularly discourage them from doing so. Here, I’m going to focus on the reasons why they should.
From Charity Shops to Charity Chains
Charity shops are wonderful things. Familiar features on every high street, often small with friendly, welcoming volunteer staff and crammed with bargains of every shape, size and type. They serve and are served by the community in every sense and provide an essential drop-off location for unwanted donations in the form of everything from clothing, furniture, electrical items, toys and bric-a-brac. It is a formula that has worked for decades and which has led to small charities expanding from one to several shops in a localised region and many larger ones like the British Heart Foundation and Barnardo’s to over 700 shops nationwide. The business model is replicated and a shop can generate form a few hundred to several thousands of Pounds a month in turnover.
But the problem is that a shop can only service its local community and cater for passing consumer traffic. What is donated to the shop stays in the shop and no matter how good or how valuable a donated item may be, if the demand does not exist for it locally, it will remain unsold or it will sell for a price far below its value or worst of all, it will end up as landfill.
This reality compels many charity shops to price up their stock at bargain prices. When it sells it often sells for far less that its true value and it often bought by some very “uncharitable” people!
Charities Lose Profit to Opportunists
If you have ever spent any time in a charity shop, you will have witnessed this phenomenon. A shopper arrives and scans the floor looking for bargains. Nothing unusal or troubling there! But wait, they have spotted an item and close in with smartphone in hand. They will often type words into it or hold up their camera and take a photograph. Moments later, they will either discard the item or drop it into their basket and move onto the next bargain. Does this sound familiar?
These people are the eBay “scavengers”. They rely upon charity shops undervaluing their stock and they capitalise on charity retailers’ resistance to selling online. They spot bargains, value them on eBay using their phones, they quickly work our their potential profit and they walk out of the charity shop with a box full of items which they will promptly sell (usually on eBay) and make a tidy profit from – profit lost to the charity and profit that the donor expected to go to the cause they support.
Believe it or not, many people and small businesses in the UK make a very good living from buying and selling in this way. Charity shops and car boot sales are where they buy and typically eBay is where they sell. There is nothing wrong with this of course. But if there is more money to be made, I for one would like to see it being made by the charities themselves rather than some of their craftier and less than charitable customers.
After the internet entered the mainstream and people wondered what purpose it could serve beyond messageboards and information exchange the worldwide web arrived and with it web browsers. With web browsers it was now possible for retailers to sell online to consumers and ecommerce as we know it exploded onto the scene in the early 2000’s. New retailers which were soon to become household names appeared for the first time including Amazon, AliBaba, Boo, Zappo’s and of course eBay (supported by PayPal of course). But these were the new breed and it took a while for traditional bricks and mortar retailers to wake up and realise that there was change coming. Some realised quickly, like Walmart in the USA – their online store opened in 2000. But UK retailers were on the whole slower to react. Many like Debenhams are still suffering the consequences today.
Of course almost every retailer now has their own website – most with a webstore – from the very small, to the very large. This is because most have recognised two things:
- There are inherent benefits to selling the same item in more than one place
- You have to sell where consumers want to buy
The Benefits of Selling in More Than One Place
By definition, the population of a city is between 100,000 and 300,000 people. A large town has a population of 20,000 to 100,000. A town has a population of 1,000 to 20,000. A highstreet charity shop’s potential buying audience is limited by these numbers but in fact due to a variety of factors including location, demographic, footfall, stock-appeal etc. the actual size of this audience is far smaller. Indeed most charity shops refer to their “regulars” who visit weekly or even daily contributing significantly to revenue – a phenomenon quite uncommon in all but food retail.
Opening a webstore on your charity’s website is one way of opening up your available stock to a much wider audience. But it has been my experience that charity webstore’s tend to have audience limitations associated with the size of your supporter network and the size of your online marketing budget. Certainly, this will give you a larger regional or national audience though.
Contrast this with the estimated 3-4,000,000 eBay users in the UK and the 170,000,000 users worldwide and you can see how astonishing the reach afforded by an online marketplace can be. Multichannel selling exposes charity retailers to a much larger audience with diverse interests who already frequent these shopping destinations without having to be lured their by expensive marketing.
Selling Where Your Customer Want to Buy
It is an undeniable fact that UK highstreets have been the losers as online shopping has gained in popularity. It is not that the highstreet shopping experience is inferior or unpleasant in of itself. But it lacks the convenience of online shopping. It also lacks the choice and the ability to compare vast numbers of goods and their prices with tremendous speed and convenience.
Not everyone shops online but it is fair to say that the vast majority of those who cannot or don’t want to shop online belong to a demographic that traditionally spends the least through retail. That demographic is more likely to buy from charity shops, it is true. But that group is also naturally giving way numerically to generations of shoppers who were either born into a world dominated by ecommerce or who have been exposed to it for most of their working life.
These consumers -the growing majority – want to buy wherever, whenever and however they want. And increasingly, online shops and marketplaces are their destinations of choice. If charities fail to respond, they risk a fate no less grim than that which has claimed the likes of Woolworths, Maplin, Toys R Us and Coast to mention a few.
The Benefits of Selling on eBay for Charity Retailers
eBay may as well have been designed with charity retailers in mind. Just consider what eBay is and what it offers:
- A worldwide audience of over 170,000,000 shoppers
- Buyers in 190 markets
- Sellers in 17 markets
- An annual marketing budget of over $1.3Bn
- Over 1 billion items for sale
- A mobile app with over 350 million downloads
- Free marketplace webstore
- No listing or selling fees for charities
- PayPal Giving Fund donations
- Multiple buying / selling formats including auctions
- Listing optimised for search engines
- Sophisticated selling and analytical tools
In practice, this means that charity retailers get access to an enormous market which is positively driven to a vast marketplace. Within this marketplace, they can enjoy a charity-branded online shopfront through which they can advertise any items they choose via auction, classified or buy now formats supported by automated payments, billing, shipping and messaging. What is more, it costs nothing to sell there and by signing up to PayPal Giving Fund, they even get donations solicited from buyers who bought from other sellers.
Selling on eBay for Charity Retailers Does Come with Challenges
As I explained in my earlier post, selling an item online whilst simultaneously selling it in a charity shop is problematic because of the risk of selling it twice. If you sell an eBay item twice and cannot fulfil the eBay order, this is called an “oversell” – dissatisfied eBay customers may generate poor seller ratings and eBay may even close your account.
There are other challenges too but you can overcome them by using multi-channel retail software like Shopiago to manage your listings, stock, orders and shipping across multiple sales channels. Alternatively, you can selectively sell items online or in-store and remove the risk of overselling altogether.
Let’s Take Your Charity Retail Business Online
If you run a charity shop, an area, region or the whole of a charity retailer, the time has never been better to get online. The benefits are overwhelming and the risks and challenges can easily be overcome by using Shopiago.
Shopiago’s multi-channel charity retail software helps you automate all of the key processes including researching, identifying, valuing, listing and selling your items plus automation of order management, messaging and shipping.
Next time, we’ll be looking at how to build your own Shopify webstore so watch this space!