For merchants with a bricks-and-mortar presence, promoting a store is more about location, eye-catching signage and the right marketing strategies. But in a busy online marketplace where millions of merchants are competing for those millions of buyers, there’s one key strategy that translates from physical retail to online.
Location, location, location.
Without prime Web space (top of page), those millions of merchants offering similar-looking or sounding products risk being lost in the crowd. Without top placement it’s like being stuck in an overcrowded strip mall with a tiny sign versus having prime real estate on the corner shop on Main Street.
Say hello to promoted listings.
And eBay’s announcement yesterday that it will join Amazon and Etsy in providing sellers with a test ad unit that will help sellers who want to get to the top of its page do so — but at a premium.
Its Promoted Listing test, as it’s being called, will rollout in June, and will enable merchants to select which items, or group of items, they want promoted on eBay. Participating merchants pay a specific percentage (between 1 and 20 percent) of those goods when the items are sold as part of the Promoted Listing feature. Merchants can also select how long they want those goods to be promoted.
In an interview with Bloomberg, Alex Linde, eBay’s vice president of advertising and monetization, spoke about the benefit to the seller in these instances.
“This way, there’s no upfront risk for the seller,” he said. “The only lever these sellers had in the past was price, and nobody wants to grow only by discounting.”
Placement of the merchant’s ads for products hasn’t been decided, though it appears they will be placed on the first page toward the bottom, but could move up toward the top — depending on shopper feedback. The Promoted Listings will start off on its desktop site and be optimized for iOS, with plans to add Android closer to the fall.
But this product placement strategy won’t rollout overnight across eBay’s marketplace.
“This is a multiyear journey,” eBay CEO designee Devin Wenig said in an interview, noting the shift aligns with eBay’s plans to turn it into a “discovery-based marketplace.”
“You bite off one challenge at a time, category by category,” Wenig said, which will include a lot of data crunching to determine how products fit together, so better connections can be made for the buyer.
eBay’s bigger goal with its Promoted Listings play is to ensure more of that buyer search traffic stays on eBay’s marketplace and doesn’t get directed to other sites via ads on eBay. R.J. Pittman, chief product officer of eBay’s marketplace business, also spoke with Bloomberg about how this new ad tool will help drive sales for its merchants — thereby giving its marketplace a much-needed boost.
“In a marketplace the size of eBay, discovering products and sellers is a bigger problem than any search engine can solve,” Pittman said. “This way, buyers won’t have to work so hard to find things they may not even know they’re looking for.”
eBay’s model is similar to its eCommerce competitors. Amazon, for example, has an Amazon Sponsored Products option, which allows sellers to promote products using keyword targeted ads. Like eBay’s new Promoted Listings offerings, Amazon puts the sponsored products alongside relevant searches. Amazon relies on the competitive bid process that involves the eCommerce company picking which ads are most relevant to the searches.
Etsy’s product, also simply called Promoted Listings, is a search tool a bit similar to Amazon in that the sellers bid on ads that would appear near the top or middle of Etsy’s search results. Instead of relying on search ads, Etsy and Amazon have turned toward promoted and sponsored listings as ways to entice more buyers to buy into the bidding on space to list their products more prominently.
While Amazon and Etsy already have their hand in the promoted products ploy to get sellers competing for better space on the site, eBay’s new plans show it’s caught on that relying on the search option, or simple online advertisements, weren’t enticing — or sophisticated — enough to draw in sellers who know they have to compete in the crowded online marketplace space.
More importantly, it’s a signal that eBay is figuring out how to handle its Google SEO snafu that set the marketplace back in 2014.
This move by eBay to provide its merchants better options to reach buyers via basic searches makes sense that it’s coming now, as eBay has been playing catch-up much of the past year after it said the change in Google’s SEO tweaks negatively impacted eBay’s search functions, which hurt its ability to draw in new buyers — and caused a marketplace slowdown. (It was during the middle of that slowdown that its top investor, Carl Icahn, pushed for the eBay/PayPal split, saying eBay was hurting PayPal’s potential.)
Defending a dip in sales, eBay CEO John Donahoe said in the company’s fourth quarter earnings in January, SEO is an important source for new buyers, and the switch negatively impacted the company’s 2014, which even Donahoe classified as “a very rough year.”
“Google’s SEO is most tuned to what retailers have, which I would call structured data and use of product catalogs. And eBay is kind of a unique beast. We have the world’s largest collection of unstructured data. And our listings, by the very nature of the marketplace, turn over every seven to 14 days. And so it’s always been a struggle for us to get that to work sustainably and effectively in Google’s SEO,” Donahoe said in January. “We clawed our way back to where SEO traffic is more or less where it was before the event, but it’s not yet driving growth and it’s not yet driving the same new buyers.”
The SEO issue, in fact, could have a drastic impact of eBay’s merchant growth as a report in April indicated that as Amazon’s list of merchants continues to grow, it may be having an impact on the merchants who were once loyal to eBay. In a Bloomberg report, Amazon CEO Jeff Bezos was quoted as saying that Amazon’s merchant base grew to roughly 2 million in 2014, meaning the eCommerce giant is outpacing eBay’s flat growth that hasn’t toppled above its 25 million sellers in a two-year period.
Even last quarter, eBay’s Marketplaces continued to sag as gross merchandise volume declined 2 percent. Its marketplaces gained 2.1 million buyers in Q1, which was an 8 percent increase from the year prior, to 157 million. But active buyer growth across its marketplaces business were still down on the year — though eBay said there were signs business is stabilizing.
As eBay works to stay competitive in the eBay/Amazon continual face off, eBay has also recently announced its plans to go against Amazon Prime with its own delivery subscription service. Just days after Walmart announced it would be launching a $50 per year rival to Amazon’s Prime program, eBay announced just a few weeks ago that it’s gearing up to announce its own paid subscription program. Know as eBay+ and built around faster shipping and returns, the program is currently being piloted in Germany on a limited basis, with plans to expand that nation’s test run later this year.
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