Sometimes it is necessary to move closer to a reseller model by exerting more control over transactions. This was the painful lesson learned by SellaBand, Bandstocks, and Slicethepie, which all hoped to disrupt record labels by creating platforms where fans would be able to interact with and fund their favorite bands. Too many poor-quality bands led investors to lose interest, however, and all three companies failed although SellaBand was resuscitated by a group of outside investors with a model closer to that of the traditional record labels.
Another potential market failure that multisided platforms cannot address is when one side has an information or bargaining advantage over the other. Fearful of being exploited, the weaker party is unlikely to participate. The reseller model can help solve this. IV typically acquires patents from universities, small companies, and individual inventors and then resells or licenses them, mostly to large operating companies.
In addition to the benefits of aggregation mentioned above, IV creates value by correcting to an extent the huge power imbalance between small patent owners and large operating companies. Lacking the expertise and resources to bargain successfully or engage in litigation, small patent owners have traditionally been able to obtain only meager, if any, payment from large operating companies. Again, a multisided platform could not achieve this, which is why virtually all attempts to create patent marketplaces have failed. IV has already become the most influential patent intermediary in the technology sector.
The considerations above are sufficient for most companies to decide where to position themselves on the reseller-MSP continuum. Sometimes companies that should ultimately be multisided platforms need to start out as resellers and vice versa. Suppose you are a start-up or a large company entering a new industry and have determined that the multisided-platform model is best for you.
Sometimes you can solve this by focusing on a small niche and growing from there, as eBay did with collectors of PEZ Candy dispensers. If you are unable to find such a niche, resorting to the reseller model for an interim period might be a wise move. Amazon adopted exactly this strategy: It bought and resold books and other products and established a substantial base of buyers before it tried to attract independent sellers.
Karma—a start-up that launched a mobile application in early that allows users to select, buy, and send presents from a variety of sources—is taking a similar approach. Currently, Karma buys items from manufacturers and retailers and resells them for a small profit.
Nevertheless, the company may have had no choice but to act as a reseller at the outset in order to prove the value of its concept to manufacturers and retailers. In addition, the control offered by the reseller model gives Karma more leeway in experimenting with ways to serve buyers. Once it figures out the best way to do that, it can start shifting toward a multisided-platform model.
If your business should ultimately be a reseller but needs to grow fast in the short run and lacks the resources to do so, operating as a multisided platform, which enjoys lower capital and operating costs, might be a good interim solution. Since its founding, in the early s, Gome has sold or rented space in its stores to suppliers, which operate as de facto independent concessions. But the company lacked the resources to achieve its goal—to be the first to open electronics stores in all major Chinese cities—if it operated as a traditional retailer.
Indeed, Gome has expanded at a much faster rate than its competitors.
Connecting buyers and sellers without ever owning the product is a seductive business model: Capital and operating costs are low, and margins are high. However, being a reseller often proves to be a better choice. If you answer yes to any of the questions below, then reselling or a hybrid approach is probably a better bet for your company.
Can your company create and extract much more value by bundling or by selling complementary products? Is your company able to create a better buyer or seller experience by taking control of transactions?
But what was I thinking???
In the typical disruption scenario, emerging marketplaces displace incumbent resellers. Indeed, the multisided-platform model has become particularly powerful and widespread with the rise of the internet and mobile-communication technologies. New marketplaces are created every day, which makes it easier for buyers and sellers to interact directly, bypassing traditional middlemen.
EBay rendered collectibles stores obsolete. ODesk and similar sites are displacing staffing agencies. Peer-to-peer car-sharing services such as RelayRides and Getaround are challenging established car-rental companies as well as Zipcar all of which function as resellers, buying their own cars and renting them to users. It would be a mistake, however, to assume that all resellers are subject to disruption by online or mobile-based multisided platforms.
Similarly, the proliferation of internet-based video marketplaces such as Hulu, YouTube, and Xbox Live Marketplace, through which users buy content directly from providers, has not rendered cable and satellite aggregators obsolete. Aggregators use bundling to extract much higher revenues from viewers and advertisers than content providers can by selling their products independently through online marketplaces; the aggregators then share those higher revenues with content providers.
We are beginning to see a reverse disruption scenario, in which upstart resellers are challenging established multisided platforms. Gazelle is an example. This suggests that successful multisided platforms inevitably create opportunities for resellers to aggregate demand or supply in specific markets or to offer a better experience for a segment on either side of the market. Multisided platforms have emerged over the past decade as some of the most powerful and valuable business models around. It is important, however, not to overestimate their attractiveness relative to the more traditional reseller model.
Before jumping on the multisided-platform bandwagon, managers and investors should carefully consider where on the reseller-MSP continuum an intermediary belongs and understand that it may take one or more moves to get there. Man… I was drooling! You may also want to subscribe to their eBay Radio shows. Nothing like escaping the cold, grey, dark winter days at home to spend a week aboard a gorgeous luxury cruiseship.
There is something about taking a cruise that is just sooo…. You have time to sit, relax, and enjoy great conversation. People flew thousands of miles, and spent thousands of dollars to grab their spot. Some of you reading this were there LIVE and loving every minute of it! But trap these two powerhouses on a cruiseship for a week with no internet or phone to allow them to work and POOF… they suddenly become the most approachable guys in the world. Yep… the water and sunshine does that to ya! At last you can experience it for yourself in the comfort of your own home without the sea-sickness.
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Another way to leave a comment is to click on the stars that appear at the top of each posting. You can rate the quality of the information by clicking 1 star Yuck! So I know I was getting a lot of traffic but no comments. I must confess that I have been a tad bit jealous. On several occassions, I tried leaving a comment and it worked fine. Fortunately, on occassion some would take the time to send an email or even a quick phonecall to thank me for the help. Then last week I get an email from a reader who tells me that when she tried to leave a comment she received the message:.
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Your comment will be presented to the blog admin who will be able to restore it immediately. You may want to contact the blog admin via e-mail to notify him. I type in the same 3 words - in the search engine - at different times of the day, everyday for the last 2 weeks trying to see where my items show up on the results page. When the results page comes up, NONE of my items show up on the first page items per page. As a matter of fact the same search results page comes up every time I go look.
Somewhere around the middle of page 2 on of my items shows up, completely unrelated to the search words I typed in.
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Yet, a competitor of mine, has 46 items on that same page. And I sit here and wonder why my sales are sooooooo low as compared to years previous. Following the release of the earnings report shares were up 8. I blame the security issue and googles punishment for the drop due to ebays inept ability to do the right thing. Don't they always say "Good News for Sellers! Having worked for a couple fortune companies who were subject to the Sarbaines-Oxley Act, I sincerely doubt that eBay is "cooking the book" in the way you are suggesting. I think I'll take a run to the flea market this weekend and pick up some girlie books as that seems to be selling.
I'm sure hard to find adult items sell very well. My brother once had some similar mags he picked up in Europe - he definately got his money's worth! In the US, the popular girlie mags are full of ads and stupid articles. Yep, some would say that the better the sales of girlie mags, the worse the economy - one buys the magazines when they can't afford to entertain the girl. Still some sales to be made. Still a few sellers who seem to do the best. But overall, very sluggish area to be selling in right now. Have also read the same for the area of collectible super hero comic character action figures, etc.
When I first started selling here years ago, the old vintage Corning Cookware was a hot selling item. I could get that old Blue Cornflower stuff cheap around my area, and flip it on eBay, and it brought in a big return on my investment, fast! After a few years, the category was packed, the prices were down significantly, and a great many of those who had initially wanted the stuff had completed their kitchen collections and weren't buying anymore. So, time to drop that particular line of inventory.
I always heard some buy the magazines when they are just going to I've heard that, as well. Though, I've also heard that it is a last resort or a quick-fix. Whichever way, it is far less expensive than dinner. And that lingering-over-a-nice-glass-of-wine part usually takes a back seat too Skip to main content. Go to My eBay page. The eBay Community.
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