Online marketplace eBay has used its 18th birthday to unveil a range of new features, including a price-matching policy for popular categories. However there are warnings that once the fight on price begins with Amazon, it may never stop.
Since launching in Australia in 1999, eBay says it has grown to accommodate 40,000 small businesses selling their wares, all courting 11 million active users each month.
As part of its “coming of age”, the retail platform has unveiled a range of new search features and commitments on delivery times.
Tim MacKinnon, eBay’s Australia and New Zealand newly-appointed managing director, tells Fairfax the business is also trialling a price-matching strategy across some categories.
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The guarantee will reportedly involve shoppers receiving eBay credits if they find an identical item at a lower price from a seller who is not using the platform.
In a statement on the company’s birthday, MacKinnon said the strength of the business is its ability to get ahead of shopping trends.
“We saw the mobile trend early and invested ahead of the curve. Our app was one of the first shopping apps in the Apple store in 2008 and remains the most downloaded shopping app in Australia today,” he says.
The new search features tap into the preference for image-first browsing, allowing customers to upload photos of items they want to purchase so the eBay platform can generate search results.
There’s also the option to share images of goods found on social media to track whether eBay offers that product.
All bets are now on that Amazon will be trading in Australia by Christmas, but eBay insists it isn’t feeling the fear.
MacKinnon told Fairfax this morning he instead sees the future as “the most dynamic period Australian retail has ever experienced”.
No going back on price
Michael Stapleton, a founder member of the Association of Virtual CFOs, warns once a company commits to lower prices, including by matching the prices offered by others, history shows they are often stuck with them.
“It’s great for consumers, but if they’re going to start, they’re going to have to be prepared to go for the long term,” Stapleton says.
For smaller retailers, a race to the bottom on price against the online retail giants leaves them once again with no choice but to develop tactics to ensure a positive customer experience, he adds.
Stapleton says price-matching strategies have worked well for retailers like Bunnings in the past, but this is in part due to the exclusive stock you can only get from Bunnings stores, which removes the need to price match.
“You can’t say, ‘well, I found this drill cheaper’, because that drill will only be available at Bunnings,” he says.
While it’s still unclear what eBay’s broader price match policy will be in future, Stapleton warns that once a commitment is made on price, that will be the new limit.
If eBay was to roll a price-match policy out and later limit it, competitors would not adjust prices back in line with eBay’s, Stapleton says.
Once one business moves to cut prices, all move — and there’s little scope to go back: “Not unless they all hold hands together and agree to stop.”
SmartCompany contacted eBay Australia but did not receive a response prior to publication.