Buy.com made a splash tonight with their announcement of a new Facebook application called Garage Sale.
Facebook users can use the application to sell thing directly to others via their Facebook profile. Buy.com charges a flat 5% commission on completed sales (the seller will also have to pay Paypal or other payment fees. The application says “thanks to Garage Sale, Facebook users don’t have to leave their profile page to advertise and sell personal goods.”
There are other Facebook applications doing nearly the exact same thing. Mosoma, for example, is one that I tested a couple of weeks ago. It also allows users to sell items on their Facebook profile.
There is an argument that a closed network is a better way to sell items because the people who view the listing know you and, presumably, trust you. That gets you over a big hurdle - eBay’s feedback system provides information on the buyer and seller which helps them get comfortable transacting. Without that feedback system to encourage sales, it’s important that something else takes its place. In the case of Garage Sale and Mosoma, user familiarity is the key.
But in practice this doesn’t work so well. Sellers are looking for a big base of buyers to sell into to leverage the network effect. eBay obviously does an excellent job of this. Otherwise there is no reason they would command a long term leadership position with their high fees. Buyers and sellers put up with the fees because it is the place to go to conduct p2p transactions. The network effect perpetuates their success and newcomers have a very difficult time gaining market share.
With Garage Sale and Mosoma, sellers can’t access this large pool of buyers because only their friends will see the listings. And sellers who are looking for a specific item are still likely to hop on over to eBay and do a quick search. They’ll only buy from friends if they serendipitously happen to catch site of an item in a friend’s news feed that they were already looking for.
Microsoft experimented in this area in late 2005/early 2006 with their Live Expo product. Originally Expo was a way to buy and sell items to your MSN IM buddies, or coworkers at a company, which is very similar to the Facebook experiments now being conducted. But over time they seem to have expanded Expo to become a more generic listing service. People want deep listings when they are looking for something.
Closed networks work for some things, but they don’t seem to work for trading physical goods. My bet is that Garage Sale and Mosoma fall short of expectations, and that eBay is looking on with, at best, bemused interest.
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In my experience, Ebay has lost a lot of it’s p2p appeal over the years. Normal search results show mostly products of small companies, not people like you and me (which it’s obviously very profitable for them at the moment). When you finally find something you have the trouble of competing against bots which win at the last milisecond. To some degree Craiglist have been covering that vacuum of a more community oriented, friendly place to buy and sell second hand goods, and perhaps this application is aimed at the same niche.
I believe ebay just targets a different audience: facebook apps will be more likely to appeal the occasional seller, while top sellers will hardly go away from ebay, IMHO.
Facebook has a marketplace that they started before the open applications approach. I wonder why people (buy.com) think that offering sales to your limited pool of friends is a better option than the built in functionality?
Anyway, doesn’t ebay own buy.com?
@ Mikey Arrington: I agree with Savino entirely. Garage Sale will appeal to a completely different target audience–the sellers own intimate social network. These buyers will be driven by a potent combination of convenience, trust, impulse, possible interaction with the item(s) for sale, and guilt.
Sure, it’s not the kind of grandiose exposure that eBay offers, but it’s equally as effective–because it’s personal to both buyer and seller.
I think there are a couple major things holding this back. First is the commission, I just don’t see that catching on in the community when there are free alternatives.
Second is, the people are savvy enough to use either eBay or Craigslist already. Unless there is a trivial input or import process I don’t see too many people using the marketplace for such a limited audience.
That being said, some will. It’s not difficult to get tens of thousands of sellers, and to get the listings showing on Google Products, etc (maybe not in this case as it’s not 100% public). It is difficult to attain critical mass enough so that people know about the marketplace on their own.
The difference here is that Buy.com can actually gather all of these Garage Sales listings and add them to the Buy.com site or a “Garage Sale” section of the site. It certainly isn’t going to happen immediately but if there is sufficient interest and inventory why not leverage the Buy.com platform in some way. This allows them to raise fees for those items included on Buy.com.
Right now this is another attempt to capture the casual seller. I’ve tested it out and it’s simple to list. I don’t eBay needs to be worried, yet. Most of these new apps though are targeting a sizable segment of their business — the casual seller.
I wouldn’t use a social networking site to sell goods. The concept is a decent one, and I bet it *will* work out for them and do well with the college scene, but as a business owner half the reason that I put anything on Ebay is to promote my own sites.
anyone else find it odd to buy and sell things with friends? Usually I’ll lend something (ie a book) or give it away but asking for cash is odd.
eBay has a network effect allright: A scammer network effect. The network effect on eBay is net negative - for every new user, more than 1 scammer gets attracted to it. The effort required to sell something significant on eBay is measured in multiple hours due to having to weed through the 15 offers to pay double if only you would please ship to Nigeria and, oh, it’ll be Western Union. Uhhuh.
closed networks work just fine. However, you abuse the term - a network implies, well, a NETWORK. Your friend’s friend’s friends also need to see your auction. Just your friends isn’t enough. With 3 to 4 layers of friends, the pool is large enough, but there’s still an effective anti-scam thing going. If you do get swindled, you can simply send your complaint through the chain of friends. One of those friends unbefriends the scammer, or the friend who doesn’t gets unfriended, etc etc etc until you unfriend the friend that led to this scam if you care enough and no one else in that chain is willing.
No more scam problem. I’d say a scam-proof eBay is better and will eventually win.
See: http://fourstarters.com/2007/0.....exception/
“The ability to learn faster than your competitors may be only sustainable competitive advantage.”
–
Michael,
Social networking sites are the center point of discussion recently and it’s obviously getting attention from every corner of business to leverage its potential. The way facebook friends network works, it may be not be a good platform for business. You are selling only to the known circle of friends. So facebook will be is not right platform for mass business. But there are other social networks like LinkedIn and few other social networking sites, where you have multi layers of known and unknown friends and friend’s friends even circle of millions of people totaling in different layers, I see big prospect of business if someone has got a real business idea.
Facebook is popular recently, so everyone going there. But important thing is to analyze, what really works and what not.
Rajesh Shakya
http://www.rajeshshakya.com
Helping technopreneurs to excel and lead their life!
WOW. Buy.com totally dropped the ball on this one. 15 minutes of research would have told them that Facebook has an application called “Marketplace”, which does the EXACT same thing… wow.
Ryan
PDG+creative
#11 - Yep
How does this compare to Edgeio?
It’s interesting… I would much rather buy items this way since I can base trust on the user’s network. However, I wouldn’t really want to sell items this way because it does feel limiting.
@Ryan Merket
Completely agreed. Facebook’s very own Marketplaces covers this quite well.
Great Article!
I have been using facebook and LinkedIn for a while. I recently came across a new website zmobs. It looks like a combintation of LinkedIn, Craigslist and AngiesList in your own network and community. so one benefit I can see is that If I look for a service provider, I can see who in my network has receommended a plumber, for example and it is free.
#11.
But hey. did it not create extra publicity for Buy.com especially since they are somewhat faded. I guess we can call it smart branding. Even more effective than banner ads.
Can’t see this working, although I am more likely to buy stuff from people I know and trust, I probably wouldn’t use this (or any other) service to do it. I’d probably just see their article for sale in facebook, phone up my buddy and say, hey I want that, I’ll pick it up later and give him a wod of cash. Why would a seller I know bother to pay postage and also pay a 3rd party commission when we could just do it face to face? Of course not all friends live close by, but you get my point…
If this applications could list items into the facebook marketplace then it could be more powerful…..
#12
edgeio chose to think about Facebook differently. After months of discussions with them they launched Marketplaces. We see that as their thing. edgeio can have 2 roles. 1) As a means of taking seller items to a wider off-facebook audience and returning traffic to Facebook. 2) As a provider of paid listings INTO Marketplaces from the outside.
We are an advertising network in essence. By the end of Sept we will have 24 million listings from about 7000 advertisers, and we already have 1000 publishers using our classified boards product. Facebook is on both sides for us. It has listings and wants to take additinal listings for a fee. Great for edgeio. Our job is to plus advertisers and publishers into a wide network, something that is hard for them to do alone. Advertisers get traffic and publishers earn revenue. Very different to these offerings.
Keith Teare
ceo/co-founder/edgeio
That was a very short sighted article. No real commentary of merit
@ Michael Arrington - Thank you for a well thought out article.
@ 2 - Occasional sellers can’t create a market. That’s the problem. I don’t look at my Facebook Marketplace because there are too few goods, which leads to me not checking very often, which creates a negative feedback loop.
@ 11 - Exactly. Also, Facebook already screwed over another Silicon Valley start-up. They’d taken money from this start-up and announced a partnership about 2 weeks prior to launching Marketplace themselves. This makes you wonder about any sort of partnership with Facebook. They will just cherry pick the best ideas and do it themselves.
The closed network has one big advantage, namely that the buyers might actually see a listing. Not everyone trolls ebay looking for stuff. Furthermore, buyers and sellers will most likely live near one another, in the case of a college-mate. This makes shipping costs and transaction logistics easier. This isn’t so much about competing directly with eBay, but rather it’s about competing with a hand-written sign taped to your dorm room, in my opinion.
I still believe the real reason these don’t work is not because of fees and marketability (the broader user base on ebay may mean you get less return for your goods). The real reason they don’t work is people want to be disassociated from what they’re selling. I don’t want to sell something to my friend, because if it breaks or he feels he got a raw deal, it could impact our relationship. Or if I felt I was too generous on the price. It’s better to sell to someone you don’t know, because it removes that weird social dynamic you get otherwise. Craigslist is great because you can sell locally to a complete stranger. Ebay is great because you can ship it halfway around the world. I do not want to sell to my facebook friends, however.
It’s pretty outrageous to assume that anyone in a “closed” network would pay
two sets of transaction fees to a third party to complete a sale like this. These are people who supposedly live within a mile or two from each other, and can realistically be considered peers. It’s very likely that their own value proposition (ie trust via a closed network) will negate the viability of their model, at least in its ability to produce transaction revenue. Maybe they were under the impression that you couldn’t include a ‘$’ in a Facebook message.
I think that it is hilarious that a company claiming a valuation in the BILLIONS has to resort to an open API for crap like this to stay competitive.
Billions? For a send-tier, half-baked classified ad site? Right….
@21..isn’t that the point of F/B apps…a Darwinian universe of Other People’s Risk to teach them which apps they should DiY?
And if any one of my “friends” on F/B starts to flog me something……
I felt the same as the author when I looked at this site. For me, it would be incredibly difficult to supplant ebay as my choice for buying/selling used goods.
Besides, have any of you ever sold something to your friends? First of all they want a huge discount, secondly it’s a recipe for causing a rift in the friendship if the haggle over price becomes heated. I prefer to just give stuff free to them anyway most of the time, they are my friends right?
Heck, it’s not even an auction, you either buy it at the price I set or you don’t. If I were actually selling something to my friends, i’d be more likely to put in the description the actual price, and put the price in the system as .10 to avoid the fees.
I guess I can give buy.com some credit for trying things like this out, but this one should have probably been left on the whiteboard.
Marketing 101:
Stay focused
Stick to your line of business
Do not underestimate competition
Don’t let greed ruin a great business model
A better idea might be to create an exchange forum for local goods and services. The competition is very amateurish, the market is underdeveloped, and the product fits right in with social networking psychology. It is also a good sustainability tool.
Marguerite Manteau-Rao
Green blogger, and marketing consultant
http://lamarguerite.wordpress.com
Even i have the same question. How does this compare to Edgeio?
This is just buy.com trying to make a buck. Facebooks had their own marketplace even before they opened up for developers and it works great especially for stuff you wouldn’t feel comfortable posting in ebay or the newspaper like “room mate needed”.
Mike,
Nice use of Buy.com’s terrible foray into the Facebook space (I gave them two stars on my review: http://www.apprate.com/garage-sale-157/) to get to the bigger story - large retailers/auction sites trying to capitalize on Facebook’s platform.
eBay to Go is the best application I’ve seen to let you share with friends what you’re looking for or what you’re selling (unfortunately you’re still dealing with high eBay fees). There are definitely different expectations with each marketplace (social networking v online retailer/auction) and it will be interesting to see who can provide services that link both. eBay’s is a front for their online store. Garage Sale (buy.com) is social networking based. Still waiting for a company that can find an intelligent way to tie both together.
#29 Amit, See my answer to #12 at #19.
Keith Teare
ceo/co-founder/edgeio
I’m not sending my customers to ‘face book’.
Will Garage sale be available as an embedded script for third-party websites? That would be IDEAL.
While I doubt this will catch on right away I do like the increase in attention on shopping apps for Facebook. I would love to see Facebook develop into a sub-internet where people do everything they normally do on the open web except with their friends. Apps like this can’t just focus on Facebook. They need to tie into an external website and exchange information freely between non-Facebook and Facebook users. That’s where I see the real potential.
Most of the comments are negative. I think it could be good. Many people on eBay are tired of the fees they have to pay, so they try to entice eBay buyers to come to their storefronts to buy next time.
Now they will entice them to come to their facebook page. Just another channel to capture sales. Just another validation that SMO is an important part of your internet marketing strategy.
If this buy.com and facebook thing doesn’t work out. There will be another feature just like it around the corner.
Jason
Commerce is a natural fit for some social networks (and smart, too, because it adds a revenue stream), though I don’t know that any consumer will ever rule out eBay, or Craigslist for that matter. I agree that eBay’s a powerhouse that will probably never really be hurt by any start-up competition, but I think there is enough room for competition to be successful for some items. eBay’s mass users typically don’t recognize beyond what’s mainstream (making some things difficult to sell) and fraud and fake items are a real problem for a lot of sellers there, so it opens up a door.
Marketing a Facebook application is a lot of work. Only time will tell if these guys can pull it off, in my opinion. It’s not a bad idea, but I think Facebook could quickly roll out a commerce element if it wanted to, and it’d kill this.
eBay just launched an app for facebook too. It currently doesnt have a “list” and “publish” to my friends feature but it should soon.