Irked by eBay, Some Sellers Trade Elsewhere - Wall Street Journal Small Business

RUNNING A BUSINESS

Irked by eBay,
Some Sellers
Trade Elsewhere

Niche Sites Tout Lower Fees,
Tutorials, More Photos;
Buyers Still Face Fraud Risks

By MYLENE MANGALINDAN

Some online retailers are moving away from eBay.

Irked by February's changes in fees and the feedback-rating system, merchants who once sold wares exclusively at the online-auction site can now be found on a number of smaller alternative sites that have sprung up. With names like Wigix, Silkfair, Etsy and Oodle, these sites aim to offer more hand-holding for sellers -- and charge lower fees -- than the behemoth eBay.

Cathleen McLain

Web retailer Cristinajewelry sells a jewelry-making tutorial on Silkfair, a Web site with specialty items.

Some of these new sites target niche markets, such as Etsy, which focuses on handmade crafts, where small sellers say their products can stand out better than they do at a soup-to-nuts-to-carburetors site like eBay. And many offer free features, such as how-to videos and blogs designed to improve communication between merchants and shoppers. Some sites are even tapping into the social-networking trend -- where items for sale can show up on sites like MySpace or Facebook.

"I don't need a million people to see my things, just the right people who have hopefully good taste to buy my things," says Cathleen McLain, a 58-year-old jewelry maker who began selling her handmade necklaces on Silkfair earlier this year.

Shoppers must beware when buying on newer Web sites. It's hard to know the merchants' track record, whereas eBay displays sellers' positive and negative feedback ratings. And some of these sites don't offer buyer protections, such as Amazon's "A-to-Z" guarantee, which covers buyers for up to $2,500 each should their purchases be defective or incorrect. Shoppers who use PayPal on eBay are covered for up to 100% of purchase price.

"You're always taking a risk with sellers from sites like these," says Sucharita Mulpuru, an analyst at Forrester Research. "Unless there are guarantees or some seller ratings like the ones eBay has accumulated over time, there will always be some bad experiences."

Alternatives for eBay Inc. sellers have existed for some time. One of the best known is Amazon.com Inc., which offers several services for merchants. But sellers are increasingly gravitating to these newer and smaller e-commerce sites. Ms. McLain switched to Silkfair in part because she found it increasingly hard to compete with cheap overseas merchandise. She says it didn't help that eBay instituted a policy that allows only buyers to rate sellers -- a change from its traditional system of letting buyers and sellers mutually rate each other. Also, when a buyer searches for an item, the results are weighted to show the highest-rated sellers first, a system that smaller merchants argue hurts mom-and-pop operations. Finally, sellers who use PayPal, the online-payment service owned by eBay, may not get their funds for as long as 21 days. It's an effort to protect buyers from transactions eBay considers "risky" or "suspicious" -- mostly big-ticket items or transactions with low-rated sellers.

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These recent changes have made the use of eBay "questionable" for small retailers like herself, says Ms. McLain. She says she hears about Silkfair on eBay-seller online-discussion boards. The site, which started operating in March, showcases her handmade jewelry with large images -- larger than those on eBay. Still, fewer people will view her merchandise. "It's never going to be as big as eBay," says the Hartford, Conn., resident.

An eBay spokeswoman says that the company is no stranger to competition from other Web sites, and that it expects many of its savvy users to sell on multiple sites. The company says its recent changes are designed to offer competitive pricing and the best overall value for merchants. For now, though, only eBay offers the volume of auction-style and fixed-price listings, which generated second-quarter transactions valued at $15.7 billion, and audience of users, with 84.5 million in the second quarter.

Entrepreneurs have been trying to displace eBay for years and haven't managed to do so, says Ms. Mulpuru of Forrester Research. She estimates that nearly one in every five dollars spent online goes to either eBay or Amazon.

Besides Silkfair, there's Etsy, another site that attracts artists who want to display and sell handmade goods. Here, shoppers can see large images updated every few minutes with the most recent products listed for sale -- eBay doesn't offer promo slideshows on its home page of newly listed products. The site also offers online workshops for crafters and instructional articles on topics like woodcarving and crocheting.

A mustang named Spider is listed on Oodle.com.

Another site drawing sellers is Oodle, a classified-ad site started in 2005 by former executives of eBay and Excite. Oodle aggregates classified ads from more than 80,000 Web sites and publishes listings on its Web site network. Merchants can advertise their listings on Oodle's network and choose different payment options, mostly commission-based. Some sellers say they prefer to list items on classified-ad sites because their items, like secondhand mattresses or strollers, can be picked up in person by local buyers.

Wigix targets shoppers who like fixed-price transactions, not auction-style trading. Co-founded March 2007 by James Chong, who helped develop Charles Schwab's original Web-trading application, Wigix is trying to offer easier navigation. On eBay, for example, prospective buyers looking for an iPhone must scroll through individual listings that might run over several pages to see the prices offered for various models of the phone. Wigix designates one page for a specific iPhone model where all individual offers to buy and sell the device are posted in one place. The site also allows sellers' items to appear on social-networking sites.

Wigix's system appeals to online merchant Jerod Husvar, a seller of used-car parts for sport-compacts. He's moving his e-commerce operations from eBay, partly because of the customer service he got.

Mr. Husvar says eBay only recently started offering phone support. Before, he was such a small seller he didn't qualify for personalized attention through an eBay account manager. He often searched to find an eBay person to call and would be put on hold 30 minutes or longer just to speak to someone.

"We built our business around eBay," says Mr. Husvar. "They lost focus. All their money comes from sellers. Buyers are what drive the market, but you need quality and protection for the sellers or else they don't even want to deal with the buyers."

An eBay spokeswoman declined to comment specifically about his complaint but said that the company tries to balance the needs of buyers and sellers for the overall good of the entire community.

Write to Mylene Mangalindan at mylene.mangalindan@wsj.com³

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