Quite often while doing research for our radio program I like to re-read books in my library that provide insight, concepts and theory to ecommerce marketers. As I was re-reading Scot Wingo's eBay Strategies over the long holiday weekend, I could not help but take serious note of the first few pages of the book and how prophetic Scot's thoughts have become.



Within the first 15 pages of the book, Scot makes reference to the "80/20" rule, or the "90/10" or even the "95/5" % rule. What this means is 20% of the sellers account for 80% of the sales. In the ecommerce environment that rule can be extended as Scot say to the 90/10% or 95/5% rule. (Scot refers to eBay but I am expanding this to all ecommerce).

In todays ecommerce environment those that cannot be competitive will fall by the wayside. The quote at the bottom of page 15 in the book says " The bottom line is that if you do not grow your eBay business into one of the top sellers in your category, the chances of your survival are relatively low." Keeping in mind the significant changes that are happening on the eBay marketplace, these words are proving to be so very true. With eBay in mind, I wonder what will happen when the 5% of sellers that sell 95% of the product push out the bottom 95% of the sellers. That will leave the remaining 5% to fight it out reducing the number of sellers to a handful in each of the categories at best. 

This is simply the truth of business. Defeat the competition, outlast them, and you (the business) then will control the marketplace and in turn be able to control supply and thus demand and finally pricing. This is true not only on eBay but across the board in ecommerce. (This is not just an ecommerce truth, just take a look at oil prices!)

The question then arises, what can the "little guy" do? The truth is there are very few options. Carving out a niche is tough. There are several ecommerce sites attempting to attract the "little guy" but currently these venues are seeing little traction. Low traffic, lack of advertising, and most importantly I think is the fact that most auction or inventory management software available do not work on these sites. The inability for small and medium sized businesses to efficently place items into inventory across a wide variety of the newer venues tend to cause these sellers to become frustrated and close up shop. Unless developers bring software or programs to the marketplace to work on smaller and newer sites, I fear these too are doomed.

I truly believe there is room for new venues to emerge to accomodate lower volume and one of a kind sellers. I just hope they do it quickly!

Ref: Scot Wingo's eBay Strategies