Ebay delves into the outlet business

EBay recently introduced eBay OUTLET on its UK site.  This new addition to the eBay platform sells merchandise at up to 70% off retail prices from various brands that have their own shop-in-shop presence on the site.  This marks one of the company's attempts to attract larger retail sellers to its site.  Additionally, it is eBay's current foray into the very popular and saturated overstock market.

In the past two years, there has been a flurry of new ecommerce sites, solely dedicated to overstock merchandise.  The challenging economy has actually benefitted these sites, which offer an appealing means for retailers to unload their excess inventory.  Following the lead of Vente-privee in France, a crop of new private sales sites, including Gilt Groupe, Ideeli, Rue La La, and others have become all the rage in the U.S. as well. Consumers have become trained to search for bargains and are increasingly shopping online for great deals.  

EBay's move into the overstock area is a smart one.  The company already has a very large audience and provides retailers with a solid platform to sell their leftover merchandise.  One might argue that retailers can create outlet sections within their own websites rather than selling them on eBay's outlet.  And, for some retailers, specifically mass brands with a large following, this may make more sense.  However, for most companies, eBay provides a larger audience than their own sites and thus will be a better area to reach customers, particularly those in search of a good deal.  

While launched in the UK thus far, EBay outlet has yet to debut in other areas.  It is important that the company markets this business properly.  Many consumers still think of eBay as an auction site only.  Further, the online overstock space is becoming extremely saturated as more and more e-Tailers are trying to benefit from the favorable conditions for selling overstock merchandise in today's economy.  This leads to another concern - as retailers plan inventories more appropriately for current demand, excess inventory may begin to dry up, leaving less for overstock retailers to sell.