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eBay Portends Radical Changes In CE Retail

When it comes to the consumer electronics industry, “What should I do to make more money?” is a question on everyone’s mind.

No one I know is satisfied with current results. Not because there is never enough to satisfy them, but rather because the overwhelming majority is at best getting by, and at worst making the airline industry look like a good place to be.

Why that is and what you should do about it could fill volumes, but in my allotted 700 or so words, this is, in part, what I would do:

Product, Customer, Communication, Channels of Distribution

That’s it. Four simple things you must focus on to sell more profitably, regardless of whether you are a manufacturer or retailer. Put another way, it’s what you sell, who you sell it to, what you say about your product/company, and how you go to market.

We could spend hours and way more than a column on any one of these areas, but right now I want to focus only on channels of distribution because it affects both retailers and manufacturers.

While there are isolated examples of excellent CE dealers, the industry is not a paragon of forward thinking when it comes to retailing unless you view “I will sell it to you for less than he will!” as good business. Nonetheless, there are indications of change leading to what will ultimately be a revolution in how CE products find their way to consumers. Radical change.

Happy Birthday eBay!

Now celebrating its 10th anniversary, the online auction platform boasts 150 million registered users worldwide, has facilitated more than $40 billion in e-commerce this year alone, will pocket over $800 million in net profit in 2005, and has seen sales and profits more than double every other year since 2001.

Probably more unwittingly than not, eBay and its Internet brethren addressed unmet needs of consumers who were not happy with available sales channels. They represent a signpost of change in a long line of retail revolutions that include multi-store chains, strip malls, indoor shopping malls, mail order and TV home shopping shows, to name just a few.

Moreover, they are not the end game but rather only a new branch on the retail tree. They suggest, rather than tell, where things are heading, and you need to think about what this means.

Remember the hand-wringing debate a few years ago about whether CE should be sold on the Internet? At the heart of that was a desire to preserve the status quo, as bad as it might have been. The concern was that “you” will get some of “my” business without having to be where “I” am, and without having to pay what I have to pay to sell. Do any of you still doubt that cross-border retailing is here to stay, or, in fact, that there are no longer any meaningful borders to be protected?

Contrary to what many believe, eBay did not take many sales from traditional retailers over the last 10 years. Instead, I am convinced they are tapping into an unfathomable mother lode of consumer demand that will, properly harnessed, dwarf sales as we know them today.

Do you doubt that? Do you think it is reasonable to assume annual per capita CE sales of let’s say $750? The equivalent figure for new motor vehicles is over $2,400, so it should be doable, right? Particularly in light of the growing demand for HDTV and most anything digital.

Today consumers spend just over $400 per capita on CE, knowing relatively little about what is available to them. So consider what that figure could be if they knew more and if we gave them alternatives to how we market to them today. There is almost endless potential to increase your sales and profit.

In an editorial addressing the lessons learned from eBay, The Economist observed: “To succeed, firms need agility, an open mind and the ability to reinvent themselves repeatedly. Most of all they need to listen carefully to their customers, paying close attention to what they do and don’t want.”

I could not agree more and believe that eBay’s 150 million users are speaking to all of us loud and clear.