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www.ecommerce-guide.com/news/news/article.php/3355741
By Christopher Saunders May 18, 2004 eBay has established itself as one of the leading forces in online commerce. Now, a new firm is looking to cut into the giant's business by fixing what it sees as a hole in eBay's strategy for Stores sellers: a lack of a true local focus. Based in Palo Alto, Calif., LiveDeal aims to provide a means for buyers and sellers to connect within a 50-mile region. The site doesn't operate on an auction pricing model, but rather lets buyers and sellers negotiate their own deals. Unlike eBay, the site doesn't take a transaction fee from the sale's final value. In fact, the site is free for normal, one-off transactions. It charges a $19.95 monthly fee to operate Stores, and smaller fees for sale promotion across the site and on its homepage. The lack of fees might be one reason that the site has attracted more than 75,000 buyers and 2,000 LiveDeal Store merchants. Another could be that although eBay offers search by city and state in its Smart Search feature, founder Rajesh Navar said LiveDeal helps address the requirements of a marketplace where needs still aren't being met by the current e-commerce environment. "There are three problems with eBay -- one is cost, two is fraud issues, and three, there are lots of items there that are not shippable," said Navar (who, perhaps ironically, joined eBay as an employee in 1998, when the auction giant was going through a period of rapid expansion.) That's why "most of the goods traded on ... e-commerce sites are small goods." Consequently, LiveDeal hopes to improve on the eBay Stores model by keeping transactions restricted to a local area, and by helping buyers and sellers quickly weed out all but nearby offers. Visitors to the site must enter their ZIP code, and the site displays only nearby products. "Being efficient is not about finding a ZIP code or a city ... it's about creating a sufficient local marketplace, and if you talk about the leading e-commerce players, none of them do that," Navar said. Benefits of that approach are numerous, Navar said. For one thing, local sales enable buyers and sellers to meet in person -- and to examine the products for sale -- while also reducing shipping costs. "Even though e-commerce grows year over year, there are still people who do not buy because of shipping and fraud issues," he added. "There is a big chunk of people who don't feel secure buying without seeing the product or without seeing the seller, so there is a big chunk of buyers who are not motivated by the current marketplace." Because of its focus on items available within a 50-mile radius, LiveDeal also makes sense for items that might prove too costly to ship nationally -- but which might get lost in the clutter of a larger, national e-commerce site. LiveDeal also hopes to provide the same sorts of functionality that's underscored eBay's winning system. For one thing, LiveDeal borrows from eBay's feedback ratings system -- but unlike the e-commerce giant, LiveDeal enables buyers to rate sellers based on two criteria, the promptness of their response to questions, and on the quality of the overall transaction. However, by keeping its focus restricted to local-area sales, LiveDeal also comes into competition with community portals, such as Craigslist. But Navar sees room for improvement here, too. "Craigslist is a great community site, but it's very poor with respect to buying and selling," he said. "For sellers, you have to post every day. People with storefronts or who have an eBay store ... who are selling 300 items ... they're not going to be using Craigslist -- their time is very expensive. Craigslist is good for a lot of things, but it's not good for people who want to sell. With something faster and cheaper, with a focus on e-commerce, we should be able to do better." Navar said LiveDeal doesn't plan to change its free listings policy, since he expects LiveDeal's ads and -- more importantly, its merchant stores -- to provide much of the site's revenue. In particular, he said be believes LiveDeal Stores will be especially in-demand, he said, because eBay misses out on adequately monetizing its own Stores offering. "eBay and other sites treat stores like a stepchild, they don't really drive traffic to them," he said. Stores "are going to be a paid subscription model for us, and people pay $19.95. In over two months, we have well over 2,500 stores and [sellers] are pretty happy with it." Christopher Saunders is managing editor of eCommerce-Guide.com.
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