Costco Style Ecommerce– Will It Work?
Is Costco A Bad Model To Emmulate?
About a year ago, Chris Fain CEO of Onlineauction.com suggested that in the future (he intimated several years in the future) that ecommerce venues might look at the Costco business model of memberships. For that comment he was chastized and ridiculed.
Last week John Donahoe spoke at the Reuters Global Retail Summit and said that shopping on eBay was akin to bargain hunting at Costco. According to an article on Auctionbytes.com John Donahoe said:
Does going into a cement warehouse pushing a bin, does that hold up in a world where retailing is becoming more and more sophisticated? I would say Costco’s growth numbers indicate that it does,” Donahoe said. “Because people want a deal. And actually you can build brand loyalty … around having a deal.
I believe that membership sites do work. There are thousands of websites using this model very effectively. The question is will shoppers pay a membership fee to be able to shop at discount prices? As long as the prices are lower than generally available elsewhere I think they will.
Will eBay succeed in becoming the leader in the secondary marketplace? I think they could however the site will be significantly different than it is has in the past. I believe the site will become a site where large volume sellers rule and the SMB’s will move on to niche sites that focus on the specific product lines that SMB’s are selling.
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June 15th, 2009 at 5:13 pm
What most concerns me about the ‘Costco’ comment is JD encouraging buyers to view eBay as a ‘Bargain Bin’ site. . . . as a seller I do NOT like that.
June 15th, 2009 at 8:42 pm
Not this buyer, I have a Costco membership to buy commodities, for my collectibles I will not pay a membership, can the operator guarantee I am going to find what I want on their venue at a good price and of the quality I buy? I think not!