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Retail Woes as Consumers flock to eBay and Facebook

Traditional brick and mortar retail shops may be struggling in the current economic climate but online shopping has never been better off.

The Australian Bureau of Statistics reports Australian retail turnover rose 0.6% in August 2011 but clothing, footwear and personal accessory retailing fell 1.4% whilst department store sales fell by 0.5%.

ABS August 2011 Retail Sales

Dr Edwina Luck, retail expert at the Queensland University of Technology says the Australian dollar will continue to decline but this may not deter consumers from shopping online for cheaper overseas goods.

“Traditional bricks and mortar retailers must start realising that they can’t continue to charge huge prices as it will drive away smart shoppers,” she said.

With so many options and savings on brand-new items, online market-place eBay has now become the go-to shop for people looking to save money on new items and designer labels.

Communications Manager for eBay Australia Jenny Thomas said eBay has recently seen a steady increase in sales for new items, especially those with brand name labels.

“The highest grossing category on eBay is clothing, with an item selling on eBay Australia every 3.5 seconds,” she said.

Ms Thomas says that eBay started out as a second hand goods market-place but has now geared more towards new items.

“Vintage and second-hand goods are what made eBay successful. However approximately 78% of sales are now for brand new items with 60% of those being fixed price items.”

Ms Thomas says that eBay fees are very competitive in relation to the traffic generated, “eBay generates a huge amount of traffic to our sellers. The new fee structure released in September was created to assist people who sell infrequently and for shops and sellers who want to sell their items at fixed prices.”

Sellers discuss eBay fees and alternatives

The new fee structure means that infrequent sellers have the option of listing up to 30 items a month and only pay if the item sells. However eBay can now claim 7.9% of the purchase price which has some sellers put out.

Vintage and second-hand clothing sellers, feeling the pinch are now moving to Facebook in an attempt to bring more customer interaction and to save some money.

Maryanne Bridges who runs House of Maryanne, a vintage clothing shop on Facebook said she did not feel in control on eBay and loves the customer interaction that Facebook offers.

“On eBay the relationship between customer and seller was distant and fractured.  On Facebook, you can be ‘friends’ and I feel like the relationship is closer and more easygoing.”

House of Maryanne- a Facebook shop

Although it was difficult for Ms Bridges to build a customer base without the traffic that eBay generates, she believes it was worth it.

“It takes a long time to grow.  You have to be patient.  It is much more organic. I have more return customers and it is easier to grow a reputation. It is easier for happy customers to recommend you to their loved ones.  I can reach out to my customers all at once now,” she said.

Consumers can buy things by typing "SOLD" under the item

However, Ms Thomas says consumers are always looking for choicer and better product availability regardless of whether they shop online or at the local shop.

“Shopping online is convenient for consumers as they can compare prices and availability before deciding on the purchase. EBay recently acquired a product inventory tool called Milo that consumers can use to determine product availability and price via an app. This would also include shops in the vicinity of the consumer,” she said.

Ms Bridges said she has considered opening a physical store but loves the free time that owning a virtual shop offers.

“Selling online means that I can get other things done and even if I don’t make sales that day, at least I have ticked off other jobs.  If you have a shop, you have to just be there the whole time. “

However she doesn’t see Facebook becoming the next ‘eBay’.

“The more people who move onto Facebook will make it become a place where people are bombarded with advertising and they will just decide to stop logging on,” she said.

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Filed under eBay, Facebook, retail and online shopping