Monthly Archives: December 2009

Selling on Amazon and eBay- Perfect Competition?

This is as close to perfect competition as you can get.  It essentially says that you need to compete on costs to make money on the marketplaces.  There are no abnormal returns in this model and the natural evolution here is for firms to differentiate their products so they no longer compete on costs.  Customer service is a big differentiator.

“Merely being listed on eBay or Amazon isn’t a sustainable business,” said Dennis Ceru, an entrepreneurship professor at Babson College in Wellesley, Mass. “There are a lot of people going down this path that are making little or no money.”

Building viable enterprises off these marketplaces requires sourcing inventory cost-effectively, researching each marketplace’s procedures and commissions, polishing customer-service practices and managing your online reputation.

via Small-Business Guide – Small-Business Guide – How to Sell on Amazon and eBay – NYTimes.com.

The importance of marketing in distribution for consumer web properties

I’ve been saying this for years– consumer web startups need to compete in marketing and distribution to succeed.   Furthermore, these elements need to be baked into the model early on.

Here’s my sports analogy.  Building a shippable product and hiring good engineers is like shooting free throws.  For success at the pro level, it’s assumed that you have to shoot a high percentage to even qualify to compete.  Where winning is determined is elsewhere, not at the free throw line.

So how do you plan to battle in marketing and distribution?  If your product/model doesn’t have an elegant viral component baked in, do you have another natural advantage to throw at this problem?

“Too many companies treat marketing and sales as a tactical afterthought. We believe marketing is strategic and seek companies that are marketing focused – with marketing requirements driving product development.”

Customer acquisition (also called distribution) is the number one challenge facing consumer web properties.

via Redeye VC: Let’s just add in a little virality.