ETD: 919 Look For The Unexpected; Comparison Shopping; EBay
May Buy Skype
E-Tailer's Digest
etd_post at gapent.com
Thu Sep 8 11:36:46 GMT 2005
E-Tailer's Digest --- Everything for the Retailer
Issue #0919 September 8, 2005
George Matyjewicz, Moderator mailto:georgem at gapent.com
Published by: GAP Enterprises, Ltd. http://www.etailersdigest.com
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CONTENTS
[1] Greetings
[2] Look For The Unexpected
[3] Comparison Shopping
[4] EBay May Buy Skype
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[1] Greetings.
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Hi All:
This week, as I was analyzing the operations of a
new client, it occurred to me that many companies
overlook the obvious. However, sometimes they
look at the obvious the wrong way. "I'm losing
money on services, so I better raise fees" is not
always the best answer. Read "Look for the unexpected."
Comparison shopping may finally hit its stride
this year. Comparison shopping has been around
for a long time, and never really took off. That
seems to be changing today. Many people
comparison shop, often to see who carries the
product, and not to find the cheapest
price. What do you think? Will it become a
dominant force on the Internet landscape?
Hot off the presses (as of 5:04 AM today) - EBay
is looking to buy Skype, the free Internet
telephony company. Skype has been asking USD $3
billion, and they have had suitors. The big
question I have is how does a company expect to
make money on a product that has been free up to
this point? 52 million people worldwide use
Skype, and the software has been downloaded 162
million times. http://skype.com/products/skype/windows/?autoload=true
Now, let's get to everything for the retailer.
Sincerely
George Matyjewicz, PhD
Chief Global Strategist, GAP Enterprises, Ltd.
mailto:georgem at gapent.com
http://www.etailersdigest.com
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[2] Look For The Unexpected
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I have undertaken a new engagement in Chicago for
a professional firm that has been
floundering. They have been in business for 15
years, and they seem to be killed by the
competition (sound familiar). Their fees are
low, and they are literally losing money, or at
least not making as much as they should.
Guess what I suggested they do? Nope - not raise
their prices - lower them! They have two
segments of their business - one that is straight
income from fees, and the other that generates
income from fees plus ancillary income as a
result of the business. So, I suggested they
focus on the second business type, lower their
fees and raise their fees on the first
segment. The lower fees will attract a lot more
profitable business and the higher fees on the
other segment will make that profitable. Sounds
simple to me. And, I will bet they will get both
sides of the deal, and make more overall from
clients they would not have gotten otherwise.
I am always amazed at how the trees get in the
way of the forest for most business people. Why
do I see things differently than they? I know
I'm not smarter. Rather I look at the simple
solutions which usually work. Maybe the simple solutions look too simple.
I remember looking at a retailer who analyzed his
own business and was ready to drop a department,
as it was losing money. Seemed logical - if you
don't make money, get out of the business. The
only problem was that department attracted
customers who also bought other things. Before
he got rid of that department, I told him to
analyze his sales to determine what else was
purchased with the items he was trying to drop.
Sure enough, sales were quite heavy with other,
more profitable items. Guess what I
suggested? Lower the price, and break even on
that department. It would (did) attract more
business and people did buy the other items.
It's like sites like Amazon, where you buy book
"A" and they tell you what else others bought who bought "A."
Cross selling works.
What do you think?
George
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[3] Comparison Shopping
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"Consumers are becoming a lot savvier and they're
using comparison shopping more and more. Another
thing that has really enhanced the process and
highlighted the need is that there's so many more
retailers and they're selling such a wider
variety of products," PriceGrabber CEO Kamran Pourzanjani said.
The comparison shopping and shopping search
business has been around for a while. Like many
other corners of the Internet business, it's
seen more than its share of businesses come and go.
Now it seems that 2005 may well be the year the
niche found its ways into the big time. Most of
that change has come through acquisition. EBay's
US$620 million purchase of Shopping.com was
quickly followed up by the purchase of
Shopzilla.com by media conglomerate E.W. Scripps, a deal worth $525 million.
Sitting in the middle of all the changes is
PriceGrabber.com, a comparison shopping site
that's managed to remain independent since its founding in 1999.
Though it may not be a household name like its
new competitors, PriceGrabber has hardly flown
under the radar screen. CEO Kamran Pourzanjani
was recently named an Ernst & Young "Entrepreneur
of The Year" in the Los Angeles area for 2005 and
PriceGrabber last year appeared on Deloitte &
Touche's annual list of the fastest growing technology firms.
Consolidation aside, PriceGrabber is in a spot
that nearly every search company has its sites
set on, from Google, which hopes its Froogle
shopping search site will help it play a larger
role in e-commerce, to Yahoo Shopping, not to
mention AOL and merchants-turned-technologists
such as Amazon, whose A9 search engine is seen by
some as a formidable player in the space.
Through the changes, Pourzanjani expresses
confidence that PriceGrabber can not only survive
but thrive as an independent company. In an
interview with the E-Commerce Times, he talked
about the changing shopping search landscape and
about the value that sites such as his can
provide to merchants who want to find high-quality customer leads.
Details of the interview at...
http://www.ecommercetimes.com/story/45939.html
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[4] EBay May Buy Skype
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EBay Inc. is in talks to acquire
Internet-telephony company Skype Technologies SA
for $2 billion to $3 billion, according to people
familiar with the matter, in a deal that would
represent a dramatic shift in strategy for the
world's largest online auction site.
The talks are in a sensitive stage and could fall
apart, according to one person briefed on the
matter. Luxembourg-based Skype, whose software
allows consumers to make free telephone calls
around the world using Internet technology, has
been in active discussions with other technology
companies, and none has led to a deal.
But the emergence of eBay as a suitor reveals a
lot about the auction leader's growth prospects
and strategy. While still dominating its field,
eBay's core business is maturing, and the company
is searching for new product categories and
international markets. The company has made a
steady string of acquisitions and investments
over the last year and a half to enter markets
such as rental-property listings, online
classified-ad listings and comparison shopping.
While other online leaders such as Yahoo Inc. and
Google Inc. have pushed the boundaries of their
offerings, eBay has stuck more directly to the
business of acting as middleman between
individual buyers and sellers. But the person
familiar with the situation said that eBay is
keen on adding services that make it easier for
its customers to buy and sell goods online, as it
did when it acquired the electronic-payment processing service PayPal in 2002.
EBay's massive and technology-literate user base
of 157 million could prove willing adopters for
Skype software. And those customers — which are
often segmented into niche communities — could
use the software to communicate with like-minded
enthusiasts. Skype's software has been downloaded
162 million times, and has 52 million users world-wide.
One major question will be how to value Skype,
which has been floating a $3 billion price tag
amid discussions with companies such as News
Corp., Microsoft Corp. and Yahoo. The company is
also considering an initial public offering and
has hired Morgan Stanley to run the process. But
other potential buyers have balked at such a high
price, in part because they may be able to build
the software on their own, and because similar
technologies may diminish Skype's uniqueness over the coming months and years.
Founded two years ago by two young Swedes, Skype
has been alternatively viewed as the future of
telecommunications and a threat to the existing
business order. That is because a Skype user need
only have a broadband Internet connection to make
phone calls that can reach any other Skype user
around the world. For fees far less than
traditional phone calls, Skype users can also
call land-line and cellphone numbers.
Details at...
http://online.wsj.com/article/0,,SB112615385922335028,00.html
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