The last few months have seen a number of excess inventory retailers announcing plans to expand from the US into Europe, as they search for new clients and buyers.
However, Luzern Solutions, a Dublin-based firm that sells such goods via eBay, Amazon and ther online marketplaces, is looking to take them on on their own turf by heading over to the US.
The company's head of marketing Jackie Brannigan tells us how the web is shaping up as an overstock sales channel, and one that many manufacturers and retailers are still to exploit fully.
Can you give us a brief introduction to the business and how is it going?
We’re an e-commerce company providing a range of e-sales and services to consumer electronics companies. We have a number of solutions for customer returns, surplus and distressed inventory.
To help us manage all of that, we have our own in-house system, which is a web-based application and can integrate, through a series of APIs, with the clients. It’s easy to integrate and through it, we can see available-to-sell inventory and allocate it in real-time to whatever marketplaces we are selling through. The reporting is in real-time, which is useful when you are trying to optimise prices across different channels. We can also provide market intelligence.
A good complaint to make is that we’re very busy at the moment. The volume of what we are pushing through the door has really increased. It’s touching 10,000 units a month now – MP3 players, laptops, mobile phones, digital cameras and all kinds of consumer electronics. We have a number of new clients coming on board over the coming year.
How much of your business is on eBay? What other marketplaces do you use and why?
eBay would be 80% or below. We also sell on Amazon, Price Minister and our own store LuzernTech.com.
Initially, we sold a lot of items through eBay. But as marketplaces mature, you need to go after certain types of customers. We find that certain products sell better on Amazon or Price Minister than eBay. It’s all about knowing what types of customers are on those marketplaces, and what they are prepared to pay.
We’re also looking to add more marketplaces this year.
What are your thoughts on the usability and search changes eBay has been making recently? Have they helped or hindered sellers?
Some of the recent changes that to the search facility, which limit serach results to one item, have caused us to make numerous changes.
The risk of having low hits and bids on your items is high, so if your Detailed Seller Rating (DSR) is affected, you won’t even get a good position for the one that is listed in search. I see that as being very contentious, as a lot of sellers have been trying to boost their DSRs, without really knowing the algorithm behind them. But this new change has come in.
DSRs are challenging and there are no eBay reports to help. Limitations like these could be discouraging for sellers and I think from a consumer perspective, you like to see what’s there when you are buying on eBay. You like to see if you can get a bargain or an unusual item. It will meet with a lot of retort from sellers. They need the bids to drive price as well as gauge the demand for certain products.
How well are retailers and manufacturers using the web as a channel to sell distressed inventory? Are you seeing best practices develop?
It varies. Some try to manage it internally, which can be difficult to do. Some companies don’t have a solution in place for distressed inventory. They may try to destroy it or sell it off as a job-lot somewhere else. But there are risks in doing that. The next thing you know, it could be coming back into the market. It can impact on your existing sales channels.
When we work with clients, we work with them to develop a sales strategy that won’t conflict with their existing channels.
How have economic concerns affected consumer spending?
The retailers have seen consumers’ confidence shift and they are really minding the pennies. We see that as a huge opportunity for online sales. There is this perception that you can find things cheaper online, plus you don’t have to go into town and pay the parking or train fare. Things like that are being weighed up more and more by consumers.
Refurbished products are also going well. Take mobile phones as an example. If you are not a die-hard that wants the latest and greatest, you could be very happy to get something that is maybe a third off the original price, and still a relatively well known product.
How do currency fluctuations affect how you do business?
We watch the currency situation constantly. It’s easier in Europe because if things are going better in Euro than Sterling, we can reallocate product into Europe to get the gains. We work closely with our clients on that. Part of our USPs is we really do monitor each of the channels and optimise the prices we get for the client. In short, swings in exchange rates can be good or bad, but our model allows us to manage this efficiently for our clients.
What are your plans in the US?
We’re looking to head into the States in the next few weeks. It will be a softly, softly approach to see what the scale of it is. We’ll start with two marketplaces and then push out to the other marketplaces in the US.
We’ll be testing our brand in the US, to make whatever tweaks are necessary for the market. But we’re very excited about it. We’ll initially be selling MP3 players and other digital media products, sourced from over there.
What are your thoughts on the competition coming over from the US?
Europe is not like the US; it is more complicated. For anyone looking for a quick entrance into Europe, there is a lot of work involved, between the different VAT authorities, languages and logistics.
I can’t name anyone, but we have been speaking with a couple of US firms that are looking to enter Europe, and are looking for someone with the back-end infrastructure to allow them to do that. This is something we can offer US based companies.
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