Home Seattle Startup Bonanzle Takes on eBay

Seattle Startup Bonanzle Takes on eBay

In June of 2008, Seattle programmer Bill Harding launched an online marketplace called Bonanzle. The site, a completely grassroots effort with zero VC or angel funding, is in many ways the anti-eBay. Instead of focusing solely on the goods being sold, Bonanzle is attempting to build a marketplace where the people are relevant, too. On Bonanzle, buyers can chat with sellers in real-time or over instant messaging, an experience that delivers a more social experience to the online shopping process. These interactions have allowed Bonanzle to build a strong community, but will that be enough to take on eBay?

What’s Bonanzle?

Bonanzle is one of many online marketplaces that have emerged to serve former eBay sellers unhappy with the changes made over the years – changes that some feel serve the larger wholesalers instead of individual sellers. As with any new entrant to this market, Bonanzle isn’t just competing with eBay, but also with online giants like Amazon and Craigslist as well as niche sites like Etsy and Worthpoint. To differentiate themselves from the pack, Bonanzle’s angle is to re-create the social deal-making experience of a garage sale.

Bonanzle’s creator, Bill Harding, originally started it because he was looking for an online experience where you had the ability to post a lot of items for sale quickly and easily, negotiate price and terms on the fly, sell items in groups, and sell a bunch of items in a short period of time. His site now offers all those things to its customers.

On Bonanzle, sellers set up virtual booths where they display the items they have for sale. Online shoppers browsing the booths can then interact with the seller through built-in chat features. The sellers can send messages to people on the site in real-time and they can even integrate their store’s chat window into their IM client of choice. This allows them to keep in touch with their online shop even when they’re away from the Bonanzle web site itself. For many former eBay users, this level of social interaction is an entirely new experience, as they are used to a more anonymous shopping environment where you often only get to know a seller through their star ratings, feedback, and occasionally email – not through chatting with them one-on-one.

In addition, Bonanzle sellers can capitalize on these personal connections by offering special discounts to their best customers. They also have the opportunity to hold “bonanzas” (hence the site name “Bonanzle”). These are brief 1-3 hour sales where sellers can deal in real-time on all their items. Bonanzle showcases these bonanzas on their homepage in order to drive traffic to the seller’s booth.

Besides its unique social experience, Bonanzle also wants to differentiate itself by being easier to use than eBay. On Bonanzle, sellers don’t need to use bold, outlined, or HTML-coded listings to get noticed – they just fill in five fields on one single page and their item is ready for sale. That saves sellers time and it’s a big draw for new users who found eBay’s convoluted set-up process confusing and time-consuming. The system also recommends what an item should be priced at, another time-saver as sellers no longer need to browse through current and historical listings to get an idea of how much things sell for. These recommendations come via Yahoo and Amazon. When a seller clicks “Guess my Price,” Bonanzle returns the three closest matches along with the range of prices those matches are listed for. Results are separated into both “new” and “used” price listings, if available.

These differences seem to be working for Bonanzle so far. The site has been steadily growing since its launch as have other eBay alternatives like iOffer.com, eCrater.com, and eBid. Meanwhile, although eBay’s traffic has grown a marginal 0.3% over the past year, the company posted its first-ever quarterly sales decline in January 2009.

eBay’s Death by a Thousand Cuts?

Says Ina Steiner, editor of one of the largest and most respected marketplace news sources, AuctionBytes, what eBay today has to contend with is “death by a thousand cuts.” While very few companies have the scale to compete with eBay head-on, there are many smaller websites that draw buyers and sellers in various categories. “Bonanzle has designed a site that is very appealing and has ignited the passion of a core group of enthusiastic sellers. It’s not even a year old, and I expect it will face the same growing pains of other sites,” she says, “but it has a lean mean approach that will serve it well.”

That said, Steiner notes that one of Bonanzle’s biggest challenges will be getting traffic. Sellers lose enthusiasm for new sites if they’re not making sales. However, she also makes mention of a new trend among sellers to list on multiple channels, especially among sellers who were formerly content to list exclusively on eBay. For example, they found that 73 percent of the merchants on the EveryPlaceISell.com merchant directory maintain listings on more than one e-commerce site, and 45 percent of merchants maintain listings on more than two sites. And “nearly 40 percent run and maintain their own retail web site,” she says.

This tendency to diversify listings may give the eBay alternatives the time to grow before they’re entirely abandoned. At any rate, the multi-listing trend has surely had an impact on the alternative marketplaces: currently, the top three alternative sites have about 5,598,000 listings, while eBay has 26,633,000 – that’s around 21%.

Kenn Registe, publisher of the financial blog MediaTechAnalyst.com, also agrees that this “long tail” approach is the best way to compete with eBay. Vertical niche sites like Worthpoint, a collectibles marketplace, are a good example of this trend, he says. As far as Bonanzle goes, he also acknowledges the site will need to build critical mass through key differentiators in their business model in order to attract the sellers – and the traffic – they need to grow. If that’s not possible, he worries that all the eBay alternatives, including Bonanzle, will end up just competing with each other instead of with eBay itself.

Economic Slowdown? Not for Bonanzle – Site Now Turning a Profit

Despite these concerns, Bonzale’s creator Bill Harding thinks they have a shot. “Bonanzle is benefiting from the web emerging from a period where people were so obsessed with anonymity that they gave up the benefits of positive communities and real interactions,” he says. And now with 36,500 registered users (a number which has grown by 50% each month) as well as steady traffic growth (they had 545k unique visitors and 9.3m page views last month) not to mention tens of thousands of transactions under their belt, the site has finally pulled its first profit as of February. Harding won’t disclose the details, but says that Bonanzle should be financially solvent for the foreseeable future, noting its revenues have grown each month at about the same pace as traffic and sales – that is, between 30-50%.

These numbers bodes well for Bonanzle’s future, especially given our current economic climate. Yet will Bonanzle ever take down eBay all on its own? Probably not…but a million little Bonanzles just might.

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The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

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