It’s becoming clear what eBay wants to find inside its corporate stocking this holiday season: affluent shoppers.
That’s why it’s opened up a brick-and-mortar retail shop on the corner of 57th Street and Fifth Avenue in Manhattan, next to luxury department store Bergdorf Goodman. The 5,000 square-foot pop-up store, which opened its doors a week ago and will close after Sunday, sells Michael Kors handbags, Jimmy Choo shoes as well as Apple iPhones and Palm Pres, and features computer kiosks with access to eBay’s site.
As Advertising Age has pointed out, these transient pop-up stores don’t often generate a profit. So why is eBay, under pressure to fatten its profit margins, bothering? Think of the outpost as a prong on the company’s latest marketing campaign –- a way to catch the attention of holiday shoppers, especially ones who can afford to spend money in the luxury stores along Fifth Avenue.
With less fanfare, eBay has also opened a luxury store of sorts on its own site. Dubbed Fashion Vault, the initiative pushes eBay into the growing retail niche of private online fashion sales. If you’re a fashion slob like me, you might not know that these are one-time, invitation-only online sales, lasting just 24-36 hours and offering top-drawer brands at deep discounts.
But the niche is growing fast. Saks recently opened up its FashionFix site, and other private-sale sites such as Gilt.com and RueLaLa.com have been thriving. (Last month, RueLaLa’s parent, Retail Convergence, was acquired by e-commerce company GSI Commerce for $350 million.)
Luxury goods are one of the bright spots in e-commerce. Demand for them remains strong even as budgets remain tight. As MarketingVox noted:
Though luxury retailers have traditionally been slow to adapt to web-based sales and maketing tactics, a recent Bain & Co. report projects 20% growth in overall online sales of luxury goods in 2009. This compares with an 11% drop of overall global sales of high-end clothing.
eBay built Fashion Vault around sellers who have established relationships with brands like Hugo Boss and Cole Haan. It has the potential to strengthen some of eBay’s weaknesses that emerged during its long and painful restructuring of the marketplace site. eBay’s recent focus on refurbished and second-hand goods gave it a low-rent feel, and its move away from online auctions drained away a lot of the thrill that belonged to the site’s early days.
Analyst are encouraged by the move. Kaufman Brothers analyst Aaron Kessler said Fashion Vault improves eBay’s marketplace outlook by strengthening its fixed-sales model (while bringing back some of the suspense of the old auction frenzies), strengthening ties with high-quality sellers, boosting average selling prices and repeat traffic, and above all bringing in affluent customers – the ones who are still spending in this economy.
Will it work? It’s been a little more than a week since Fashion Vault launched. But if the number of people following eBay’s Fashion Vault account on Twitter is any indication (123 followers at this count), eBay needs to do a better job getting the word out.