Glynn Davis is one of the UK’s most knowledgeable and experienced retail journalists, founder of Retail Insider, and Ecommerce Age’s monthly columnists.
When eBay was founded in 1995 there was no denying the great innovation behind this online marketplace but the big question was around the willingness of people to trust their money with some random person potentially on the other side of the world. There was also the worry over goods turning up through the post and bearing little relation to those described on the website.
The worry was ill-founded because the real genius of eBay’s model was its founder’s pioneering creation of the online feedback system whereby buyers and sellers rate the other parties in the transaction. This very quickly weeded out any untrustworthy counterparties.
This basic system has served eBay extremely well to date but as online trading has grown to pretty much encompass all categories there has been a growing need to bring in some form of authentication process to validate the claims of sellers in order to reassure buyers.
The chief concern centres on the resale markets, which have exploded for numerous high-end categories including art, luxury items of all descriptions, and rare collectibles. For the watch market alone McKinsey forecasts that preowned volumes could reach as high as $32 billion by 2025 – up from the $18 billion recorded in 2019.
Like other marketplaces eBay does not want to lose any of this lucrative, and growing, business. Its mind has certainly been concentrated by a study it undertook in July, which found 52% of consumers stated that fears around authenticity were a reason for not buying a preowned luxury item, 44% cited the condition of the goods as a concern. 40% referenced that quality was an issue, and 39% revealed they simply did not trust sellers.
To address the issue eBay has been launching ‘authenticity guarantee’ services. In September 2020 it brought in a service involving physical checking and independent authentication of watches with a value of $2,000 in the US and £2,000 in the UK. Hot on the heels of this initiative it launched a full vetting and verification service for select sneakers – priced over £150 – in partnership with Sneaker Con.
With 1.9 million pairs of sneakers available to buy every day on the eBay platform and 1.55 million having been authenticated over the past 12 months the Sneaker Con service must have proved very effective because eBay has just announced the purchase of the business.
Alongside the introduction of these authentication and certification services we are also seeing the emergence of standardised ratings systems. Among these is the Wata scale that is dedicated to ranking video games. The highest rank of 9.8 A++ is preserved for games that remain sealed and look just like they have left the factory floor. This trusted system gave sufficient confidence in the market for one buyer to outlay $1.65 million for a pristine copy of a 1996 Super Mario 64 game that needless to say scored 9.8 A++. This rating system followed the equivalent solutions introduced some years ago for both baseball cards and comics.
When ratings systems are combined with authentication processes then we have the perfect climate for something of a bonanza in the sale of specialist and esoteric collectibles and rare category goods. This is clearly boosting the levels of trading on platforms like eBay, specialist marketplaces, and the websites of auction houses that have been embracing online sales.
Whenever a new rating or authentication service is released for a category this has been shown to increase volumes and values by a significant magnitude. This suggests that the way things are going there should be some good days ahead for the likes of eBay. When the power of blockchain is thrown into the mix, to provide certificates of authenticity for owners, then things begin to look even more exciting for all stakeholders in the resale market including the granddaddy of them all – eBay.