EBay expects to facilitate $10 billion in holiday sales

SAN JOSE, Calif. -- While traditional brick-and-mortar retailers fear an economic grinch may dampen holiday sales this year, Silicon Valley's own version of Santa Claus expects to be ho-ho-hoing all the way to the bank.

Online auction giant eBay Inc. is bracing for record sales of everything from the hot new Barbie-as-Rapunzel doll to unusual gifts for former dot-commers who used to have everything.

In fact, the company that bills itself as the world's largest virtual marketplace is beinning to look a lot more like its main street and shopping mall competitors, with holiday trappings like glitzy advertising and merchants who offer gift wrapping.

The fifth-most-frequently visited site behind AOL, Microsoft, Yahoo and Google, eBay expects to facilitate $10 billion worth of merchandise sales in 2002, more than Saks Fifth Avenue and several other large national chains.

A good deal of that volume will be rung up in the next few weeks.

"We are no longer just an auction site," eBay spokesman Kevin Pursglove said. "People are coming for every type of purchase."

The vast majority of sellers are individuals and small businesses like the one Paul Mercy, 43, began from his San Jose home five months ago. His biggest items so far are 18-carat gold chains and carved imitation alabaster Indian Chiefs on a Cherrywood pedestal.

"Anything that would look like a good and unique item will move rapidly," Mercy said.

'We're never sold out'

But major manufacturers and retailers also hawk merchandise through eBay storefronts now. In addition to shopping for the Beanie Babies and stuffed Bears that were once eBay's hallmark, shoppers can peruse offerings from Disney, Kodak, Gap and Victoria's Secret -- and of course, toy stores.

Michelle Lever, eBay's general manager for toys, said one of the reasons parents turn to eBay is "because you can actually get them here and we're never sold out."

Early holiday sales figures suggest eBay has benefited from fears among retailers and consumers that the labor unrest that closed down the West Coast ports for 10 days this fall would lead to shortages of popular items on store shelves.

"We may be the only company in America actually rooting for the dock workers," Jeff Jordan, eBay's head of U.S. business development, joked to analysts last month.

The threat of empty shelves failed to materialize but fears of shortages apparently prompted many consumers to buy toys early. Weekly toy sales have already reached last year's peak, Lever said, with weeks to go before Thanksgiving, the traditional kickoff to the holiday shopping season.

One toy growing in popularity this year is Chicken Dance Elmo. On Oct. 30, Lever said 200 were listed on eBay. By Nov. 11 there were 586.

The appeal of Elmo and other toys, such as Hasbro's BeyBlade, Bob the Builder and FurReal Friends and Upper Deck's Yu Gi Oh! trading cards, didn't come as a surprise to eBay. Back in July, Lever sat down with major manufacturers and retailers to assess what might be perceived to be in short supply. That resulted in a list of 20 hot toys now being heavily promoted on eBay.

"We've become very sophisticated about it," says Lever. "We track products and listings and the number of bids and prices."

New campaign

Much of this merchandise is being sold through eBay's Buy-it-Now function, a feature for those who can't wait several days for eBay's trademark auctions to run their course.

On Nov. 10, eBay launched an aggressive new branding campaign on national TV and in the 50 largest newspaper markets, with the theme "doing it eBay."

Also new are buyer and seller warranties on electronic equipment and user-friendly changes to the Web site. Unlike past holiday seasons, many eBay sellers this year will offer gift wrapping services and free shipping, or the option of express shipping.

The gift wrapping doesn't involve eBay itself, however. The auction site is careful to avoid the liability issues that would arise if it became more directly involved.

The advertising campaign is a marked departure for eBay, which previously aired isolated TV commercials. Carrie A. Johnson, an analyst with Forrester Research in Cambridge, Mass., thinks the marketing will pay off.

"EBay's biggest hurdle right now is attracting mainstream consumers," she said. "Many don't know they can buy new toys on eBay."