Market Analysis Summary
AuctionShipper will be going after two distinct market segments for their business: new eBay users and advanced eBayers. eBay is a fairly new eBay users online auction which has created its own market by developing a huge, successful, online auction. Starting from nothing, eBay has developed a site where millions upon millions of users buy and sell new eBay users and used items online. Suddenly, with the creation of eBay, there is a wonderful market where almost anything can be bought or sold. Looking for a bike part, a piece of Nambe sculpture, a Patagonia jacket, whatever, it is available to be bought or sold on eBay.
AuctionShipper will service three different customer groups, new eBay users, advanced eBay users, and a catch all category of general customers. AuctionShipper will be a convenient service for new eBay users. For the advanced user, it will offer a fast solution that is cost effective and allows advanced users to sell more items on eBay since their time is freed up from the packaging chores. AuctionShipper will also service non-auction walk-in customers.
The market for auction shipping is huge. There are millions of active members of eBay and 99% of all transactions are exchanged through some sort of shipping service. The ability to tap into this huge market is a wonderful market opportunity.
4.1 Market Segmentation
- New eBay users: These people are fairly new eBay users to the online auctions. They may have been purchasers for a while, but they are just getting into the selling aspect of auctions. Having a service that will package the items sold will be a valued service, making it easier for the person to transition into an online auction seller.
- Advanced online sellers: This is a market segment of active sellers on eBay. Offering a packaging and shipping service that is inexpensive and convenient will be quite appealing to a seller who would like to increase the number of items they sell on eBay but cannot because of the time it takes to package and ship the items. Most seasoned sellers would be more than happy to pay several dollars to have someone package items for them.
- Others: This market segment is a catch all category of non-auction customers who desire to ship packages. Often these people are either sending an item to a friend or business, or a maybe returning a mail order purchase. This category of people has similar demographics to a Mail Boxes Plus customer except they might have cost or environmental sensitivities.
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4.2 Target Market Segment Strategy
AuctionShipper will use a grassroots approach to segmenting the market. AuctionShipper will be active in the different usergroups and bulletin boards that are quite active within the eBay community. By being active on these communication systems specific to eBay, AuctionShipper will generate awareness among the perspective customers. AuctionShipper will also segment its customers through local advertising that will be aimed more at the beginner users who are less active on the bulletin boards, etc.
4.3 Service Business Analysis
The general packaging/shipping industry is composed of both mom/pop stores as well as franchises. The mom and pop outfits often offer other services beyond shipping, packaging and shipping are offered as a value-added proposition. Also participating in the industry are the franchises like Mail Boxes Plus and MailBox, Etc. These retail organizations offer general packaging and shipping services, they do not cater to auctions specifically. Currently, there is no other organization that is going after auction-specific packaging and shipping.
4.3.1 Competition and Buying Patterns
The competition comes in two general forms:
- Mom and pop stores: These stores typically offer additional services beyond packaging and shipping. They typically have another line of business and since they already ship UPS they have decided to offer shipping as a value-added service beyond their core competencies.
- Franchises: These types of stores have packaging and shipping as their primary services, with other services such as fax service and private mail boxes in addition to the primary shipping business.
The buying patterns of customers are based on convenience. Convenience is based on services offered such as packaging in addition to shipping, hours of operation, etc. Price is a factor to some degree, however most of the businesses charge a premium. AuctionShipper believes that customers will become more price sensitive when a realistic option becomes available that is significantly cheaper than the current competition.