eBay Suffers Setback
eBay's
(EBAY) - Get Report
efforts to lure big business to its site suffered a setback when partner
Accenture
(ACN) - Get Report
announced Friday it is shutting down its auction consulting business.
Accenture launched the service, "Connection to eBay," to much fanfare in fall 2002. Although customers of the service included
Sony
(SNE) - Get Report
and
Sharp
, the business didn't grow quickly enough for Accenture, said Joel Friedman, chief operating officer of Accenture's business process outsourcing organization. The consulting firm plans to shut down the business over the next 30 days, Friedman said.
"Accenture is not focused on nascent start-up businesses unless they can scale rapidly. As we looked at the enterprise market
on eBay, it was scaling less rapidly then we hoped," he said. "We concluded that we were better off partnering with another player than going alone."
Accenture has signed a deal with rival
Auctionworks
to promote Auctionworks' listing services to Accenture's clients. The 60 to 65 Accenture employees who currently work on the "Connection to eBay" project likely will be reassigned to other positions within Accenture or possibly given the opportunity to join Auctionworks, Friedman said.
eBay representatives did not return calls seeking comment.
Accenture, AuctionWorks and related firms provide a range of services for eBay sellers, depending on how much hand-holding their clients want or need. Some firms offer simple tools to help sellers automate their auction listings. Others offer more hands-on services, including housing and shipping inventory, providing guidance on what items to list when, and manually setting up auctions for clients.
To date, eBay's success largely has depended on the trades conducted by small businesses and mom-and-pop firms. But the company has looked to Fortune 500-class firms as a source for future listings and trading growth. When Accenture launched its service, the two companies touted the $80 billion market for returned or overstocked goods and the potential for companies to see greater returns on eBay.
Accenture seemed to be in a perfect position to help big businesses do just that. As a well-known consulting firm, it already had a network of Fortune 500-type clients. And the company signed a deal with eBay that placed its employees in eBay's offices.
The consulting firm had no problem attracting customers for its services, said Friedman. The problem was in convincing client to commit a significant amount of inventory to the auction service -- and to maintain that level over time, he said.
"Excess inventory is not strategic to many companies," Friedman said. "It doesn't get that level of attention. It doesn't keep the CEO awake at night."
Without a significant amount of inventory going through the service --Friedman threw out a figure of $100,000 in gross sales per month per merchant --Accenture couldn't afford to pay its fixed costs of providing the service, he said.
Despite Accenture's retreat from the auction services industry, the industry still has a lot of potential, argued Scot Wingo, CEO of
ChannelAdvisor
, a rival auction listing service. But getting big businesses to sell on eBay takes a lot more time and effort than Accenture was willing to devote, said Wingo, whose company counts
Best Buy
(BBY) - Get Report
,
Sears-Roebuck
(S) - Get Report
and
IBM
(IBM) - Get Report
among its more than 50 enterprise clients.
"I think it was poor execution," said Wingo. "They were able get a number of large enterprise clients, but they drove them into the ground."