eBay joins virtual catwalk after model first quarter

Auction site eBay is launching an online fashion outlet store, after Q1 profits jump by 11% to $400m.

Last Updated: 06 Nov 2012

Perhaps inspired by the roaring success of sites like ASOS and Net-a-Porter, auction site eBay is trying to join the ‘in’ crowd with a brand new online fashion store, offering high street brands at knockdown prices. Top fashion names like Kookai, Ted Baker, La Redoute and er, House of Fraser have all signed up to the eBay Fashion Outlet, with others expected to follow. Discounts of up to 70% are being offered, and the typical price point on dresses, shoes and tops looks to be between £30 and £50; it is really going after the mass market.

The news comes shortly after the site posted profits for the first quarter of the year of $397.7m, up 11% on the same quarter last year. Revenue was up a more modest 9%, so the company’s cost-cutting efforts seem to be paying off.

For eBay – which made its name as a trading platform allowing users to buy and sell unwanted stuff – it’s a further move towards becoming a fully-fledged online retailer, rather than simply a trading exchange. The firm has already done similar deals with Tesco, Argos and Littlewoods.  The logic is apparently customer driven – users like buying from eBay, but they want to be able to get their favourite brands reliably, without having to wait for an auction to come along and then watching it like a hawk.

Of course eBay veterans have been buying discount designer gear on the site for years. Just where do you think MT editor Gwyther’s impressive collection of Etro shirts came from? But in the old days there was always the (sometimes substantial) risk that what you were buying wasn’t strictly Kosher. Those Floridian counterfeiters must have had a field day over the years.

So the new outlet should at least provide buyers with a little more confidence in the provenance of their purchases. Just how successful it will be remains to be seen, however – fashionistas, even the bargain-hungry online variety, are notoriously fickle, after all. And the British high street rag trade is one of the fastest moving and most ruthlessly competitive markets out there, to boot.

But if the recent success of bricks’n’mortar outlet stores like TK Maxx (and of straightforward bargain retailers like Primark and Peacocks) is anything to go by, there’s big money to be made here. With its minimal overhead, if eBay can drive a hard enough bargain to get the right kind of stock, it should be well placed to thrive.

Fill your boots, eBay – so long as they are the black leather knee-high variety, of course.

In today's bulletin:

Tesco continues land-grab with house-building plan
Companies get the jitters about potential hung parliament
Revenue squeezes an extra £13bn out of UK business
Employees still value CSR, despite recession
eBay joins virtual catwalk after model first quarter

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