Does Ebay policy change alter your partner site e-commerce strategy (Guide to Small Business E-Commerce Strategy)

While it’s unclear whether Ebay or its sellers will end up taking a hit here, this EBay boycott illustrates the benefits and risks of using third-party partner sites as part of your small business e-commerce strategy.

No simple answer exists as to whether you should use a third-party channel or not as part of your total e-commerce strategy; however, the risks and benefits are clear:

Benefits of Third-party Partner Sites

1. Exposure to potentially large audience – Customers often start their search for products and services on large aggregator sites. Listing your products with one of these sites gives you a larger potential audience than you might get on your site alone.
2. Scalability – To serve the needs of large audiences, sites such as Ebay, Amazon, Expedia and Travelocity need robust server farms, far in excess of what small businesses can hope to create for themselves. Making the most of their hardware can often be a smart ploy. Even given Amazon’s recent S3 outage, you don’t get less risk with a smaller player.
3. Low cost – Typically, large web sites like Ebay and Amazon gain significant economies of scale and can pass those savings on to you. For many businesses, the cost of a partner channel might be the least expensive – at least in the short run.

Risks of Third-party Partner Sites

1. Greater competition for attention – Sure, listing your products with one of these sites gives you a larger potential audience than you might get on your site alone. But that’s true for the other products and services listed there, too. Ebay lists more than 14 million items at any one time. So, don’t rate the site on its potential audience. Rate the partner on volume of sales.
2. Less control – As this Ebay flap illustrates, relying on a partner site for too many of your sales can put you at a disadvantage when they change their rules.

While the advantages of partner sites outweigh their disadvantages for most small businesses, you should run the numbers for yourself and see what makes the most sense. Partners have terrific upside and, in most cases, can make a big impact as part of your overall e-commerce strategy.

What do you think? Will Ebay’s change make you change your view of partner sites? Are there better places to look? Drop a line in the comments and let me know.