eBay’s vulnerability, it seems, is drawing attention. In this installment of the Deal Radar, we look at a company that is trying to hit eBay where it hurts!
Wigix is a new online marketplace for consumer goods modeled on a NASDAQ-style trading platform. The socially-driven site has a “Want It, Got It eXchange” policy based on a price matching system similar to NASDAQ and replaces eBay’s popular auction method. This market model works well for common items with SKU numbers, which now make up a majority of the items being sold on auction sites. As a community-oriented, revenue-sharing business model, Wigix brings not only buyers and sellers together, but also like-minded hobbyists, collectors and small businesses to interact, collaborate and develop content.
Wigix was founded in 2007 by former Charles Schwab colleagues James Chong, CEO, and Bob Lee, CTO. Prior to founding Wigix, Chong spent 11 years at Charles Schwab as VP of Architecture and Planning and helped design Schwab.com, one of the world’s largest web-based transaction systems.
The company raised their Series A round of $5.34 million from Draper Fisher Jurvetson in January 2008. Their next round is slated for late 2009 or early 2010.
On Wigix, people can list free the items they want to sell, and the listing remains there for free until the item is sold. When inventory is sold, a fee is charged based on the final value of the sale. Services are free for items under $25. There is a charge of $1.50 each for the buyer and seller for items up to $100, with an additional 2% fee for the seller for items sold at $100-$1,000. For items over $1,000, there is a seller’s fee of $19.50 plus 1% for every dollar of the portion over $1,000. There are no listing fees or hidden costs, and prices are lower than eBay’s.
Since their Beta launch in April 2008, Wigix has attracted over 12,000 registered users and 1.5 million catalog items. According to Compete, unique visitors in September this year were approximately 16,000, down 67% from the previous month.
The site offers revenue sharing options for its members. These active members (approximately 400 in number), who are experts in their category, help define and build categories while earning revenue from their shared knowledge. The top target segments are consumer electronics, home products, jewelry, books, furniture, fashion and beauty – typically anything consumers are looking to sell or buy online. Wigix was able to gain early traction by educating the market on the issues being raised about eBay’s services and illustrating how the Wigix service is addressing and solving these matters.
Acc. to the company, one of the biggest differentiating factors is its community and user-generated content features. The portfolio tracking and community features are initially likely to get more traction due to liquidity issues. Users who are disenchanted with the limited offerings, high fees and lack of attention on the bigger sites such as eBay can turn to Wigix as a no-cost option. As I mentioned earlier, eBay has a lot of problems with its auction business. Other players in this market are Etsy, which focuses on unique handmade items, Half.com and most importantly, Amazon. In fact, as I have said on many occasions, it is Amazon that I think will emerge victorious in the ecommerce arena, and its relatively new marketplace service already has a superior user experience to that of eBay.
According to a report by Internet Retailer, ecommerce in 2007 reached more than $200 billion in the US. Despite its gang buster performance, Amazon is still only a ~$20 billion company. Wigix, it appears, can make a legitimate case to take away a portion of eBay’s business which is more vulnerable, even as Amazon continues to build out its own marketplace very successfully.
This segment is a part in the series : Deal Radar 2008