eBay’s RedLaser Purchase: A Risky E-Commerce Move

Written by Evan Schuman
July 1st, 2010

eBay’s purchase last week of RedLaser, a small but extremely popular mobile app that scans barcodes and then displays how much various retailers are charging for the items, reflects a calculated risk for the auction giant.

That’s mostly because the chief goal of many acquisitions is to deny the product/service/technology to key rivals. With RedLaser, though, eBay chose to go out of its way to make the app much more available to competitors and to do it for free. Making such a move at this stage of Mobile Commerce is a decision that could ultimately prove brilliant or insane.

The application used to cost $1.99, but the first thing eBay did was change it to a free app.

Let’s first examine this from the “eBay’s move is brilliant” perspective. RedLaser is nothing if not a price-comparison tool. Therefore, it’s reasonable to assume that the consumers who use RedLaser are unusually price-sensitive (or, in the vernacular of marketing circles, cheap).

With that assumption, it’s realistic to assume a retailer that sells used merchandise (along with products purchased solely to be sold) would have a serious edge with such an audience.

But that analysis sidesteps some of the practical ways consumers are using these apps, which would explain the RedLaser interest from so many brick-and-mortar chains. And this is “eBay’s move is insane” part. The fact is that RedLaser is a physical-store tool.

A consumer scanning a bottle of detergent at a local Wal-Mart isn’t usually looking for the lowest price. That’s a Web site function. No, such consumers are probably looking to just get an assurance that they aren’t being ripped off in a big way. If the price is within 5 to 10 percent (and perhaps even 15 percent, depending on the item’s price), the consumer is more than likely to walk up to the POS and buy it, taking it home within minutes.

If that’s the case, the inclusion of low-price leaders like eBay may actually help close the deal for Best Buy and Target. “Look at this, Martha. If I got a used item with all of the hassle from eBay, it would barely be 20 percent less than this. This here, with the warranty of Sears, is suddenly looking much more attractive.”

With the app now suddenly being free, retailers are likely to encourage their customers to use RedLaser much more. It’s a nice device to keep chain pricing honest. And eBay knows that the more purchases are done in a lowest price world, the better it will perform.


One Comment | Read eBay’s RedLaser Purchase: A Risky E-Commerce Move

  1. Philip Cohen Says:

    What possible good is RedLaser to eBay? Due to eBay’s lack of control over prices on eBay and their constant fee increases, prices on eBay are unlikely to be that attractive to consumers. And, merchants surely aren’t going to direct buyers to eBay when they can direct them to their own sites, or elsewhere, and avoid eBay’s ever higher and higher profit-sucking fees.

    Why then would anyone (even the idiots at eBay) want to promote a technology that is probably going to direct buyers away from their own principal site? Then, we have to assume that this most unscrupulous organization, eBay that is, won’t apply a “Best Match” algorithm to favor themselves, don’t we?

    Sounds like another “Skype” purchase to me. Oh, sorry, I forgot, PayPal is going to be eBay’s major growth area in the future. Oh yeah, dream on …

    Then, who knows, maybe eBay is going to use some of their overseas stash of cash to fill those rumoured eBay warehouses with Chinese manufactures and start selling their own inventory? If so, methinks the Chief Headless Turkey may have, once again, found another way to continue converting all those past-laid golden eggs to brass …

    So what is going on? I think we are observing the most stupid, cruel and inhumane, slow slaughtering of probably the most successful commercial golden-egg laying goose of modern times. Clearly, headless turkeys harbor a great resentment towards such gifted geese …

    Whatever is the grand plan that Donahoe has for eBay, clearly there is no place in it for all those sellers who made eBay the success that it used to be, nor for the buyers who wanted to buy what those sellers had to offer. Is that not a very strange strategy for “turning a business around”—and around, and around, and around …”?

    Still, it will be interesting to hear how the Chief Headless Turkey spins the ongoing disastrous consequences of the April Fools Day IT Massacre, when he presents what will undoubtedly be another creative reporting on the 21st next.


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