Tuesday, April 14, 2009

Innovative Online Retail: A Review of Ztail's eBay Resale Offering

“Global Recession” happens to be the most daunting of words these days, and online e-commerce sales are taking a hit as a result of the current economic crisis, but perhaps it’s true that With Crisis Comes Opportunity. The online business model of Ztail may indeed be emblematic of such an opportunity, and on the outset, my preliminary review of the site’s offering indicates that it may be a promising venture.

Ztail’s new online offering is built around an upstream trusted network of online vendors (listed here) who have partnered with the website to sell their products, and the site uses eBay as its downstream channel for resale. Essentially, Ztail provides a simple limited insurance policy that guarantees that customers will be able to resell the items they purchase through Ztail’s business partners at a substantial price through eBay within a certain time period after their purchase.

Buyers can visit the Ztail online catalog (an aggregation from various partner merchants) where they can browse products, and for each item, the buyer will be presented with the item’s normal price from the merchant, as well as its Ztail price (difference between the sale price from the merchant and the guaranteed resale price). When a buyer purchases an item through Ztail’s catalog, the site will guarantee that a within a certain time period after the purchase date, Ztail will be able to resell the item on eBay for a certain amount. For example, for the item shown in the picture below (item details available here), Ztail is guaranteeing that a $300 MP3 music system through Cambridge Soundworks will sell for at least $135 on eBay (within a year of the purchase date).

What I really like about the service is it’s automated workflow. Once buyers completes the purchase transaction, Ztail emails them a link that they can click whenever they’re ready to re-sell the item. The link is also accessible through the buyer’s online Ztail account. The resale workflow uses the eBay auction wizard to post the buyer’s item on eBay, and all auction settings are configured behind the scenes to maximize the buyer’s return. Other than entering your eBay and Paypal information, it’s a hands-off process!

It can get even better if your auction price ends up being higher than the guaranteed resale price, in which case, you get to keep the extra money. You also need not worry if the auction ends with a final selling price below the Ztail’s guarantee, as Ztail will refund the residual.

So what do you think?

I personally think the idea has great potential for products that require frequent upgrades or things that you might not need to keep forever. The one year time limit is a major restriction though, but I suspect this will be increased as the service gains more traction, and Ztail builds a critical mass of buyers and sellers.

From the buyer’s perspective, the service sounds appealing because it gives them some confidence in the product and offers them an alternative down the road if they don’t like the product, or want an upgrade. Also, the hands-off approach to the resale process through eBay is a plus - I personally never get around selling unwanted items on eBay because of time constraints.

Also, only time will tell whether there is a particular category of products that this service is more suited to… high priced products? fashion accessories? technology products with a short life-cycle?Only time will tell if the service proves to be viable, at which point, I wonder whether we’ll see Ztail’s offerings being integrated with major online storefronts – i.e. rather than having to purchase through Ztail’s catalog, we’d be able to purchase directly from the online retailer and choose Ztail as an additional option. How will that business model work? Further food for thought…