Amazon, eBay Sell More Cell Phones

Posted by: Olga Kharif on August 5, 2009

A quarter of mobile phones recently sold in Western Europe had been purchased through online vs. physical stores, research project TNS ComTech found. Amazon and eBay facilitated the majority of the online purchases, according to the survey, which was based on responses from 60,000 consumers.

The fact that Amazon and eBay are emerging as major retailers of mobile handsets could have major implications for the wireless industry. It could affect the way carriers and device manufacturers market, subsidize and sell products and services, and how much revenue and profit they receive.

As purchases continue to shift online, Amazon and eBay could become the go-to brands for wireless services, at least in certain countries and for certain services, such as prepaid. That market power could allow the sites to dictate prices, and to negotiate for a larger cut of the industry’s revenues and profits.

Eventually, this market power could even allow these companies to launch handsets and services under their own brands. Amazon already sells its Kindle e-book reader, which can download titles via Sprint Nextel’s network. Offering an Amazon-branded cell phone or a cell-phone service could be the next logical step.

More likely, though, the online retailers will simply continue to resell others’ handsets and services and eat into carriers’ margins. A carrier makes more money by selling a phone to a consumer through its own stores than by selling the service to the user through Amazon, which takes a commission.

An increase in eBay purchases, meanwhile, suggests a rise in consumer purchases of used cell phones. The good news is, whenever a consumer buys a used device, the carrier doesn’t spend anything on subsidies. The bad news: That carrier may not be able to sign up that consumer to a long-term contract.

Reader Comments

polo martin

August 6, 2009 1:44 AM

I am curious to know if eBay is not behind this new web phone. the w@son is announced for launch in 2010.
www.get-a-watson.com

Philip Cohen

August 7, 2009 6:29 AM

The people currently running eBay are a lot of greedy, unscrupulous, disingenuous, incompetent buffoons, and I assume that they still have not found those lost performance bonuses ...

For eBay “watchers”, a detailed case study of shill bidding and the abuse of eBay’s proxy bidding system—all exacerbated by eBay’s introduction of “hidden bidders”—plus a detailed general criticism of eBay’s “clunky” auction platform and policies, at

http://www.auctionbytes.com/forum/phpBB/viewtopic.php?t=24033

Buyers, and honest sellers, should read this case study so that they can be made aware, if they are not already so aware, of just how primitive and open to abuse is the eBay auction system.

A synopsis thereof:

 very little of the auction system security, that eBay claims to offer buyers, exists in fact;

 contrary to their claim, it can be demonstrated that eBay has no “sophisticated” nor “proactive” system in place for the detection of undisclosed vendor (“shill”) bidding and indeed appears to do nothing about such criminal activity except as a reaction to a user’s report of suspicious bidding activity;

 eBay appears to have no effective matter-of-course verification of users; unscrupulous users can apparently have as many user IDs as they may have email addresses;

 many of eBay’s “rules”, concerning the retraction of bids, cancellation of auctions, etc, are nominal only and are no bar to the machinations of the unscrupulous seller;

 as a result, eBay’s “proxy” bidding system is so open to abuse by such unscrupulous sellers that to use it, as eBay intends it to be used, can be an invitation to pay your maximum;

 by the lack of any such effectual security, eBay effectively, and knowingly, “aids and abets” unscrupulous shill-bidding sellers to defraud naïve buyers;

 the masking of bidding IDs with non-unique, absolutely anonymous aliases serves little other purpose than to obscure such shill bidding, and defeat any attempt at comprehensive analysis of individual bidding patterns to expose such activity;

 the quarterly changing of even these non-unique, absolutely anonymous, bidding aliases serves absolutely no other purpose than to stop even experienced eBay users from attempting to track suspicious bidding activity over time;

 the anonymous, individual bidder Bid History Detail pages, supposedly supplied to offset the absolute masking of bidding IDs, although better than nothing, can present an ambiguous view and, in such circumstances, are of dubious value;

 anyone naïve enough to “nibble” bid on a seller-elected “private” auction (ie, “User ID kept private”), on the balance of probability, is going to be defrauded;

 when suspected fraud [i]is[/i] reported, and is found by eBay to be proved to their satisfaction, eBay will conceal that fact from the victim of the fraud; this then is the concealing of a crime after the fact, surely, a crime in itself;

 eBay will never acknowledge to a victim that a fraud has been perpetrated, nor indeed will they acknowledge that such fraud is even a problem on eBay; eBay therefore sees no reason to provide any mechanism to aid in the recovery of any monies so defrauded;

 if eBay did have any truly sophisticated and proactive system in place for the detection and control of shill bidding, we would not now be having this debate; and

 for those buyers (and honest sellers) who do embrace eBay believing that eBay acts as an “honest broker” between buyer and seller, I can only say that there are fairies at the bottom of your garden too.

Romi Parmar

September 18, 2009 10:40 AM

@Polo Martin: ebay is definitely not behind the w@son.

Regards,

Romi
Blog.the3gdatingagency.com

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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