Deal Radar 2008: Wigix

eBay’s (EBAY) 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.

Former Charles Schwab colleagues James Chong, CEO, and Bob Lee, CTO, founded Wigix in 2007. 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 its Series A round of $5.34 million from Draper Fisher Jurvetson in January 2008. Its 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 its 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.   

According 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 (AMZN). In fact, as I have said on many occasions, it is Amazon that I think will emerge victorious in the e-commerce arena, and its relatively new marketplace service already has a superior user experience to that of eBay.    

According to a report by Internet Retailer, in 2007, e-commerce reached more than $200 billion in the U.S. Despite its gangbuster 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.

Disclosure: None

 

Comments

[User 153301:]

This article was a waste of time.

2008 Nov 05 08:08 AM

[Bob C:]

Just another sign that eBay trails the pack in true innovative thinking.

eBay's CEO, John Donahoe, could screw up a steel ball with a rubber hammer!

2008 Nov 05 08:13 AM

[Patricia013:]

I have some items on WIGIX. It may be good for ipods and such but it fails as far as artwork. I've been there from the beginning...even helped them make up the index for their arts category. I wish them luck but for art and collectibles they'll have to change their business model to accomodate these categories.

2008 Nov 07 04:02 PM

[twturtleltd:]

Wigix has a long way to go before they even consider competiting with eBay. They have been "Beta testing" since March 2008 and are missing a lot of key features of a marketplace website like eBay or Amazon. They do not seem to be in hurry to change either. They have poor customer service avaliable only through email or forum posting that may or may not be answered within 48 hours. Items are free to post and there are no transaction fees. However, you are charged fees to withdraw your money from Wigix to PayPal, googlecheckout, or have a check mailed to you.

2008 Dec 27 06:20 PM