Though Reverb's 10 million monthly visitors are dwarfed by eBay's 167 million users, analysts say smaller operators with a hyper focus on niche merchandise and audiences can pull market share away from bigger e-commerce operators by effective use of payments technology and other tools to emulate the big guys. “I figured people would rather buy used gear directly from the source-owners-and I got inspiration from Etsy's model,” Kalt said. (Kalt previously co-founded the online stock trading site optionsXpress, taking it public in 2005 before its eventual acquisition by Charles Schwab.) "There’s a sweet spot where fraud is low, but there will always be some, even in a very healthy operation."įor Kalt, the opportunity to disrupt the music equipment industry was an obvious one, because he already knew the pain of trying to buy and sell music gear through eBay and other sites. “If we don’t lose anything to fraud, I know we’ve gone too far because it means we’re cutting off some prospective sales," Kalt said. “We have a very sharp fraud team but with thousands of product listings a day we have to be very good at spotting and reacting to fraud,” Kalt said, noting that Reverb uses a combination of third-party fraud solutions and its own internal monitoring.īut there’s a fine line between being too restrictive and too lax on fraud. Reverb’s fees mean its profit margins are thin, leaving little room for fraud losses. “We started off relying heavily on PayPal, but it’s hard to grow a marketplace if you don’t control the transaction, so we went all in with our own checkout solution and it keeps evolving,” said Reverb’s founder and CEO David Kalt, a music aficionado and serial entrepreneur. Alternatively, sellers may opt to directly accept PayPal for 2.9% of the sale plus $0.30. This has helped keep sellers' fees at 3.5% of the sale, and transaction fees are among the marketplace industry's lowest, at 2.5% of the transaction plus $0.25.Ībout 75% of sellers opt for Reverb’s proprietary Direct Checkout option. We will not declare it as a gift, or at a lower value.Early on, Reverb built its own payment solution called Direct Checkout that now accepts any payment type-including PayPal-with the option to finance purchases via Affirm.
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