David Kalt has a thing about eBay.
Much of it, the usual complaints about the online shopping giant: eBay’s too big. It’s too impersonal. Its sales cut is too high.
These considerations may not mean much, concedes Kalt, if you’re selling, say, a used book for under $10. But if you’re an amateur guitarist like Kalt, eBay’s 10 percent transaction fee on a $500 used Taylor dreadnought can be a pretty big deal.
Mind you, most amateur guitarists trolling the internet for old FX pedals aren’t like David Kalt, founder of reverb.com, a website looking to redefine the online used-guitar market.
The 46-year-old Michigan native’s roots were in e-trade before gear trade. As one of the founders of online brokerage firm OptionsXpress, Kalt learned fast and furious the ins and outs of buying, selling, and trading valuable commodities over the internet. It’s an online education he brought with him in 2011 when he purchased the venerable Chicago Music Exchange guitar store (for a reported $7.5 million), trading the world of hybrid stocks for one of headstocks—yet, one that’s still firmly rooted in the cyber-world reality of increasingly busy online sales.
So when Kalt found himself knee-deep in CME’s cyber-sales on such sites as Amazon and eBay, the flaws he saw in the mega-online-bazaars really started to amp up.
“They were so big that it made them difficult to communicate with for people who wanted to sell drums or guitars or whatever,” says Kalt. “And they had such a huge interface that the listing screen was cumbersome, and hard to get your stuff online.”
Worst of all, adds Kalt, is eBay’s 10 percent transaction fee—a cost-prohibitive amount for the many sellers hoping to use their sale as a means toward a purchase, and the many buyers priced out when sellers mark up an item to cover the fee.
Kalt isn’t alone in his appraisal. As online eBay critic Bluescaster1973 recently posted, “All I know is they charge too much … soon as my guitar neck sells, I am going to craigslist and never coming back to eBay to buy or sell at these prices … all inflated for eBay’s cut … I am surprised they are still business.”
While Bluescaster’s prediction about eBay’s impending demise may be a tad premature, his thoughts about taking his business elsewhere aren’t—which is exactly what Kalt is counting on.
In January 2013, Kalt launched reverb.com, a self-described “marketplace that empowers musicians to maximize the value of their gear.”
That “value maximization” essentially comes from Reverb’s more modest 3.5 percent transaction fee, which Kalt believes will ultimately leave more money in musicians’ wallets to buy more gear–ideally from Reverb. (“Musicians are always aspiring to play something else,” notes Kalt.)
Kalt wants Reverb to be more than just another auction/selling site with a lower fee. He says he and his team of 15 reverb.com staff are constantly trying to come up with better ways to sell gear online—and part of that is to make the site more buyer-friendly. Toward that end, Reverb offers such features as an online price guide with which buyers can check the approximate used-marketplace value of a potential purchase, and it provides the ability to haggle—which Kalt describes as an essential holdover from brick-and-mortar guitar-store culture.
There’s also an effort to list the merchandise in novel ways. In addition to categorizing guitars by price, make, and decade, there are such “handpicked collections” as the Gear of Led Zeppelin, Japanese Vintage, and Pointy Guitars.
Kalt says the strategy is already paying off, pointing to the $2.5 million per month that changes hands via the website.
While Reverb doesn’t yet have the inventory of an eBay (a casual search for acoustic, electric and bass guitars turned up about 11,000 items at reverb.com; a similar search numbered in the hundreds of thousands on eBay), Kalt sees the gap narrowing in the not-too-distant future, as websites specializing in specific markets become the go-to place for serious buyers and sellers.
“I think there is a trend,” says Kalt. “That’s not to say that eBay isn’t still growing. But there are a lot of subcategories and subverticles. You could say the world has gone from independents to Walmarts, and all that, but Amazon and eBay can’t really handle the complexity of a lot of these marketplaces–so this is sort of the natural evolution of ecommerce.”
Until the evolution is complete, though, Kalt and his Reverb crew will keep adding inventory, and thinking up new ways to please buyers and sellers. They’ll probably also be playing a lot of music.
“Between [CME and Reverb],” says Kalt, “we’ve probably got about 50 musicians on staff, and about 25 bands. It’s pretty crazy.”