Reverb also has built a strong following on social media by leavening its site with proprietary content including news and interviews. That process grew naturally from Reverb’s reliance on industry experts to staff the site and run customer service-many of the company’s employees are musicians, Kalt said. Reverb also offers protection for buyers and sellers by providing live customer support to resolve disputes between buyers and sellers, when necessary. Using external and internal data from recent transactions, Reverb supports a real-time price guide for gear across nine categories ranging from electric and acoustic guitars to drums and amps. “With global e-commerce growing, the ability to drive cross-border transactions and use smart routing methods is necessary,” said Mercator's Pucci.įrom the start, Reverb has worked to set itself apart from eBay and other marketplace sites by offering broad transparency in pricing gear and tools to help users smoothly negotiate deals. Two years ago Reverb made its first hires in Europe, and it now has operations in the U.K., France, Germany, the Netherlands, Australia and Japan. Reverb not long ago switched from using Braintree as its core payments platform to Adyen, which provides advantages for cross-border payments and payouts in local currencies as Reverb expands. “With third-party sellers fearing that listing merchandise on Amazon means they could become their lunch someday, the sites-within-a-site offered by Reverb, Shopify and others are becoming more attractive,” said Raymond Pucci, associate director of research at Mercator Advisory Group. Early last year Reverb added the capability for sellers to create their own websites within its platform with a unique URL, while transactions continue flowing through the checkout page Reverb controls. Two years ago the company went global, reaching $400 million in new and used music equipment sales last year, and early this year it launched Reverb LP, a sideline that's showing promising growth using the same site tools to sell vintage record albums. 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.
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“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.
#REVERB LP SHIPPING COSTS PLUS#
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. 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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