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Explore your auctions: once the domain of small sellers, eBay has become a valued resource for entrepreneurs

Entrepreneur, Jan, 2003 by Amanda C. Kooser

Fifty million registered users can't all be wrong. EBay is an empire that was built on a foundation of individual sellers and raised up on the back of collectibles and antiques. But if that's all you think eBay is, then you probably haven't entered the terms "pocket PC," "printing labels" or "small business" through its search engine lately. Even the word "yak" reveals over 200 listings.

EBay isn't a cure-all for lagging business sales, and it can be a very involved and time-consuming operation. It's had its share of complaints from small businesses unhappy about fee increases and the site's policies. But eBay is still a valuable tool for many entrepreneurs, offering opportunities, such as a venue for selling excess inventory, that can help your business grow to new heights.

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"We are like an e-commerce operating system for the American entrepreneur today," says John Herr, eBay's vice president and general manager. Those are big cybershoes to fill. Join us as we take a stroll around one of the most successful Web sites ever and look at how entrepreneurs of all shapes and sizes can benefit from jumping aboard. Here's a chance to look before you leap.

Bidding On It

Selling on eBay is not for everyone, but the system has proved itself flexible enough to accommodate a variety of entrepreneurs. This is where we meet two very different eBayers: Judy Dunlop and Andrew P. Hortatsos.

Dunlop, 41, is a classic eBayer. The owner of Days Gone By, an antique and collectibles store in Gravenhurst, Ontario, she's used eBay to sell her goods since a friend suggested she try it out in 1998. Gravenhurst is a small bedroom community with a population of 10,000 and a slow summer season. The $30,000 her business reaps from eBay sales annually helps her through the down times--and that amount is growing steadily. "If something doesn't sell on eBay, you throw it in the store" is her philosophy.

Hortatsos, 37, president of the CyberMarketing Group, which runs sunglasses retailer ShadeSaver.com, is a modern eBayer. He co-founded the company with his wife, Tracy, 36, in 1998, and they now handle 50 percent of their business on eBay. "It was probably the single most important thing we stumbled upon as far as allowing our business to grow," says Hortatsos. He buys name-brand overstock wares for the sole purpose of selling them on eBay while his online store at ShadeSaver.com is geared toward all the latest styles.

One thing Dunlop and Hortatsos have in common: They both deal in tangible goods. The services arena has never taken off in the auction marketplace. Online auction expert Dennis L. Prince, author of Online Auctions at eBay (Premier Press), has a theory: "It's one thing to inspect goods, but you can't inspect the convolutions of a brain to see if they really know what they're talking about," he says. Tiffany lamps, loose diamonds, real estate and bubble wrap sell. Landscape design or Web site building don't fare so well.

While 50 million registered users is a sea of potential customers, competition for this vast market is intense. Just as you wouldn't open up a comic book store next to an existing comic book store in the real world, you shouldn't place items up for auction if the site is already saturated with similar offerings that aren't selling well. Don't waste your time. Dunlop uses a basic rule when placing her coats, quilts or collectibles up for bid on eBay. "If I [don't think I can] sell it for my opening bid," she says, "then I don't put it on."

OK, you think you're ready to sell--what now? Instead of just throwing items up on eBay to see what sticks, research first to evaluate the competition, check pricing and popularity. "We do our due diligence," says Hortatsos. "We know the pricing points for each of the brands we carry, and we know the market." He checks current and closed eBay listings before he lays out money for overstock merchandise. In the rare case that you can't find your item listed, eBay can still provide a good barometer of customer interest. Try running an auction and see what kind of attention it generates. Adding a visitor counter to your listing will give you an idea of how many people stop by for a look. Where else can you test-market a product for under a buck?

EBay is a hotspot for shedding excess inventory that's haunted your shelves for too long. Price-conscious auction buyers love to snag overstock or last-generation items at bargain rates. "Where retail is good is an area we don't really focus on at eBay," says Herr. "Where retail has its pain points and difficult areas is what we're best at." He includes hard-to-find, unique, out-of-stock, returned, refurbished and excess items in that description. If a customer returns a Zip drive to your store with the box open, you can't restock it as new. Consider putting it on eBay instead.

Most entrepreneurs who have found large-scale success on eBay have worked the process deeply into the way they run their business. Clicking the "Sell Your Item" button will bog down any but the occasional user who has just a few auctions to track. If you use it too often, it'll suck your time away faster than a whirlpool. Dunlop keeps a handle on her auctions with a tight inventory-control system and uses AuctionWatch, a popular automated listing tool, to keep her time spent on eBay down to five hours a day. Prince urges entrepreneurs to create a system for the process. Many businesses even dedicate one or more employees solely to dealing with eBay.

Business Services Industry

Explore your auctions: once the domain of small sellers, eBay has become a valued resource for entrepreneurs

Entrepreneur, Jan, 2003 by Amanda C. Kooser

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