eBay isn’t just for comic-book collectors anymore: how SMBs can use the auction giant to clean up, in more ways than one.
When eBay got started in Pierre Omidyar’s living room in 1995, it was the ultimate flea market, where shoppers could browse for everything from comic books to used sneakers without ever having to leave home. Although some still limit their eBay shopping to Spiderman back issues, retro lunchboxes, and import CDs by Pink, the auction giant has become much more than a wired garage sale. It’s emerged as a middleman killer, helping small businesses empty their warehouses of excess inventory by hooking sellers and buyers directly to each other.
The only catch is that placing individual items on the site can be time-consuming, especially for a small-to-medium-sized business (SMB) owner who already wishes there were another 10 hours in the day. Putting a piece of equipment up for auction requires writing a description, navigating the site’s requirements for listing, and including a digital photo. Then the real work begins. After the item is up, a seller has to track the auction, confirm billing, arrange shipping, and possibly answer multiple e-mails from prospective buyers.
In early 2002, eBay noticed how many members were sending them messages detailing their desire to sell products, but bemoaning their lack of time and experience for the task. The company decided to create a way for individuals and companies to sell without, well, having to sell. The Trading Assistant (TA) program, started in February 2002, is now a healthy, bouncing one-year-old. And, according to eBay and its devotees, eBay’s new baby promises a bright future for small business sellers. The program allows SMBs to find and work with experienced eBay sellers, who are all too happy to take on the time-strapped business owners as clients. By providing a database of PowerSellers, the auction site allows users to browse for the type of seller that hawks their kind of wares and even resides in their area.
Even for SMBs that have a retail segment to their businesses, making eBay a part of the inventory control plan tends to make sense. For one thing, the auction site is wildly popular, and growing at a prodigious rate, allowing companies to reach a wider audience than a homegrown e-commerce site could ever hope to see. In the third quarter of 2002, eBay reported gross merchandise sales of $3.8 billion, had 55 million registered users, and 160 million product listings. By comparison, at the same time in 2001, the site had $2.4 billion in sales, 38 million users, and 109 million listings.
Also, for those who might want to sell off excess high-tech gear, eBay has always been a shopping destination for the tech-happy consumer, but now it has become even more alluring. A new, heavily-touted section for electronics showcases the category and gives it prime eBay homepage space. Other initiatives, such as adding big-name stores to its site, are designed to draw even more shoppers of every ilk.
Perhaps most important, the TA program, while not in its infancy, is at least in its toddlerhood, and eBay is nothing if not whip-smart at adding new features to already existing programs.
Trader Joes and Jills
Like many other eBay offerings, the TA program has levels of complexity, but is fairly simple in concept. Experienced eBay sellers register in the program, are added to a database, and can be found through a directory search by area code, state, or country.
“Small businesses can benefit from the program in two ways,” says Kevin Pursglove, spokesperson for eBay. “First, a business with an existing eBay account can enroll in the program and start selling on behalf of others. Depending on the arrangement between the two parties, this may allow a small business to earn 20 to 30 percent of the selling price with the potential for higher margins.”
For those not keen on diving into the auction waters, Pursglove says that the program allows companies to develop an arrangement with a seller in order to have an outlet for excess inventory.
“Selling a large number of items on eBay is not as easy as a person might think,” says John Morgali, co-owner of Saint Marys, Kan.-based HippoVariety, a firm that buys large liquidated equipment and sells the items on eBay. “It’s pretty time-consuming, and I know people who have tried it and failed. You have to have the right system, shipper, payment, and service in place. That’s why having someone manage your auction can sometimes be the best option. Otherwise, you’d have to get on eBay and suddenly become a PowerSeller, and that’s just something that’s not going to happen without at least four to six weeks of education.”
The TA program, on the other hand, requires little effort and even a minimum of navigation. Once a list of sellers is found for a specific state or area code, you can click through to each assistant’s contact page, which lists a user’s ID, name, location, length of eBay membership, languages spoken, and gives a description of their service, terms, and fees. There are links to the assistant’s current items for sale and, most important, feedback results.
Andy Mowery, an eBay trading assistant in Kansas, notes that of all the information available to SMBs at the program page, the feedback should be the most crucial area of research for those looking to pick a seller.
“You have to look at how many negative feedback statements they have,” Mowery says. “Too many is really an issue. The feedback is the only way to get a sense of their reputation.” Unlike a more standard business relationship, in which a potential partner asks for references, a trading assistant may be unable to divulge client information, making the feedback even more important.
“Many of our clients don’t want to be known to the end buyer,” Mowery says. “They feel uncomfortable with having their personal data out there or they just want to be anonymous for some other reason.”
One group that isn’t shy is eBay buyers, who leave the feedback that shows up on a seller’s record. The TA program feedback page is rife with negative comments about assistants, some quite passionate in their dissatisfaction.
“Slow and unresponsive,” one buyer wrote about a Minneapolis-based assistant, following that with a slew of exclamation marks to emphasize the point. But although unhappiness with sellers isn’t tough to ferret out, it’s not often the norm. The same assistant garnered glowing reviews as well, with one buyer calling the seller, “an asset to eBay.”
To gauge how a seller’s reputation changes over time, eBay has provided the feedback based on three time periods: the last seven days, the past month, and the past six months. This is a nice feature for seller and client alike, since it allows a seller who may have been shoddy to get credit for cleaning up his act, and lets a client see general improvement. For example, the Minneapolis seller had 17 negative comments in the last six months, of which four were in the past month, and none in the last week. By juxtaposing these numbers with the positive comments–2,115 in the last six months for the Twin Cities asset to eBay–it’s easy to see sellers for their good qualities rather than their occasional missteps.
Although perusal of an assistant’s reputation is vital, that’s not the only research that needs to be done when finding a good go-between. Mowery says that a client should get to know how the assistant handles business in general. “You have to look at how they manage data, how they handle shipping, their payment processing, and what kind of service they provide,” he says. “If someone is working with a pen and a notebook rather than a sophisticated software tracking system, and you’re fine with that because they have great service, then that’s fine, but it’s something you should know.”
One reason that eBay arranges its directory by location is that often it may be a good idea for sellers and clients to meet in the real world. Experienced eBay sellers know how to market items effectively, and what type of products zip through the site quickly, so an in-person consultation that includes actually seeing what needs to be sold and making decisions right then and there can be invaluable.
Although the TA program could prove to be a boon to SMBs that like the idea of unloading excess equipment or overruns on the auction site, there are situations when it may be easier to just clean out the closet once and not look back.
“The bottom line is that some people just need to do liquidation,” says Mowery. “There are plenty of firms that will buy what they have and resell it to professional eBay sellers.”
One advantage to going to such a firm is that an SMB can pocket the cash in one lump sum and get rid of their stuff all at once, rather than going the assistant route, which involves commissions, eBay listing fees, and sometimes consulting charges. If the items don’t move in auction, it’s the SMB, not the assistant, that eats the cost.
Companies like Washington, D.C.-based Liquidation.com buy in bulk, and prove to be a good choice for SMBs that don’t need an ongoing relationship with a seller. With the economic downturn and the continued rise in popularity of eBay, liquidation firms are thriving.
“The biggest issue for eBay PowerSellers is where to find products,” says Bill Angrick, CEO of Liquidation.com. “These are people who may have started out selling their comic-book collection, got hooked on doing online auctions, and want to make a business out of it. They don’t have the capital to buy large quantities of things like CD players, for example, so they come to a company like ours to get wholesale lots that they can then break down into individual units for consumers.”
The need for more and more products to feed the hungry eBay audience works in favor of SMBs, which can shop around to different liquidators for the best rate. Also, some liquidators offer the option of letting the small business send out their products to whichever PowerSeller buys the lot, which tends to cut down on shipping and commission charges.
Going once, going twice
Pursglove says, “The program is very dynamic and continues to evolve. For example, in the early portion of 2003, we want to identify potential sellers with liquidations, refurbished, or returned products to find and hire a trading assistant. We will target our efforts on the consumer electronics, business, and industrial motors categories on eBay in the early portion of the year. As the program continues to expand, we will explore other categories for inclusion in our efforts.”
Most important, the program will continue to explore ways in which busy small business owners can harness the power of eBay without having to devote days to managing their auctions. As Morgali says, “It’s such a robust site, with such explosive growth, that you can’t underestimate the importance of eBay.”
The eBay program: When the urge to auction strikes but the in-box is way too full. The main page allows you to veer off into listings of trading assistants, an FAQ about the program, and other goodies for those who like simple information delivered simply.
AuctionWatch.com: If the auction bug bites and you want to dive more deeply into selling, this site gives you the high-powered help to do it. Plus, it offers a two week trial for free, and is there any nicer word for your business than free?
SpareDollar.com: Designed to streamline auction management, the site allows companies to choose assistance a la carte. Need just photo help, or maybe a better way to organize your bids? Don’t fret, SpareDollar is here for you.
Weauction4you.com: Run by trading assistant Andy Mowery, the company has a site that offers seller resources, information on current auctions, and even an acrobatic animated penguin.
Liquidation.com: Excess PDAs, postage machines, even boats, or art prints? Bring ’em on, says Liquidation.com. One company’s refuse is an eBay bidder’s treasure.
ExcessTechnologies.com: While you may sigh over the amount of inventory that’s clogging up your spare storage, this site sees only a potential mountain of auction fodder.