Supply On Demand
When Robert Howard (eBay User ID: hurricainbob1), a PowerSeller in Jacksonville, North Carolina, decided it was time to ratchet up his business on eBay, Everythingforsale2006, he went straight to the market--the eBay Reseller Marketplace, that is.
"I wanted to sell tools, but I wasn't big enough to go right to the wholesalers," says Howard, 45, who already had a lucrative business on eBay selling items left behind at the ministorage business he owns. "[As] an eBay PowerSeller, I received a notice from eBay about the Reseller Marketplace, and I tried it as a source for tools. Now I ship about 200 to 300 packages a month, and about two-thirds of them are tools."
Since its launch in 2005, the Reseller Marketplace has become a viable B2B source of new and refurbished inventory open only to PowerSellers like Howard. Today there are hundreds of manufacturers, liquidators, wholesalers and retailers who have been approved as Reseller Marketplace sellers, as well as tens of thousands of PowerSellers who are registered buyers. The latter are small- and midsize-business owners interested in growing their existing businesses, expanding to new product categories or both, and they're finding that the Reseller Marketplace is a great place to buy large lots of product at discounted prices without the hassle of trying to persuade reluctant suppliers to sell to them.
"Finding reliable new sources of supply is an ongoing challenge for eBay PowerSellers," says Howard Rosenberg, eBay's director of private marketplaces. "On their own, these small businesses usually don't have enough spending power to interest a wholesaler, plus they often can't meet the minimum volume amount. What the Reseller Marketplace does is consolidate buying power among PowerSellers to interest suppliers with excess inventory, like manufacturers, liquidators and wholesalers, as well as eliminate the time-consuming process of forming relationships with individual suppliers."
And it doesn't matter what a PowerSeller wishes to purchase for resale on eBay or through another sales channel--chances are it will turn up in the Reseller Marketplace. From day to day, the Reseller Marketplace inventory is dynamic and eclectic--it's not uncommon to find inventory across many product categories.Because of this variety, the Reseller Marketplace has become an important new buying channel for PowerSellers like Billy Ng, the 31-year-old founder of Teczilla (eBay User ID: teczilla) in Germantown, Maryland, which sells small consumer electronic products on eBay and projects 2007 sales of $300,000. "The Reseller Marketplace has made a big impact on my business," Ng says. "I now buy about half my inventory there because there's a lot of stuff to choose from."
Reseller Marketplace Basics
Although it's a separate site from eBay.com, the Reseller Marketplace is owned and operated by eBay. Once a business on eBay crosses into PowerSeller territory, an invitation to visit the Reseller Marketplace is issued automatically by eBay. The Power-Seller then sets up a free buyer's account by going to ebay.com/reseller, entering his or her unique PowerSeller User ID and password, and filling out the registration form that pops up with the first sign-on. The PowerSeller then has immediate access to Reseller Marketplace listings, which contain detailed information about the product and quantity available, terms of sale, shipping costs and so on. Using a credit card previously placed on file, the Power-Seller can bid immediately, and if a lot is won, that credit card may be billed automatically by the seller; there's no need to make payment arrangements. There's also no charge to the PowerSeller to use this valuable service beyond, of course, the cost of any lots that are won and the shipping charges associated with them. Continued access to the Reseller Marketplace is guaranteed as long as the buyer maintains PowerSeller status.
There are two types of listings in the Marketplace. The first is a one- to seven-day auction-style listing, which is usually placed by suppliers with inventory to liquidate. "Basically, these companies want to get rid of the stuff at any price," Rosenberg says. "Many of these [listings] start at $1 [with] no reserve. If enough PowerSellers are interested in the merchandise, there could be a bidding war."
In fact, that is exactly what happens with the $1 lots offered by Larry Peterson, president and founder of ToolWarehouse, a specialty tool distributor in Cape Coral, Florida, that also sells tools through the Reseller Marketplace under eBay User ID toolwarehouse. "We open and close 50 to 60 wholesale lots per week," says Peterson, 49, who projects 2007 sales in the low seven figures. "Power-Sellers can get some amazing buys in these lots, the majority of which contain brand-new, quality tools."
The second type of listing is the Fixed-Price "wholesale" listing, which lasts for one to 30 days and is usually used for items offered at wholesale prices. While a buyer can purchase these lots on the spot, this format is primarily a lead-generation mechanism that prompts buyers to contact the seller to discuss the product. The sellers may be liquidators, distributors or manufacturers who set the lot price at a fixed amount, then wait for an inquiry or a buyer. Often the price per piece is higher than it would be in an auction-style listing, but it's still possible to get a good deal.
No matter which type of listing a PowerSeller wins, he or she can be virtually certain that the seller will deliver the merchandise as agreed because each company is thoroughly investigated in advance. "Before we could sell in the Marketplace, eBay ran our D&B report, among other things," says Bill Frischling, 35, who co-founded Dyscern (eBay User ID: dyscern) with Jennifer Canty, 36, and John Angerer, 35. The Sterling, Virginia, company sells small consumer electronics through eBay, the Reseller Marketplace and their site, dyscern.com. "They really check you out to see if you're for real," says Frischling, who projects overall sales of $12 million for 2007, $1 million of which will come from the Reseller Marketplace.If there is ever a problem with a transaction or a supplier, eBay will step in to arbitrate. "Every seller is [vetted], but things can still happen," says Rosenberg. "Just like with eBay, the buyer and the seller are first encouraged to communicate, but if they can't resolve their issues, we'll [try to assist]. Though we don't have a public feedback system for the Reseller Marketplace, we do ask buyers for feedback after a transaction is concluded, and we track their responses. If we see repeated bad transactions from a seller, we'll take action. So PowerSellers can feel confident that they'll have a good experience."
Bulk Buying Tips
Let's say you're a PowerSeller who wants to try to ramp up your sales by buying in bulk on the Reseller Marketplace, then reselling the merchandise on eBay or through another sales channel. Despite the tempting deals you'll encounter in the Marketplace, it's always best to have a well-planned business strategy before you dive in.
First, before you make a purchase, it's important to realize that the wholesale and liquidation lots of products you'll be offered usually consist of excess merchandise, such as last year's models, store returns or factory seconds. These items may be new or refurbished, but they're not likely to be the most up-to-date items available in today's market. However, when you consider that an attractive price can often overcome a buyer's hesitation when it comes to certain product categories, this may not be a problem--as long as you pick the right categories. For instance, you could probably sell 12 dozen Pirates of the Caribbean Captain Jack Sparrow action figures with no trouble, but you might not be able to sell 12 dozen royal blue women's tweed jackets with fringe.
"There's absolutely no doubt in my mind that with the right product, you can make money as a seller and as a buyer in the Reseller Marketplace," Peterson says. "As a seller, it opened a new dimension for us that has allowed us to maximize the return on our investment."
Another thing to decide right away is whether you prefer to offer a wide-ranging inventory or specialize. It can be beneficial to specialize because you'll become an expert on a particular product or product line, and you won't have as many decisions to make when it comes to selecting products. In addition, you'll save yourself a lot of preparation time when listing items because you can reuse product descriptions and photos.
On the other hand, specializing can be risky when you're buying liquidation lots because once the lots are gone, they're gone for good--and you'll need to find another specialty item, which in essence amounts to starting a whole new business model. Also, if your product line is too narrow and sales are flat, you could find yourself sitting on hundreds or even thousands of items (albeit in various models, sizes and colors, depending on what you're selling) with little hope of recovering your costs. That can be catastrophic for your business.
"If you can't move a product fast enough to affect your cash flow, don't bother," says Jason Guarino, 31, founder of Key West Distributors Inc. (eBay User ID: keywestinc), a Raymond, New Hampshire, seller of small consumer electronics with 2007 sales projections of $750,000. "Sure, $10 for a widget that sells for $30 on eBay is a great deal. But if you need to buy 100 and only move five a week, is it worth it? Don't let the thrill of bidding affect your judgment."
Offering a well-balanced line of related merchandise can help offset these problems--and of course, the Reseller Marketplace is the perfect place to investigate other potential product lines. But do some due diligence to find out what the market will bear so you don't find yourself stuck with products no one wants. "You can't be stupid about what you buy," says Howard, who projects 2007 sales of $150,000. "To have a good experience, you have to research the product first. Just because something is a good buy [in the Reseller Marketplace] doesn't mean it will sell."
The obvious place to start your market research is on eBay. Search for the item you're planning to sell and note the selling prices on individual listings. If there are a lot of open auction-style listings for the item and few or no bids, you might want to try another product.
Finally, pay attention to inbound shipping charges on the lots you're interested in because they can add considerably to the per-piece cost of the items. Also be sure to find out how the product will be shipped to you. Imagine scoring a great deal on digital cameras, for instance, and one day finding a semi loaded with hundreds of boxes--or even dozens of heavy pallets--parked in front of your house with no one to help unload them. Then, you'll need a place to stash all that inventory once it's off the truck. If your garage, basement, entire home and so on are not large enough to accommodate your treasures, you may have to rent a storage locker, use a temporary storage unit (like the ones available at pods.com) or lease a warehouse.
Taking the Plunge
Once you've made these decisions, you should be primed and ready to jump into the Reseller Marketplace, although Frischling does have one more important piece of advice: "If you're looking to expand your sales base, the Reseller Marketplace is a great place to do it," he says. "But start small. Lots priced in the sweet spot of $2,000 to $5,000 are a good place to start. Then it's all about velocity--if you turn, turn, turn the merchandise, you'll make a profit."
Eileen Figure Sandlin is an award-winning freelance writer and author who writes on business topics.
On the Flip Side
Selling through the reseller marketplace
Although the Reseller Marketplace was designed for suppliers like wholesalers and manufacturers who want to liquidate excess inventory quickly, some eBay PowerSellers are seizing the opportunity to sell through the Marketplace themselves and beef up their bottom lines.
"If you want to grow, there's only so much you can sell to individual buyers [on eBay]," says Jennifer Canty, co-founder of Dyscern (eBay User ID: dyscern). The Sterling, Virginia, company sells small consumer electronics on eBay, the Reseller Marketplace and its own website. "We tried out the Reseller Marketplace and were really happy with our success. It opened another side of our business and caused a jump in our sales."In addition to having their businesses vetted just like the big boys before getting the green light to sell through the Reseller Marketplace, sellers pay a one-time setup fee of $199. Other fees include a basic subscription fee of $79 per month for sellers who place auction-style listings only. According to Howard Rosenberg, eBay's director of private marketplaces, auction-style listings have a very high conversion rate, which makes them very attractive to PowerSellers and others. Sellers who wish to place both auction-style and Fixed-Price listings in the Marketplace pay a monthly extended subscription fee of $149. Both basic and extended subscribers also pay listing and final transaction fees: Auction-style listings are subject to a $20 per listing fee and a final transaction fee of 3 percent, while Fixed-Price listings incur a $1 per listing fee and a final transaction fee of 5 percent. --Eileen Figure Sandlin