Retail may not be dead, but it is finding new life online. Retail overstock, damaged items and customer returns have long found buyers on eBay. Now, many retailers are turning to the online marketplace to expand their core business or to become multichannel sellers, without the cost of leasing more real estate.

The move from a local retail store to a global online market will likely require a shift in sourcing to match demand from millions of potential new customers. Some retailers simply buy more from existing suppliers, especially if bigger orders result in a better price. But this strategy overlooks the potential of eBay to help sellers experiment and diversify, creating a more stable business with a broader customer base.

To tap that potential, businesses will need to find new wholesalers, distributors and manufacturers. It's a process that can require days of internet searches, but trade shows, online wholesale portals and merchandise marts make your job a little easier by pulling together names and contact information in one central location.

Unlike many eBay newcomers, retailers have the advantage of proven sales performance to help win over vendors wary about selling to internet businesses. eBay's wholesale listings overcome the problem altogether by linking retailers with sellers already comfortable with the eBay process.

Many businesses turn directly to overseas manufacturers, usually through facilitators or agents with experience in foreign markets. Online agents such as ImportExportHelp.com provide web-based forums that list manufacturers looking for buyers.

Specialized magazines on sourcing and overseas sourcing fairs are other ways to find manufacturers. You can also look for trade leads by visiting http://globaledge.msu.edu, a site created by the Michigan State University Center for International Business Education and Research that provides information on 197 countries, a directory of exporting companies from around the world and free online training for first-time importers.

Jay A. Mednikow (eBay User ID: mednikow), president of J.H. Mednikow & Co. Inc., in Memphis, Tennessee, didn't choose any of these options. Instead, he maximized his jewelry business's unique advantage: customer trade-ins.

Trade-ins make up the bulk of Mednikow's $35,000 monthly eBay sales, supplemented with consignment items and closeout merchandise. The popularity of this refurbished jewelry was so successful, Mednikow, 41, began to use local newspaper advertising to bring in more trade-in customers. Not only has this line of business helped build up the company's eBay volume, but it also works symbiotically when trade-in customers use the cash for something new from the Memphis store.

Closeouts offer another special advantage, Mednikow says, because after more than five years selling on eBay, he knows how to spot the items that will be most in demand and go for the highest prices. Sources for closeouts and consignments often come from trade shows where Mednikow chats with vendors and talks about his success on eBay. "It's a matter of stepping up those casual conversations and making them a little more aggressive," he says. "We ask if they have anything sitting in their vault that they would love to turn into cash."

This enterprising entrepreneur also makes use of the extra gemstones he buys when designing new pieces. Mednikow fits the stones, which don't have much market value on their own, into simple silver or gold mounts, and those go on eBay, too. "There are endless ways to source product when building a business on eBay," Mednikow says. "It's an amazing business model."

Work With What You Have
Some retailers are content to stick with what already sells in their physical stores, using eBay as a sales channel for merchandise that misses the mark with local customers. That's how eBay works for Debbi McGill (eBay User ID: chulavistamojosounds), co-founder of Mojo Sounds, a new and used CD, DVD and video store in Chula Vista, California. McGill, 39, stocks her music collection with an eclectic mix of bands that don't always appeal to the store's regular customers. After 30 days without a buyer, unbought CDs go on eBay, where they can reach fans from all over the world. "We have bands you've never heard of that will sell on the internet," McGill says. The store now has sales between $3,000 to $4,000 a month on eBay, an achievement McGill attributes in part to sales management software Monsoon Gold.

Alan Iba (eBay User ID: iisports), president of I&I Sports Supply Co. Inc. in Carson, California, is another retailer who gets the most value from selling items related to his core business of martial arts, airsoft and paintball supplies-but not the same ones he puts on the shelf. Local buyers want the latest and greatest, says Iba, 49, while eBay customers mostly look for items they can't find anywhere else, including discontinued paintball guns or collectible martial arts equipment.

Supplying these items is a shift for Iba, who originally used eBay to unload the occasional customer return or damaged goods. In 2004, his Certified Provider, Marketworks Inc. in Atlanta, convinced him to launch a full-fledged online business. To supply the new operation, Iba had to broaden his base of suppliers. Among them are nontraditional sources such as martial arts instructors who have extra tapes from seminars and want to reach followers in other cities. "Small suppliers were always offering product to us," Iba says, but the company would usually decline. "We couldn't pay top dollar for something that might sit on the shelf," he explains. But now, Iba says he can offer better prices that make the deal a win-win for both, because products move faster online.

A variety of strategies help make eBay work for growing retail businesses, especially those that know how to maximize the value of any kind of unsold merchandise. "Someone once told me," says Mednikow, "that the most successful retailers are those who have the best endgame for leftover merchandise."

Julie Monahan is a writer in Seattle whose articles on small business and emerging technology have appeared in numerous consumer and trade magazines.