Everyone knows eBay is a shopping hot spot. It is the source for everything from hard-to-find collectibles to great deals on used merchandise to new and used cars.
eBay currently has 193 million registered users, 575 million listings and annual sales consistently rising at a double-digit pace. But most of the users are buyers. What many people don't realize is that there is an even bigger opportunity on the sales side of the equation.
eBay spotted that opportunity back in 2002, when it began receiving calls and e-mails from people asking for referrals to experienced sellers, says Skip McGrath, eBay PowerSeller and author of How to Start and Run an eBay Consignment Business. In response, the company created the eBay Trading Assistant program. Today, being an eBay Trading Assistant is a great way to profit by helping others sell their products, either from your home or a retail location.
Trading Up
Trading Assistants are individuals with an eBay account in good standing, have proven their familiarity with the eBay sales process by listing at least 10 items in the past 90 days, and have a feedback rating of at least 100 (meaning they completed at least 100 transactions), with at least 97 percent of it positive. These individuals can be listed in the Trading Assistant directory, which connects prospective sellers to profit-motivated sales help.
More than 500,000 people already make their living full time by selling on eBay, reports John Hoose, eBay Trading Assistant and founder of the eBay sales franchise Auction It Today (www.auctionittoday.com) in Brighton, Michigan.
ACNielsen's 2004 "Survey of Unused Household Items" reported that the typical American household has nearly $2,200 worth of unused belongings lying around in closets and attics.
In fact, that's where Nancy Baughman, Trading Assistant and co-founder of eBizAuctions (www.ebizauctions.com) in Raleigh, North Carolina, got her start: her attic. Intrigued by eBay, Baughman, 43, and her husband, Daren, 42, began selling clutter from their attic in 2002. They did so well, neighbors started asking the pair to sell their items, and they also began listing items for a local antique dealer. The Baughmans launched the business in 2003.
Today, several other antique dealers are regular customers, as are a few pawnshops and area residents. When items sell, the Baughmans receive 33 percent of the sales price plus the final value fee that eBay charges. They deduct it from the buyer's payment and cut a check to the owner for the balance.
To ensure that time spent preparing a listing is worthwhile, eBizAuctions and many other eBay service businesses require that items have a value of at least $30. Fortunately, as a certified property appraiser, Nancy is fairly accurate when it comes to estimating value, but sometimes eBay buyers surprise her.
Take the sleeve of paper cups with the Mountain Dew hillbilly on them that a customer brought in a few years ago. Baughman would have thrown them out had her husband not resisted. The cups ended up selling for $640, and eBizAuctions earned nearly $210.
Or take the two statues an antique dealer brought in that had been collecting dust in his store, each priced at $50. On eBay, the pair fetched $1,762. "Rare, hard-to-find items will go through the roof," says Nancy, "because you have millions of people looking at them."
Although the Baughmans don't have a drop-off store, they offer free pickup, which often leads to additional business. "We go out to customers, and while we're picking up items to list, we may spot something else that could sell on eBay," Nancy says.
The lack of a drop-off location and only one part-time employee doesn't appear to be limiting the company's growth. Vacillating between Gold and Platinum PowerSeller status, meaning the business makes at least $10,000 or $25,000 a month, respectively, the Baughmans are happy with their controlled growth.
Drop-Off Business Picks Up
Scott Kluth got his start selling on eBay in 2004 by helping his mother clear out stuff in her home. Despite the fact that he had previously only made purchases on eBay, Kluth, 28, quickly grasped the potential opportunity.
He did some research and decided to invest in an eBay-related franchise. Kluth was ultimately drawn to iSold It (www.i-soldit.com)--a turnkey system that would have him up and running quickly, with access to a check fulfillment system and negotiated supplier agreements, for a 4 percent royalty and 1 percent marketing fee. Kluth signed on as a franchisee and opened a store on a major thoroughfare in Palatine, Illinois, in fall 2005. Today, his location is one of iSold It's top 10 locations nationwide.
Kluth attributes much of the store's success to its superior location, which leases for more than the average iSold It storefront but gives him prime exposure to his target audience: affluent, downsizing consumers, 250,000 of which are within five miles of his store. On average, Kluth's store lists approximately 28 new items per day.
iSold It typically charges 33 percent of sales up to $500, and 25 percent of any amount over $500, plus all eBay and credit card processing fees, which total about 2.5 percent.
Most customers will bring in a single item "to test the business," says Kluth. After the item sells, they bring in more over the following month--50 to 100 items in some cases. "It's great to have people come through the door," he says, "and we want to get them to bring in their other treasures." One such treasure was a life-size, custom cutout of Barbra Streisand that sold for nearly $500.
Though Kluth's store has only been open a year, it was profitable in its third month. The business's best month so far yielded $67,000 in gross revenue from closed auctions.
Like Kluth and the Baughmans, Hoose follows many of the same industry standards that other Trading Assistants do, such as minimum item value, commission percentages and selling tools. Last year, his own Auction It store grossed $1 million in sales and projects $2.5 million for 2006.
Part of what makes his business so successful, he says, is his familiarity with eBay itself. Hoose knows that to sell an item for more money, you need a clear, attractive photo, an accurate and appealing description, and a low starting price. "We like to start our auctions at $9.95," he says. "That way, we can get people attached to [an item]--they'll be willing to fight to get it," which drives up the closing price. High starting prices scare people off.
Hoose also says, "It's extremely important that [Trading Assistants] market what they do." He recommends tools such as advertising in the local newspaper, sending direct-mail packages, radio advertising and joining organizations such as the chamber of commerce and Business Network International.
Unlike most homebased Trading Assistants, Hoose has a team of 18 who work at his retail location and the corporate offices. However, he says most Auction It drop-off stores are designed to function with a staff of four.
Test the Waters
One of the major advantages of eBay selling is the ability to try it as a hobby before forging ahead to make it a full-time business, says Christopher Spencer, author of The eBay Entrepreneur: The Definitive Guide to Starting Your Own eBay Trading Assistant Business and president of The Spencer Company in Burbank, California. "You can scale up slowly, starting with family and friends, and then get clients," he says, which is exactly what he did. Since 1998, Spencer has sold 160,000 items on eBay for a wide range of clients.
He recommends turning to eBay for free information about getting started in selling (www.ebay.com/startselling) and becoming a Trading Assistant (www.ebay.com/ta).
"There's huge growth opportunity," says Spencer, for anyone willing to learn the ropes and build an eBay clientele.
Untapped Markets
The new hot growth area in eBay selling is B2B, reports Skip McGrath, an eBay Trading Assistant and author of How to Start and Run an eBay Consignment Business. B2B transactions tend to involve higher-value items, which net more money for the same amount of work, he explains. Be on the lookout for organizations or individuals interested in selling:
Used farm equipment. Because farmers can get more for a used tractor on eBay than through a manufacturer trade-in, this is a growing area of opportunity for proactive Trading Assistants.
Business equipment. Everything from used phone systems to computer parts to copiers and accessories are of interest to other businesses in search of a deal.
Medical equipment. Doctors and dentists worldwide are on the prowl for used equipment for their practices, especially dental chairs, lab equipment and X-ray machines.
Automobiles. Some states require that sellers get a dealer's license to regularly sell automobiles, but with price tags in the thousands of dollars for used cars and trucks, it may be worth it.
Antiques and collectibles. Says McGrath, "There are still thousands of antiques dealers not comfortable selling on eBay," creating a tremendous opportunity for Trading Assistants to offer their services.
Drop-Off Opps
The following companies offer either franchise or business opportunities for starting your own eBay drop-off service.
Assist 2 Auction LLC www.assist2auction.com
Auction Mojo www.auctionmojo.com
The Eyardsale.com www.theeyardsale.com
FoundValue Inc. www.foundvalue.com
iSold It www.i-soldit.com
NuMarkets www.numarkets.com
The Online Outpost Licensing Corp. www.theonlineoutpost.com
QuikDrop www.quikdropfranchise.com
Snappy Auctions www.snappyauctions.com
24/7 Auctions www.247auctions.com
For more information, visit either Entrepreneur's FranchiseZone or Entrepreneur's BizOpp Zone.
This story appears in the October 2006 issue of Startups. Subscribe »
