Consumers aren't the only shoppers loving eBay. Entrepreneurs from dozens of industries regularly sit in on eBay's online auctions in hopes of getting good prices on the equipment and supplies they need to operate and grow their businesses. In fact, business buying on eBay doubled last year to an estimated $2 billion in global gross merchandise sales, according to the San Jose, California, online auction giant.
Not surprisingly, businesses use eBay because they can score great deals on business equipment. Entrepreneurs are also flocking to eBay because of its global reach, which gives them the opportunity to search for merchandise among millions of vendors worldwide without ever leaving their desks. "EBay is a very popular place now for small businesses to look for new and used equipment beyond their local areas because of the selection and price-two important considerations for any small business," confirms Jim "Griff" Griffith, dean of eBay education.
According to an AC Nielsen study commissioned by eBay and released in March 2004, 10 percent of the small businesses that buy on eBay have been in operation less than a year; and 27 percent have been in existence between one and four years. In addition, almost half of the small businesses that use eBay are homebased. Seventy-seven percent of business owners who use eBay are male, and almost 39 percent are under the age of 40.
Smart Shopping
One of eBay's most loyal business customers is André M. Hedrick, who buys 90 percent of his business equipment on eBay. When this 37-year-old and his three partners started PyX Technologies Inc.three years ago, he immediately turned to eBay to outfit his Concord, California, storage software solutions company. He was able to purchase enterprise hardware that cost "pennies, nickels, dimes and, in worst cases, quarters on the dollar," he says. Case in point: In 2001, he bought gigabit cards and switches for a few hundred dollars that sold for more than $1,000 new.
Since then, Hedrick has acquired a trade show display box that cost him $495 (compared to $1,500 new). He has also purchased pricey items-including four servers that retailed for $22,000 but cost him just $5,450, including shipping. Hedrick had no qualms about purchasing big-ticket items on eBay, because it was the virtual showroom where he bought his Porsche and a minivan for his wife: "I thought the experience was fabulous and thought it would be a great place to bid for business equipment."
Certainly, eBay is worth checking out when an expensive item hits your must-have list. According to Joseph T. Sinclair, author of eBay Business the Smart Way, you can buy $25,000, $50,000 or $75,000 machine tools for "25 cents on the dollar on eBay, maybe less, maybe a little bit more, but certainly not full price. That's really a good deal, especially since these machines are designed to last forever."
Many users opt to handle transactions via PayPal, a service that enables individuals or businesses with an e-mail address to send and receive payments online to pay for their purchases. However, because there are limits to how much you can spend with PayPal, those buying costly equipment should pay with a credit card, a certified check or a cashier's check. Hedrick, for one, uses PayPal for most eBay purchases; but if a product costs more than $10,000, he wires the money.
While eBay is a useful option in many instances, Hedrick warns it's not a good choice when you need a particular product immediately. "But if you are forward-thinking enough and think you might need something in a week or two," he says, "then you can go out and peruse eBay for it and get it at a significantly lower cost."
Bidding Time
Before you bid on eBay, head over to eBay Business, which has all their business-related item listings. Today, there are more than 1 million business-related item listings on eBay.com, compared to 500,000 a year ago.
Sellers interested in selling business-related products on eBay Business post product listings through an auction-style post or a "buy it now" post. Auction-style listings are traditional eBay listings in which the seller sets the product at a starting price, and the highest bidder wins the product. In general, auctions take one to 10 days.
The "buy it now" listing allows sellers to sell the product at a set price. On the plus side, it offers time-sensitive businesses the option to sell and buy products quickly, without going through a bidding period. The drawback: "Buy it now" prices are often not discounted, and sometimes, they're even above retail.
Proxy bidding is yet another possibility in which users put in the highest bid they are willing to pay, and eBay automatically continues the bidding on their behalf until it reaches that amount. While this feature saves time, "you are not assured of getting the product you want," says Sinclair, "because somebody can come and outbid you."
Before purchasing a big-ticket item, Griffith recommends new users register on eBay and purchase something of little value in order to experience the process. Protect yourself by making sure a seller is legitimate before handing over payment. Read a seller's description, in addition to any feedback, "so you can get a good idea of their past transaction history," says Griffith. Look for detailed descriptions of what's for sale, like a product's specs, photos and information about its condition. Hedrick actually advises buyers to e-mail their phone numbers to the seller to discuss a product in more detail-a good way to ensure you're purchasing what you really want.
Melissa Campanelli is a marketing and technology writer in New York City.
This story appears in the July 2004 issue of Entrepreneur. Subscribe »
