Expanding to eBay

This story appears in the October 2005 issue of Entrepreneur. Subscribe »

Buyers of pricey Los Angeles Dodgers collectibles don't exactly line up at your door when your music, comics and memorabilia shop is located in Joplin, Missouri. So when Rodney Spriggs finds that one of his 10 Vintage Stock stores in the Midwest has slow-moving merchandise, he lists those items on eBay to reach a wider audience.

"eBay gives us a great outlet for higher-dollar items or items that might not sell in the Midwest," explains Spriggs, 38, who co-owns the company with partners Steve Wilcox, 39, and Ken Caviness, 49. "Five-hundred-dollar Star Wars items might just sit in the store, but when we put them on eBay, we reach a whole new audience."

Sales on eBay make up approximately 3 percent of the company's $7 million in annual revenue. Spriggs expects the percentage to jump in 2006, when Vintage Stock plans to open an eBay Store instead of just running individual listings from each of the company's locations.

While brick-and-mortar retailers may not immediately think of eBay as a viable selling option, Janelle Elms thinks every retailer should have an eBay presence as a way to unload inventory, beef up sales and even drive traffic into local store locations. Elms, co-author of eBay Your Business: Maximize Profits and Get Results, lives in Kirkland, Washington, and teaches courses on eBay selling, in addition to consulting with businesses to maximize their profits on eBay.

"I've worked with hundreds of businesses, and I've yet to find a product or service that doesn't work on eBay," says Elms. "For a very low cost, you can get your name out there, brand your business and reach an audience that you never dreamed of with a small retail business."

Tools You Can Use
Retailers can choose to run individual listings to get started, or they can invest in an eBay Store, which creates a common area on eBay where retailers can display all their eBay items, says Elms. The virtual storefronts are available at different levels, each with a variety of services, and range in price from $15.95 to $499.95 per month. Entry-level packages include five pages of customizable space, sales-tracking capabilities and other features, as well as access to customer support. Top-tier subscriptions for high-volume sellers feature 15 pages of space and all the features of the lower-level subscriptions, as well as 24-hour access to customer support.

eBay also offers a number of tools to its sellers to help them get off on the right foot. The Seller OnRamp Program is a free, phone-based consulting program designed to help businesses start selling on eBay. (The Seller OnRamp team can be reached at (866) 304-EBAY between 9 a.m. and 9 p.m. Eastern time, Monday through Friday.) The eBay Certified Provider Program promotes access to a network of technical and nontechnical service providers who help eBay sellers ramp up their sales volume. See http://developer.ebay.com/certifiedprovider for more information.

Of course, the eBay site has many basic tips and tools for those who want to get started or launch more successful listings. You can start at the Learning Center, which offers everything from basic selling techniques to links to starting a business for the advanced seller. And like most other business functions, listings can be outsourced. eBay offers access to Trading Assistants--experienced eBay sellers who will sell your items on your behalf for a fee. In addition, eBay has trained an army of instructors as Education Specialists to help you get started selling. To find one in your area, check the Education Specialist Directory.

Making the Most of It

Regardless of your approach to getting on eBay, Elms advises creating a strategy and selection of products from the beginning. She advises new sellers on eBay to think inventory. "Some people just sell one or two items," Elms says. "You'd never open a brick-and-mortar store with just two items. No one would be interested in coming to that store. [Customers would] treat it as a garage sale instead of a business."

And it can be big business. Sales were down and the future looked dismal for A City Discount, an Atlanta restaurant equipment retailer, and owner John Stack was about to close the doors. Around the same time, Stack found 250 coffee pots in a stash of used restaurant equipment he had purchased for resale. Stack knew he couldn't sell them in his store. Then, one of his employees suggested putting them on eBay.

"To my surprise, it worked," recalls Stack. "They ended up selling for over $150 each--more than we could get in the local market. That opened my eyes to the potential of eBay."

That was in September 1999. Today, A City Discount brings in more than $10 million per year, selling 25,000 pieces of new and used restaurant equipment on eBay--which accounts for nearly half of the company's volume--as well as through its own website and retail location. Most surprising, says Stack, 54, is the synergy between eBay and the retailer's other channels. His eBay listings have driven traffic to his website, and customers have phoned from around the country to find out if he has specific pieces of equipment. A City Discount now has more customers in California than it does in its home state of Georgia.

Spriggs agrees that eBay is a powerful marketing tool. Vintage Stock puts tags on in-store items that are currently being offered on eBay, so if a customer is unsure about an item, he or she can take some time to decide and then log on to the item listing to purchase it.

"Sometimes, people need extra time to pull the trigger on a big purchase. With eBay, we don't lose the sale," says Spriggs.

"If you already have a brick-and-mortar store, why wouldn't you be on eBay anyway?" asks Debra Schepp, author of eBay PowerSeller Secrets: Insider Tips From eBay's Most Successful Sellers. "You already have sources for your products. You already know your product line. You are already experienced in customer service. So selling on eBay can't do anything but put your business into a global marketplace with millions of potential customers."

Some brick-and-mortar stores actually have their beginnings on eBay. Keith Chrapliwy, 31, and Andrew Cape, 30, were both graphic designers who started selling furniture on eBay as a hobby. For six years, the two maintained a friendly rivalry in their listings. Then it became clear that their pastime could sustain them as a business. In 2003, they both quit their corporate jobs and opened Modology, a modern furniture store in Cincinnati. In less than two years, the company's revenue has grown to almost $300,000--85 percent of which is still sold through eBay--and continues to climb.

"We wouldn't have survived if it wasn't for eBay, because of the high-end furniture that we sell," says Chrapliwy. "It's given us an international platform to sell our [furniture]." Because of the sheer volume of users, eBay can also build exposure and drive customers from other locales into a retail location. Some of Stack's local customers have found his store because of his eBay presence. And Chrapliwy recalls one couple who had traveled from Idaho to their store. Based on the volume of listings on eBay and the reputation that Modology has built, the couple commented that they had expected to find a much larger retail store than the company's modest 2,000-square-foot location.

Setting Up Shop
Setting up a proper store on eBay requires some savvy search engine marketing, says Elms, since eBay Stores often show up in searches done on Google, Yahoo! and other web-based search engines. Each eBay Store has a title, which, she says, does not have to be the same name as the business. Instead, she advises opting for words that describe your business in 35 characters or less. So while Elms' business name is Jill of All Trades, her eBay Store name is Auction Profit Education Consulting, which is more indicative of what she does. Using keywords related to what you sell in your Store title will result in a higher ranking in search results. According to Elms, her carefully chosen name has resulted in 41 percent of her traffic coming from Google, which ranks her within the top five results of a search for "eBay consultant."

"It runs counter to traditional marketing wisdom, but it's all about search engine optimization," explains Elms. "By using eBay's ability to get my business on search engines, I can then promote my brand. It doesn't matter what I call myself if customers aren't finding me."

Schepp adds that retailers should make every effort to keep their feedback scores--the comments from buyers that indicate whether their experience was positive or negative--high. Positive feedback is the backbone of a successful eBay enterprise.

"Serious sellers guard their eBay feedback more closely than their inventories," she says. "If your feedback rating is 97 [percent positive feedback] or less, you are suspect on eBay."

Schepp says that the best way to maintain positive feedback is to give truthful descriptions of products, use clear pictures, and keep buyers apprised of the selling process, shipping fees and status of their auction at all times. Stack found that adding a freight calculator to his website, accessible from eBay listings, was a popular feature with customers, who could then avoid sticker shock when learning the fees for shipping his large equipment.

Schepp adds that eBay can be a valuable part of a trade-in program. "Offer your current customers trade-ins on their used products, and sell those items on eBay," she advises. "That way, you can turn every sale into three sales."

With ample tools and resources to get retailers started in e-commerce, eBay offers a turnkey solution for taking part in a $34 billion marketplace. That's something few independent retailers can do on their own.

"I think at a certain point, you have to look at every possible opportunity," says Spriggs. "Look at just the sheer number of eyes you get on eBay. They're definitely the dominant force. They're definitely where you go. You'd be hard-pressed to find someone who hasn't heard of eBay."

There's More In Store...
Think e-commerce is more your style than auctions? eBay may still be the answer. In June, the company launched ProStores, a turnkey e-commerce solution for retailers who want to sell online.

ProStores creates online stores that are separate from eBay.com. So while eBay Stores are a collection of a seller's current listings on eBay and have eBay's multicolored logo prominently featured on each page, ProStores is all about you and your business. The fully customizable product uses your own domain and is easy to tailor to the look and feel of your business, says Chris Tsakalakis, senior director of eBay Stores.

ProStores is still compatible with eBay, and the product allows you to easily create and list auction-formatted or fixed-price products directly on eBay.com. ProStores is also compatible with PayPal, allowing retailers to accept credit cards without having to apply for their own merchant accounts.

"This is more than just a website," says Tsakalakis. "You get a shopping cart, a product catalog and full customization capabilities. It's a solution for retailers who want to get started selling online, but who want to keep their costs down."

And the fees are reasonable. ProStores is offered in four tiers: ProStores Express, which will set you back a mere $6.95 per month, is a bare-bones product that allows you to sell up to 10 items. At $29.95 per month, ProStores Business is more sophisticated, but it does not include the more advanced inventory tracking offered by ProStores Advanced, which is $74.95 per month, and ProStores Enterprise--used by companies like shoe seller Doc Martens--for $249.95 per month. On top of that, you'll pay a per-sale commission of 1.5 percent at the Express level, and 0.5 percent per transaction at the other levels. Each level offers a variety of services, which increase with the fee levels.

Of course, ProStores sellers don't have the traffic of eBay's 147 million registered users--they must drive their own traffic to their sites. But for retailers interested in getting started online, ProStores offers a single-source option to get an online store up and running. See www.prostores.com.