Retail Businesses Use eBay For Widening Market Reach
Sales assistance: Mariano Ruiz uses eBay at his surplus machinery business.
By SAMANTHA LEE
Staff Reporter
For Mariano Ruiz, owner of an Irwindale surplus machinery store, Internet-driven sales are important. It’s easier for customers to browse a Web site in search of a lathe or pump than it is to call store after store or to browse catalogue after catalogue looking for the right product.
Ruiz’s Web site name?
EBay.
Sixty percent of Ruiz’s sales at Reliable Tool come from the items he auctions on the popular site. Once just a novelty, eBay has become a vital income lifeline for many businesses. Not only is the eBay site more effective than company Web sites, it has become a major distribution channel for selling products.
Ruiz projects $3.5 million in eBay sales alone this year, about 60 percent of his overall revenue.
Four years ago he started posting items that he couldn’t sell in his retail shop. EBay customers found they could bid on items as expensive as $20,000 for an opening bid of only $1.50. Eventually, the winning bids get close to what Ruiz wants.
“I have my own Web site but I find stuff moves quicker on eBay, Ruiz said. “We’ve tried to sell items on our Web site, but didn’t have the traffic. The auction element really hypes people.”
For Lennard Billin, who owns Reel Clothes and Props, a movie clothing and props business in North Hollywood, eBay provides a way for him to sell movie memorabilia that do not sell in his store and are usually bought by people from outside L.A.
Billin was one of the early eBay adopters who used his own Web site name as his eBay name. The practice is no longer allowed, but eBay grandfathered it for those who used URL names before the rule was imposed.
Taking a cut
With a fee for posting and a percentage of the final sale, eBay charges users roughly 7 percent of the sales price, leaving the rest for a business owner’s profit. Ruiz says he uses that money to buy more inventory.
He posts an average of 50 machinery items a day and uses 12 employees, including 2 full-time description writers, to handle his eBay business alone. “I sell 100 percent of items I post,” Ruiz said.
While eBay permits links to other sites on the seller’s personal “My eBay” page, certain guidelines are enforced. “We don’t want to encourage people to use links that will steer business away from eBay,” says eBay spokesman Kevin Purseglove. “Users can deploy links if the link helps to describe the item for sale on eBay,” he said.
There are other limitations. “You’re going to have to forego certain aspects that you want, because you have to fit into their template,” says Michael Weiss, chief executive of Web site developer Imagistic Media Studios.
Brand promotion nixed
Ebay also does not allow blatant promotion of a company’s brands on the site.
Still other business owners prefer the cache of their own Web site, which costs an average of $30,000 to $50,000 to develop.
“We sell premium shoe brands, and we wouldn’t be able to sell in-season merchandise on eBay. Our vendors wouldn’t allow it,” says Dan Zuckerman, the chief operating officer of online store Shoes.com. The site, which took more than 5 months and $150,000 to develop, sells over 20,000 pairs of shoes per month in conjunction with its sister brand, famousfootwear.com.
The brand restrictions draw some business owners onto other shopping sites, such as Yahoo Shopping or Bank of America eStores. On Yahoo, a flat $49.95 monthly fee and a small percentage of sales are charged, but Yahoo templates offer more flexibility, allowing a business to incorporate brands into the site.
Mark Wallis of Thousand Oaks uses both his own Web site and eBay to run his soccer memorabilia business. A former software executive, Wallis wanted a “retirement job” and began selling soccer cards in 1997.
Using the two channels has balanced out his business. “Some buyers like the auction element, they like the thrill of bidding for an item,” he said.
Novel Promotion
KB Home, seeing the broad reach of Internet auction business eBay, has started listing nearly 2,400 homes on the site.
Only seven of the houses, all in Southern California, will be sold at auction. The rest have been posted as listings of KB product and will not be open to bids. KB is using the site as an advertising vehicle from which buyers can contact the listing agent.
“Right now it’s a short-term strategy to determine how effective it is,” said Jay Moss, president and regional general manager of the Greater Los Angeles division for KB Home.
Moss wouldn’t predict whether future homes will be put up for bid but said, “we’ll definitely keep our homes on the site for the listings.”
The seven auctions, which started June 15 and end June 24, include three homes in Upland, two in Fontana and two in Moreno Valley, and have reserve prices ranging from $250,000 to $375,000. If bidding does not hit the reserves, the homes will not be sold.
Selling homes is new to eBay, which began putting houses on its site for both bid and for listing about a month ago, according to Doug Galen, vice president of real estate at eBay. Other homebuilders on the site include American Heritage Homes and Pioneer Homes.
Galen said the listings are part of eBay’s strategy to lure more people to the site. “It’s important to have an appropriate depth of listings from the homebuilder even if it’s not up for auction,” said Galen, who would not say how many houses eBay expected to sell.
In KB’s case, the selling process will differ from that of most items sold on eBay. Successful bidders will have a rescission period in which to visit the house before closing. If the winning bidder decides not to go through with the deal, the next-highest bidder gets an opportunity to see and buy the house, according to Moss.
“It’s a lot different from buying a pair of concert tickets,” said Moss.
Danny King
