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The eBay Success ChroniclesSecrets and Techniques eBay PowerSellers Use Every Day to Make Millions
By Angela C. Adams
Atlantic Publishing Group, Inc.Copyright © 2007 Atlantic Publishing Group, Inc.
All right reserved.
Chapter OneIn the Beginning
eBay, a name, even an icon of the driving train of commerce on the Internet.
On an average day, millions of items are listed on eBay with some individuals buying and selling thousands of items. Originally, eBay was primarily a site to auction off collectibles like trading cards, antiques, dolls, and housewares, but over the years it has exploded to practical items like used cars, clothing, books, CDs, and electronics.
People from all over the world buy and sell on eBay. Currently, eBay has local sites that serve Australia, Austria, Belgium, Canada, China, France, Germany, Hong Kong, India, Ireland, Italy, Malaysia, the Netherlands, New Zealand, Poland, the Philippines, Singapore, South Korea, Spain, Sweden, Switzerland, Taiwan, the United Kingdom, and the United States. In addition, eBay has a presence in Latin America through its investment in MercadoLibre.com.
Sellers can be a big business, a local store, or a teenager unloading his old baseball cards.
At the top of the heap are the PowerSellers. They are the most active, often selling thousands, even hundreds of thousands of dollars worth of items each month. Buyers trust them. Sellers aspire to be like them.
So who are these PowerSellers, and whatdoes it take to become one?
To find this out, you need to know about eBay. That is because eBay is more than just a commerce site. It has its own culture and its own language. Like the rest of the Internet, eBay is also growing, changing, and evolving in thousands of ways great and small. The evolution of eBay is something that would astonish a business school case study: it is largely an accidental company-started and grown by trial-and-error.
Working within this culture, adjusting to the ever-changing market place, and finding profitable niches are really what distinguish a PowerSeller.
The Birth of eBay
It has long been said that eBay founder Pierre Omidyar started eBay in 1995 so his girlfriend could have a way to trade Pez dispensers.
"Well, like every creation myth, there's always an element of truth," eBay Chairman Omidyar has said.
Omidyar worked for a small start-up company called General Magic in the early days of the Internet. He also ran a small consulting business named Echo Bay Technology in his spare time.
He started thinking that the 'Net could be used to create a perfect marketplace-where everyone was on equal footing and the market set the price. In other words, what would be the perfect free market? He thought that an auction format would become an excellent "market mechanism" for reaching the reasonable value of an item. It began as an entertaining, intellectual exercise because he really didn't have the time to develop it.
But Omidyar was always a curious person with an incisive mind. He spent a few months of his time off to develop some software. As an experiment, he introduced what he called AuctionWeb. He meant it to be placed as an adjunct feature to a Web site he'd developed for Echo Bay.
The first version of what would evolve into eBay went online in September 1995. He worked out of his apartment in the beginning. It trundled along, with Omidyar successively tinkering and upgrading the AuctionWeb.
It grew at astonishing rates despite feeble marketing efforts by its founder. Customers kept listing their items on AuctionWeb, with a buzzing number of buyers bidding and buying the items. Omidyar began to get a glimmer of the possibilities and decided to devote more time to Auction Web and his Echo Bay Web site.
This is when circumstances took a historic turn.
When he tried to register that site name in 1996, the name echobay.com was taken. Those were the early days of the Internet when you had to fill out paper forms. Standing at the counter, Omidyar made a snap decision and decided to abbreviate Echo Bay. eBay.com was born.
And what about the Pez dispenser myth? Omidyar relates that about the time AuctionWeb started, he and his girlfriend, Pam Wesley, took a trip to Europe. While there, she bought a number of Pez dispensers. Back home, Pam started selling and trading them on AuctionWeb. It gave Omidyar a first hand look at the passion of collectors.
He later told that story to eBay's first public relations person, Mary Lou Song. She ran with the Pez story, and the myth was born about the origin of an absolute phenomenon. eBay has changed how people think about the junk they once might have sold at garage sales. In fact, the whimsy of the items people offered for sale on eBay is almost as legend as the site itself. There was the grilled-cheese sandwich with a toast pattern in the image of the Holy Mother that sold for $28,000. One man auctioned his forehead for advertising space for $37,375.
The Early Years
eBay's growth was stunning; Omidyar and his rapidly expanding team must have felt they had hold of a tiger's tail. Greater server power and new features were added on an almost daily basis. They landed an agreement with to provide guaranteed payment for auction sales. The service, which quickly developed into eBay's PayPal, skyrocketed eBay business because of the ease and security for buyers and sellers to make and accept payments.
The Painful Early Years
The system could barely keep up with the demands placed on it. In 1996 and 1997 eBay users feared that it would crash each day. Two developments would change this.
First, measures were attempted to cut down on the demand for eBay-put on the brakes-to cut the strain on the system. Omidyar and his management team decided to raise auction rates from a dime to a quarter, and most drastically, to limit auctions to 10,000 new auctions each day.
Limiting auctions led to the rise of the PowerSeller. Since only 10,000 auctions were allowed, although many more demanded, there was a daily race by sellers to get their auctions listed before the 10,000 cutoff was reached.
Some sellers started developing their own software programs to allow them to upload their listings quickly so they could handle scores or even hundreds of auctions. Selling activity started to gravitate away from an every-person market to one dominated by several large sellers.
This also placed an unintended stress on the eBay system. As soon as the daily clock started ticking towards the 10,000 daily limit, the network was overcome with the new auctions from sellers racing to get in.
An overloaded network helped to lead to the second development, a doomsday event that rattled the very bones of the growing eBay monster.
June 10, 1999
This date is seared into the minds of each of the 400 eBay employees who worked there at the time. The ramshackle, slapped together, hodgepodge system crashed.
For 22 hours eBay was completely down in catastrophic failure.
It was a defining moment for eBay. First, each of eBay's employees hit call lists of users to apologize personally for the fiasco, an act that won raves from the users. Second, management plunged into the technical side of the company. They quickly ordered an overhaul of the old system to make it more robust, with more than adequate capacity and a better, more efficient design.
The Growing eBay
Since 1997 eBay has been the definition of an Internet business advancing into new and sometimes surprising markets. It has expanded into varied areas like real estate, medical equipment, and construction machinery. It sells billions of dollars of electronics. It is the world's biggest used car dealer.
It has also expanded into Europe and Asia, with even a little business going out to South America. eBay is in 33 international markets. In 2005, about 15 percent of its transactions involved a buyer and seller living in different countries. The number is expected to increase drastically in the next five years. Of eBay's 157 million registered users worldwide, 82 million are international and 75 million U.S. users.
Sellers have changed, too. Through the 1990s, eBay's sellers were mostly a motley collection of individuals. Now sellers range from individuals to major corporations. eBay's fast facts for 2005 stated that there were over 724,000 professional sellers in the United States who use eBay as the primary or secondary source of income, with another 1.5 million individuals who sell on eBay to supplement their incomes. It is one of the few places where someone operating off their coffee table can compete equally with an international corporation.
And those sellers are topped by about 100,000 PowerSellers. These top performers have many faces. Some are big businesses or a new marketing side of a brick-and-mortar shop. Some are housewives selling from their kitchen table. A surprising number are teenagers and college students blitzing staggering amounts of items from their bedrooms.
Some handle a closet full of items, and some have acres of warehouse space.
The common characteristic of PowerSellers, though, is adaptability. Business or individual, they've seen the world of eBay as it's grown. They've identified needs and found ways to fill those needs. Many PowerSellers are continually shifting operators. They find a niche and work that area as long as it is profitable. As soon as that need dries up, they are on the search for the next need they can fill.
One thing that has stayed constant is the way eBay management stays in contact with its buyers and sellers. Since June 10, 1999, eBay has been fanatical about following up on customer feedback. It is constantly bringing out new features and modifying old ones based on customer requests, the bedrock of the eBay culture.
It has also improved drastically in reliability. From the 1990s when daily system crashes were the norm, now the eBay platform is considered to be a model of reliability. Crashes are rare. In fact, the greatest challenge for eBay programmers is defending the site from a constant stream of would be hackers, spammers, and scammers.
The little auction site that started in Omidyar's apartment now has 135 MILLION customers. Quite a heady accomplishment for a ten-year period. And, yes, Pierre Omidyar did marry Pam Wesley, the Pez collector girlfriend from eBay's early days.
Where does eBay go from here? More to the point, what about PowerSellers, those fabled heavyweights of the ranks of sellers?
Chapter TwoSelling on eBay
eBay has been called the "World's Largest Garage Sale," a definition reflecting its most basic characteristic. eBay, stripped down to its barest essentials, is a single seller looking to sell one thing.
Most experienced PowerSellers follow a similar learning path to reach their final destination within the eBay hierarchy.
Almost all sellers start by offering old items they own. Have something you'd sell at a yard sale? Sell it in eBay. It is a great way to cut down on the clutter of unused items you have. Better yet, it's the first few steps in familiarizing yourself on the process of listing and selling on eBay.
eBay offers a wide variety of educational tools, features, and services that enable members to buy and sell on the site quickly, safely, and conveniently. The site is filled with tutorials on how to use these services.
There are also programs to include online payments by PayPal, tips on safe trading, and the Developers Program for community members who would like to develop their own technology solutions.
Next, it is a simple matter to list your item. You post it on eBay and begin the wait. You feel a growing excitement as bids come in on your item and it sells. And there is nothing like the satisfaction of boxing up your item to ship t to your buyer.
You start listing more and more. More items sell. You realize it takes a long time to keep putting in listings the basic way. You start looking at auction management software like Blackthorne, Turbo Lister, and others to make listing and handling your auctions less time-consuming.
Once they've de-cluttered their homes, many sellers begin looking for other things to sell. Some start combing neighborhood yard sales or local auctions to find items to list. Some even start prowling eBay itself to purchase wholesale lots they can resell at their own auctions.
eBay soon changes from a hobby to a part-time business.
Originally, all sales on eBay were by Web auction. Over the years it has expanded to include "buy it now" and store-front sales. These alternative ways of selling make for faster transactions. Plus sellers have more control of the sales price.
However, as a safety measure for the marketplace, sellers are required to have minimum requirements for sales and customer satisfaction ratings to have Buy Now and store-front sales.
Sellers keep experimenting and becoming more sophisticated. They learn the need for establishing good practices to handle payments and shipping. They find what works for them and the products they sell.
On the Run
For many, a point comes when the seller discovers THE niche to fill and the source for the perfect set of items.
Most PowerSellers have a well-defined niche suited to their individual interests, abilities, or nature. Maybe it is selling hard-to-find motorcycle parts, or collectible Harley Davidson scarves. Whatever the product, if that niche is not overly crowded by seller-competitors, and you can fulfill orders reliably, you are on your way.
There are a few categories that PowerSellers fit into: having a brick-and-mortar store they use eBay to help supplement, having an Internet/eBay only business, and being a Trading Assistant. Many of the PowerSellers out there are able to fit into more than one of those categories. Many of them also take advantage of drop shipping as a method of selling items. Let's discuss this format and then jump into what it takes to become a PowerSeller, the qualifications, and benefits of doing so.
Chapter ThreeThe "No Inventory" Solution: Drop Shipping
Some PowerSellers have their homes stuffed with products giving it that "eBay house" look. Others have rented thousands of square feet of warehouse space to store everything.
And some don't have anything. These PowerSellers use a form of selling called Drop Shipping.
Drop Shipping has been around for decades. With it you don't keep inventory. Instead, you reach an agreement with a supplier to ship your sold product directly to your buyer. In most cases, the buyer has no idea the item is not coming directly from you.
The Drop-Shipping Process
As with anything else, there are pros and cons of being a drop-ship seller. But first, a little bit about how it works.
Choose a Product to Sell
The very first step in any sales process is deciding what product to sell. Many factors should be considered before you make the decision, but for now, let's say that you've decided to sell digital cameras on eBay.
Locate a Supplier Who Will Drop-Ship for You
Using a research tool like Google or the Thomas Register, you can search for and find a company that will drop ship digital cameras for you, for example. If the company offers you a 35 percent markup over cost, which means that it will supply digital cameras to you for $100 each, then you should be able to retail them for $135 apiece. Make sure the drop shipper has a good stock of digital cameras on hand so you don't end up-selling a product that must be back-ordered.
Set up an Account with the Drop-Shipper
Now it's time to set up a reseller account with the company that will supply the digital cameras. This can often be done online or by phone, but some companies will require that you complete and return a reseller application to open an account.
List the Product for Sale on eBay
Now that you have your supplier lined up and you know that the product is in stock, it's time to list it. Remember that the drop shipper will charge shipping, so make sure to figure that into your sale.
The Product Sells
Great news-your digital camera has sold for $135, and your buyer pays!
Place the Order With the Drop Shipper
After your customer pays you, you contact the drop shipper to order the product on your customer's behalf. The drop shipper then ships the order to your customer under your company name and address.
Many people are afraid to use this method because of the horror stories that fill the Internet about unscrupulous drop shippers. These snakes take the money and don't fill the orders, merchandise items that are eternally back ordered, and so on. Some drop shippers are actually dishonest middlemen charging too much for items you can get cheaper elsewhere.
Excerpted from The eBay Success Chronicles by Angela C. Adams Copyright © 2007 by Atlantic Publishing Group, Inc.. Excerpted by permission.
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