I remember when eBay was still fairly new. I wasn’t much of an online shopper at the time (although I later did go through an eBay-buying addiction, from which I’ve since recovered). At the time it seemed like a lot of people were selling the same kinds of things that you’d see at any other auction or neighborhood garage sale.
Like many other things online, other auction sites sprang up once eBay’s success was proven.
I watched eBay with interest and shopped there off and on. I knew someone who had earned a living for a few years selling antiques on the site. Lately, I hadn’t given it a lot of thought. But in a recent conversation I had with a former eBay seller, we spoke about the metamorphosis that took place on eBay. It was a real education for me.
He talked about how eBay started and provided services similar to many other auctions: someone who wanted to sell something posted it and found buyers who willingly bid. It was very much a junk style store. (Not that what people sold was junk, but that the early products were often from clearing out the closet).
Soon, like all good opportunities, people saw how they could make money by selling online. EBay seemed to move into a second phase – a phase he and I believe was its biggest strength – as folks would buy products and sell them. Products might be bought from garage sales, antique shops, second hand stores, dollar stores, then re-sold: bought at retail and sold at higher retail.
Then people became even more serious about increasing profit margins. Since auctions cannot necessarily increase prices, they had to reduce their costs: wholesale suppliers became eBay seller suppliers and you can still see many wholesaler and drop- shipper sites that provide a special batch of services to eBay sellers.
Soon, though, eBay started opening up to more and more commercial businesses who post their products online to sell through an auction system. These businesses may have their own stores already but have found a new group of auction-based buyers to market their products to.
The result is a flood of new (not used) products onto these auction sites at a very low price. This tends to drive out the little guy.
My friend, the former eBay seller, couldn’t criticize eBay for this move; it was a natural event: eBay worked well for individuals and very small retailers who wanted to reach a bigger market (like a neighborhood bookstore, for example) but the businesses selling on eBay became larger and larger and now dominate.
Is there money to be made on eBay? Quite possibly, yes. There are still periodic news stories of someone who sells well on an auction site and earns a steady living. (And of course I’m not talking about those crazy stories of cheese sandwiches sold for more money than many people make in a few years of work).
On the other hand, you may have to work harder to ensure that your products are unique and not at all like what the “big guys” sell (for example, consider rare books or antiques or comic books and other collectibles). Or you may have to start up an eBay store rather and expect to make money through volume.
My conclusion? Don’t rule out auctions, but don’t take on the major retailers; find your own way.
