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eBay millionaires

The internet has been a genuine wealth of opportunity for millions of people around the globe. A genuine chance for entrepreneurs and small business people to get in on the ground floor of a brand new media and communications framework, the internet has provided an enormous push for a lot of small businesses – and a chance for just about anyone to open up an online shop, and start making money.

The mid 1990s in particular were a relative gold mine. At the height of the dot-com boom, companies like Amazon and Pets.com were raking in money hand over fist – and even the little guys were getting in on the act.

By little guys, we mean people like French-born Iranian-American Pierre Omidyar, who founded a site called AuctionWeb in 1995. On September 5 of that year, Omidyar flicked the switch on his brand-new site, offering a unique consumer-to-consumer transaction model – for a small fee.

One of the first items sold through Omidyar’s site was a broken laser pointer, which fetched $14.83. Omidyar was perplexed – and phoned the winning bidder personally to make sure he knew that the item he had purchased didn’t work. The buyers response – “I’m a collector of broken laser pointers” – was the first crucial insight Omidyar had into the future of his website.

If someone, somewhere, was not only prepared to pay for a broken laser pointer, but also prepared to admit that they were a collector of those sorts of items, then selling things from consumer to consumer was going to be even easier than he thought. Two years later, Omidyar renamed the site “eBay.com”, and just 12 months after that, in 1998, eBay went public. Pierre Omidyar was an overnight billionaire.

Ordinary People

Omidyar and his business partners, of course, weren’t the only ones to make some serious money through eBay. It wasn’t long before people began to see eBay as a golden opportunity to set up a shop, hawk their wares and all-but dispense with the bricks and mortar approach to sales.

One of those was internet and sales success story, Ruslan Kogan, a man now famous for completely re-writing the rulebook on how to sell consumer electronics. Kogan’s now a big name in the fast-moving consumer goods (FMCG) market, shifting large quantities of Kogan-branded goods directly from the manufacturers in China – but relatively few people understand that Kogan built the foundations for his business using eBay.

Naturally, not everyone who’s made a million or more on eBay is as high profile. You’ve probably never heard of many of the people we spoke to for this article – but, like a lot of other dedicated entrepreneurs, they’ve made a mint using eBay, and in doing so have become some of the best small business success stories in Australia today.

As of March 2012, there were 157 ‘eBay Millionaires’ in Australia, according to eBay’s Online Business Index report. With recent estimates from Forrester Research putting online retail around the $200 billion mark globally, which is still only about 10% of all retail trade, there’s enormous scope for online marketers to get their hands dirty and achieve success.

Meet the Clarksons

From humble beginnings as a builder and fitness trainer respectively, Matt and Amanda Clarkson have turned a very small-scale business into a marketing juggernaut. It wasn’t long before they were making almost-unheard of sums of money, selling fitness equipment and turning over around $50,000 a month.

Not even a complete disaster could wipe Matt and Amanda out. When their warehouse was inundated during the devastating Queensland floods and all of their uninsured stock destroyed, the couple could well have simply turned their backs on it all and called it a day.

“Everything was gone,” Amanda said. “There was no way to salvage the stock or the business after the floods. Our dream business of five years destroyed in moments. It took us a couple of months to get over the loss of our business and eBay income, and then we went to work on our next eBay business. Within four months from launching, it was making us $35,000 a month and it’s still growing.”

Six years on, they’ve expanded their business to include public speaking, seminars and even private master classes on how to sell on eBay. They have their own line of marketing and sales seminars, and they travel the country sharing their wisdom and telling the story of how they managed to make their mark in the online retail sector.

The key to it all, Amanda said, is to make sure you market your goods properly.

“54% of things don’t sell on eBay mainly because the sellers don’t know what they’re doing,” Amanda says, before explaining that she and Matt now focus their energies on leading seminars teaching others how to use the online auction house to achieve a better work/life balance. That new venture, called Bidding Buzz, aims to educate anyone interested in how to crack the eBay Millionaire code by sharing their experiences and expertise.

The Surf Guru

It’s not all powersellers and huge online shops – there’s still plenty of scope for the smaller players to focus on their passions, and make more than a decent living from it. About three years ago, Roger Savage retired from his position teaching high school Information Technology to open up an online venture selling surf gear.

“I looked for a product that I could stand behind,” recalls Savage. “I don’t want to be the cheapest guy in the market – that just becomes a race to the bottom in terms of margin and eventual profits.”

Instead, Savage worked on getting the basics of his eBay strategy right before trying to expand. He soon realised that it was as much about customer service as it was about getting his product choice right.

“You might think you know what people want, but that’s not necessarily the case,” he says. “I initially went with my gut – I’m a very keen and passionate surfer, and originally started off selling items that I had been looking for in the past. I knew my potential market really well – I was that market for years.”

Savage did his homework before starting out. “I was doing it part time while teaching high school. In the early months, I did a couple of courses, which were very highly priced. Yes, I learnt stuff, but they weren’t really worth the money.”

He soon discovered that while eBay had originally catered to the mum-and-dad garage sale crowd, there had been a large and fundamental shift in the focus from eBay.

“It’s a lot more focused on the bigger players these days,” Roger says. “The guys who are shifting volume across a wide variety of lines. eBay loves them.”

That love probably stems from the fact that eBay not only charges to place the ad, but for professional setups, the company takes a 7% slice as well. Which is why, within eBay’s rules, Savage has since branched out and uses eBay to direct people to his own bespoke website.

His surf business has grown to the point where he needs assistance, which he outsources overseas. “I have two employees in the Philippines, who do a lot of the hack work,” explains Savage.

That arrangement frees him up to explore other opportunities. He has recently made a move into the highly competitive fashion market, and is enjoying more success as one of Australia’s leading retailers of handbag organisers.

“It’s important to find a niche,” he says. “Something that hasn’t been thrashed in the marketplace already. Learn it, and be prepared to back up your product with the best customer service you can. You live and die on eBay based on the feedback you receive.”

Spare Parts

The importance of customer service is a message repeated by Andrew Astley, one of the founders of eBay powersellers carsRus. What started as an online used car parts business, to help pay the wages of his brother at the family car yard, has blossomed into one of the best success stories that eBay Australia can lay claim to. However, it wasn’t a business model that was really on the radar for the Astley family.

“It all started as a bit of a fluke, actually,” recalls Andrew. “We were running the family car lot, and when my brother left school and came to work for us, we needed a sideline to help pay his wage. So we began breaking down old cars, like a standard auto-wrecking business, and selling the parts online.”

By selling online, the brothers were able to significantly undercut their bricks-and-mortar competitors. But it was an extremely time-consuming endeavour for them.

“Each and every part needed to be photographed, and we spent hours making sure that the technical information was 100% accurate,” he says.

Just three months into the venture, Andrew had a light bulb moment that changed everything. By selling new parts, the photography and writing of each advertisement only needed to be done once.

“You can sell the same part from the same ad hundreds of times,” Andrew says. And from there, it snowballed. The Astleys stopped selling used parts and focused solely on the new parts business.

“Early on, we went looking for tools to help us,” Andrew says. “We researched what similar businesses were doing overseas, and came across a package called ChannelAdvisor, which automates an enormous amount of the work involved. It helps with payments, and follow-ups with customers, and gives people who buy from us the impression that our business is a lot bigger than it is, simply because the level of customer service we’re able to provide is so much better as a result.”

Andrew says that it’s the after sales service – answering queries and promptly shipping the product – that is the key to success. “Something as simple as having a phone number that people can call if there’s a problem is a major part of our success,” he says. “When people have problems with the product, or even just paying for it when they’re not tech-savvy, it’s vital to have a human voice on the phone to really help them out.”

Have you missed the boat?

There’s a lot to be said in business about getting in first, and blazing the trail that others follow – and it is usually the people with the foresight and drive to be the pioneers that end up being the most successful.

However, according to the experts, eBay selling is a different type of beast. Sure, it’s a crowded market, but for a canny operator with the right product and a solid understanding of their potential market, eBay still beckons as a golden opportunity.

“There’s still plenty of scope for newcomers to sell on eBay,” Savage claims. “But for anyone looking to get into this marketplace, they will need to do their homework.”
Andrew Astley agrees. “eBay is definitely a different place now than when we started. But it’s not too late for people to get involved,” he says. “You simply need to find a product that you can work with – something with a reasonable profit margin – and get selling now.”   

Tips from the pros

1 Compete to sell – internet consumers can be a finicky, distrustful bunch – and anything that looks or smells like a ruse will be bad for business. That’s why good, clear photographs, well-written (and correctly spelled and punctuated) descriptions and a very clear channel of communications are of paramount importance.

2 Image is everything – eBay’s feedback system is another area that needs to be very carefully managed. Consumers are now aware of the power of poor feedback, and they’re not afraid to use that to ensure that they’re getting the best deal. As a result, it’s crucial that both your product, and your customer service ethic, are as high-quality as possible. It’s all but impossible to claw back negative public opinion, especially online. The internet has a long memory.

3 Market in the gap – identifying your key market, and getting your communications out to them, is really important as well. Targeted communications are a fantastic strategy for building an eBay business profile, and ensuring that your products are being marketed strategically.

4 Know your product – It may sound like a no-brainer, but knowing your product lines inside and out will help enormously. Many eBay entrepreneurs try to cast a very wide net, with lots of different product lines on the go at once. The experts we spoke to tell us that it’s much wiser to work on a single line to begin with, and to know it very well – that helps when it comes time to look at your sales and conversion figures, and figure out how to tweak your product’s profile online.

5 Be persistent – eBay is not going to make you rich overnight – even the most optimistic of eBay powersellers and coaches will tell you that. There are only about 3,000 people in Australia making a full-time living from eBay, according to Amanda Clarkson – the vast majority of people making money on eBay do so part time. It’s not about getting rich, quickly.

Useful resources

Bidding Buzz
Owned and operated by Amanda and Matt Clarkson, Bidding Buzz runs seminars and workshops to help small businesses develop their online presence with eBay.
www.biddingbuzz.com.au

eBay Guides
Nestled within eBay itself is a wealth of user-generated wisdom on what works, and what doesn’t, across the site.
reviews.ebay.com.au

ChannelAdvisor
There are a number of helpful tools for eBay sellers. Andrew Astley uses ChannelAdvisor, a system that helps him to track orders, and keep his customer service up to levels that ensure repeat business.
www.channeladvisor.com.au

Image credit: Thinkstock

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