Secrets of the eBay

216 Secrets of the eBay Millionaires
“Our Model: Virtual Inventory We Don’t Own
Until It’s Sold, and National Distributors”
When you ramp up and start putting thousands (or tens of thousands,
or even hundreds of thousands) of items for sale on eBay, the question
naturally arises: Where are you going to store all this stuff? If you don’t
ask the question, your spouse or your children surely will. There are two
different solutions to this problem, and Kevin Harmon uses both of them.
“I started my office in my house. I had one bookshelf that held 200 DVDs,
and I remember at that time, I was freaking out with how many DVDs I had.
(Now I have 200,000.) When I ran out of space, I moved to an 800-sq. ft.
office. Then, I moved to the office next door and took over both spaces. Now
we’re in a 2,000-sq. ft. warehouse, and we’re moving to a new space.”
The key to such growth is having lots of merchandise to sell, and that,
of course, depends on finding the right suppliers. “Through our distributors
we can offer as many as 300,000 items,” says Harmon. “There’s a whole lot
we could offer; it’s just a matter of finding what sells on eBay.”
Finding what sells requires research in eBay’s completed auctions,
which Harmon conducts on a regular basis. It’s also a matter of pricing
lower than the competition. In the case of CDs and DVDs, Harmon knows
he’s competing with the many brick-and-mortar stores that sell movies and
music. He realizes that the only reasons someone would make a purchase
on eBay are price and selection: He has to offer items at a lower price than
the competition, and he has to offer unusual, even strange items that people
can’t find easily, such as the movie shown in Figure 11-2.
“Ninety percent of our items are more expensive than a brick-andmortar
store. Someone could indeed buy a DVD for $16 in a physical, retail
store and they would pay $21 through me if you include shipping. I’m
taking advantage of the laziness of the world. The average big-box store like
Best Buy has 2,000 titles. We have 200,000 titles including many unique,
rare movies. You have limited movie selections in the local store, so you go
online. My business works because I found a lot of products to buy—the
right type of products. eBay is a site where you have to sell at competitive
wholesale pricing, and then you just offer everything under the sun.”
The Inflatable Madness LLC business model doesn’t require Harmon to
store every one of the items he sells in his warehouse, however. Like many
eBay PowerSellers, he uses drop-shippers: suppliers who sell merchandise
and hold on to it for the owner; when a purchase is made, they pack and
ship it as part of their services. The eBay seller never actually sees them.
“Our business model is twofold—virtual inventory we don’t own until it’s
sold, then national distributors.”