Tough Times for eBay Entrepreneurs

By KAREN E. KLEIN, BUSINESSWEEK.COM
Posted: 2008-08-28 00:09:23
Filed Under: Home Business, Small Business, Online Business
A bad economy and competition from big e-tailers are challenging those who make a living via online marketplaces such as eBay, Craigslist, and Etsy.

eBay seller
Cassandra Shie, AOL

Ann Wood was thrilled last January when her eBay store, Willow-Wear, had its best month ever, grossing around $33,000. In February, however, Wood experienced a sharp drop-off in sales. Since 2004, Wood has run the home-based business, listing and selling high-end jewelry, clothing, shoes, bags, and antiques for more than 40 clients around the country. She works four to six hours a day, and had sales of about $250,000 in 2007, she says.

"I've still got steady sales and I'm making money for my clients," Wood says, "but I've been seeing more caution from buyers on the items priced for $1,000 and over. People are being smart. They're acting like my husband and I are trying to act, which is to be more careful about purchases and not buying everything we want."

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    Yet Wood's inventory is growing as her clients scour their closets, hoping to make some extra money selling unused items, and telling their friends Wood can do the same for them. The other bright spot for the former appellate attorney, who became a home-based entrepreneur after her three children were born, is international sales. "A great portion of my stuff is shipped overseas. With the dollar so weak, I've got great deals for people in places like Germany and Italy. I even sold something to Tahiti recently," Wood says.

    "Pay to Play"
    But overall, it's a tough time for entrepreneurs who sell products through online retailers like eBay, Craigslist (BusinessWeek, 4/16/08), Etsy (BusinessWeek.com, 6/12/07), and myriad other sites. It's also tough to get solid financial data on these individuals, many of them hobbyists conducting virtual yard sales in their spare time, rather than serious business owners. "What we know is that probably half of all online retail happens through companies that are smaller than the top 100 e-commerce retailers," says Sucharita Mulpuru, a principal analyst in the retail division at Forrester Research.

    "I suspect that probably about 60,000 small and medium-size businesses have some sort of Web presence, and another 650,000 sole proprietors are selling through an online marketplace where anybody can upload their product catalogs," Mulpuru says. "I can't imagine that they're doing particularly well in this economy." Small online operations must either sell unique items, such as antiques and collectibles that appeal to niche buyers, or do enough sales volume to keep prices low.

    "The challenge is that if they're sole proprietorships, they will not be particularly well-branded. In order to attract traffic, they have to pay for some interactive marketing program, which adds to their expenses and cuts into their margins," Mulpuru says. "They have to pay in order to play, but many of them don't have the resources to do that."

    That's not to say lots of people aren't trying. A study of eBay market activity released in May shows that in 2007 the top 10 markets in the country -- Los Angeles, New York, Chicago, Philadelphia, Dallas, Orange County, Calif., Washington, Houston, Nassau-Suffolk, N.Y., and Fort Lauderdale -- generated more than $7 billion, accounting for 55% of all U.S. sales on eBay. In Los Angeles alone, 196,089 residents sold 24,051,645 items for a total of $1.3 billion in sales, with cell phones, cell phone accessories, and clothing the top categories.

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    injhon316 11:13:09 AM Mar 05 2009

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    STAY AT HOME, WORK YOUR OWN BUSINESSIf you know anyone who was involved in the deregulation of the phone companys in the 80's they can tell you about the thousands of Independent Consultants who became financially secure with that opportunity. Thas is why many of those same people are now involved in our business wich is the "Deregulation of Energy Companys, Electric and Natural Gas". This is going to make tens of thousands of people who take advantage of this opportunity financially secure. The good news is the earning potential is Unlimited! There is no cap on what you can earn! It is set up so that you get paid, month after month, when customers pay their Gas and Electric bills. There are also many other ways we get paid such as referral, and leadership bonuses! Watch the full business presentation, contact me if you understand the potential opportunity!!http://www.jmbello.goambit.com

    wgodsreal 11:07:50 PM Feb 24 2009

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    www.WattsBusinessOverview.comwww.WattsAisle19.com

    wgodsreal 11:06:52 PM Feb 24 2009

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    I've been doing my home base business for 2 years now. When you first start out you are NOT going to make million dollars over night. But if you just put half the time that you spend building your bosses company. And give yourself a 3 to 5 year plan to build your own. The sky is th limit. I was scared to do something different because I was with my company for 10 years and I couldnt see myself there for 10 more years. So I started my own home business and worked both until I let them go. You get out what you put in. Now when I give 110% I am doing it for myself and my family. I wont fire my self!!! I enjoy the time that I have home now with my family. Go to my website and view my company presentation. www.WattsBusinessOverview.com If it's not for, please DON"T join my business. If love to travel and see the opportunity please go for IT!!! To view my company go to www.WattsParadiseVacations.com Send me a e-mail and lets talk. David of Watts Paradise Vacations, LLC

    sunbell793 12:49:30 PM Feb 24 2009

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    650 STORES @ WWW.CROSCONNECT.COM OR WWW.THECROSSINGMALL.COM

    np00000014890723 09:12:58 PM Feb 19 2009

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    ATTENTION EBAY SHOPPERS CHECK OUT MY ITEMS 201.bestseller on ebay.

    np00000014890723 09:04:41 PM Feb 19 2009

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    i want to make millions of dollars on ebay now due to all of the negative feedback that i read.

    cyntiques 12:37:17 AM Feb 10 2009

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    I have been a seller since June of 1997(100% feedback)--Ebay was still a "baby" then....I say with no regrets and a smile on my face when I read the negatives people are writing about eBay because they deserve every bit of what they are getting. The people that made them in the beginning have been royally "crewed." I am selling on Etsy and Bonanzle and of course Craigslist. Etsy and Bonanzle as well as others will be a little slow getting started, but I believe if we all stick together we can do without eBay.

    dapperduck 11:38:40 PM Feb 09 2009

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    These thieving creatures that operate out of their closet should be jailed and the key thrown away. I had a problem with several of these thieves (didn't receive my goods) and ebay refused to help me but did cancel my comments on the seller and gave me a bad report. Never again thieves, never again.

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