Manufacturers Cashing In on eBay

Michele SanFilippo, May 9, 2005

San Jose, Calif. — Selling products on eBay is fast becoming more than a passing trend in the home fashions industry, with retailers and manufacturers finding the online marketplace an effective way to turn obsolete, returned or refurbished goods into cash.

For example, current Vice President of e-commerce at CHF Industries David Spain built a $2.5 million business from eBay sales of closeout inventory while at slipcover manufacturer Sure Fit, which has a two-year relationship with the online marketplace. In 2004, he brought his expertise to CHF, where he began selling overstock merchandise two months ago.

According to Spain, Sure Fit, CHF and other manufacturers use eBay to support retail partnerships.

“Ours has become a global import business and eBay allows us to sell through excess inventory because our partners cannot do so efficiently. That allows us to take more chances in terms of fashion rollouts and alternative products,” he added. “At CHF, we have a lot of licensed product and thought we'd meet a lot of resistance from our licenses, but instead we elevate the way the brands are presented.”

Spain said eBay serves three functions for its consumers: selection, entertainment and value.

“eBay allows them to find mainstream merchandise and search for items (they) never would find in a store. Second, there is a great entertainment aspect of the auction and the bidding process (that) appeals to a broad segment of the population. Third, eBay's buyers get great value at a great price,” he said.

For the seller, eBay works to attract new buyers to the site. Spain continued that the marketplace offers sellers high- and low-income customers and has a wide geographic breadth, reaching both large cities and small rural locations.

“To us, both the high- and low-income customer is important. The wealthy customer often has many rooms or even many houses to fill, so she buys a lot. The less affluent customer appeals to home furnishings businesses because she will spend on soft goods when she cannot afford big-ticket items,” he described.

CHF plans on committing a significant number of work hours to developing its eBay sales.

“We are adding new people to support the eBay business, which will be front and center in our online efforts,” Spain added. “I fully expect to sell thousands of items every day and list new items on a weekly basis at least. I am a firm believer in auctions versus 'buy it nows.' Auctions attract more people to our site and as we are in the business of putting this merchandise out and turning it around, we feel (it) is the most efficient way to manage this.”

Roughly 70 percent of products on eBay feature the auction format versus fixed pricing.

According to Spain, eBay is an efficient selling channel for individuals with an entrepreneurial mindset because it maintains a level playing field.

“It offers manufacturers like us opportunities to make it a powerful channel, but it's important to have the right software providers and products that are established and have broad appeal or products that are at the end of their cycle. Selling on eBay is forcing us to be smarter in how we package goods in order to be a better marketer of the products,” he said.

John McDonald, director of home and garden on eBay, which represents $2.2 billion in worldwide sales, added, “The primary goal we have is twofold: improving the buyer experience by making it easier to buy products and having the right high-quality goods. We are working very hard to bring on high-quality brands and companies as well as to increase awareness of eBay in the home and garden area.”

The home and garden category, which saw over 10 million visitors in March, has grown by 38 percent in the past year.

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