eHobbies Survives, Thrives After Dot-Com Bubble Pops

By James Maguire | Posted May 23, 2005

In the late '90s dot-com boom, eHobbies was a fast growing e-tail outfit with $40 million in venture capital funding. In the early 2000's dot-com meltdown, eHobbies was a money-losing venture with a bloated payroll, heading toward extinction.

"The business model was never correct," recalls Seth Greenberg, who was once the site's marketing director and is now one of its two CEOs.

In 2001, Greenberg went to eHobbies's CEO and said, "Listen, we don't need a hundred people here. We can run this with seven people and a Yahoo store."

As eHobbies restructured, Greenberg bought the business, moving it to the Yahoo platform and letting go of most of its staff. He re-launched with a mere three employees. "Now that it was mine I wanted to be a little bit more cautious."

Loving Yahoo — and Outgrowing It
Greenberg knew the Yahoo platform could handle eHobbies' needs because he had used a Yahoo store as a marketing tool when he was eHobbies' marketing director. The site opened a small Yahoo store in addition to its main site to boost visibility. "It was ironic, because sometimes the main store would go down, and we would redirect the URL to the Yahoo store," says Greenberg.

Yahoo's all-in-one platform helped Greenberg to get eHobbies back on its feet financially, allowing him to run the site with a lean staff. He praises the platform's stability.

"We wouldn't be here if Yahoo hadn't gotten us through six Christmases," he says.

As happy as he is with Yahoo, eHobbies keeps growing — and he is now considering switching to a new platform. Yahoo "has its limitations that we build things on top of and around," he says. In particular, Yahoo's closed-source shopping cart software can't be tweaked. Also, "we don't have 'bill me later' and we can't have the international shipping the way we want it."

Looking ahead, "We're ready to be in the major leagues, and I've been looking at about 14 or 15 different vendors whose software will let us run the business the way we really want to."

Broadcasting Inventory
As his business continues to expand, Greenberg sees further growth potential in posting his inventory throughout the Web. His philosophy is: "Let's put our products on Amazon and eBay [the site's fixed price stores] and let them compete against eHobbies."

This competition works in his favor.

"By the sheer volume of consumers who go to Amazon, you're going to see more sales at the end of the year," Greenberg says.

He also sees value in posting on Overstock and many other shopping sites.


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After barely surviving the dot-com bust, eHobbies reinvented itself and is growing by leaps and bounds.

This strategy of widely presenting his inventory works because shoppers are searching for brands — like Revel or Mattel — instead of eHobbies itself, he notes. Greenberg, of course, must pay these shopping sites a percentage of revenue, but this is money well spent.

Those fees are "a marketing expense," he says.

Adapted from ECommerce-Guide.com, part of Internet.com's Small Business Channel.

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