eBay Says 2004 is the 'Year of the Small Business'

By Patricia Fusco | Posted January 26, 2004

Last August eBay kicked off its first "Big Savings for Small Business" contest in which small businesses could win $25,000 to put toward purchases made through the online auction colossus. To enter the contest, small business owners had to answer the question: "If I won $25,000, what would I buy on eBay to help my small business and what impact would it have on my company?"

Essays were limited to 250 words and entries were limited to small businesses with fewer than 100 employees. Originally, eBay planned to announce the grand prizewinner — along with five 'first prize' winners that would each be awarded a $5,000 eBay buying spree — on Oct. 17, 2003.

But things didn't quite work out as planned — the winners were actually notified in mid-November and the prizes were not awarded until mid-December. It's not that the contest was a failure — far from it. Jay Fiore, eBay marketing manager, said the response to the program greater than what the company anticipated.

"We kicked off the program to build awareness about business items available on eBay. We thought we might get a thousand entries or so. But the level of response was three times what we expected," Fiore said. "We received thousands of essays from small business owners who all had incredible stories to tell about their experiences buying and selling on eBay."

Many essays explained how personal use of eBay translated into business use; there were also pleas for capital, and a few essays that tugged at the heartstrings.

"A lot of stories indicated that $25,000 would turn the business around — even save the business," Fiore said. "As you can imagine, it was quite a challenge to read through all the essays — quite a challenge indeed."

After Marden-Kane, the promotions firm eBay hired to manage the contest, thinned the list of possible winners, a second panel of judges completed the final reviews and made their selections.

"The promotion relied on independent judges to do the initial scoring of thousands of the entries," Fiore said. "Then we submitted Marden-Kane's list of the top 50 finalists to a group of judges — some business experts and some eBay executives, among others — to select the winning essays."

Winners included a small photo studio, a commercial winery, and day care center, as well as three other small businesses. Examples of two of eBay's prizewinning essays follow:

While the contest proved interesting, Fiore said the essays proved eBay is a key resource for small businesses.

"I know of no other resource or company that can offer small businesses such an advantage," Fiore said. "Making a single purchase could save thousands of dollars for a small business — that's money that can be poured back into the business or used for expanding the business."

eBay believes that 2004 is shaping up to be the year of the small business.

"We seem to be in a recovery cycle and the small business market, by its nature, is leading the way," Fiore said. "If your resources are limited but business starts to pickup, all you co do is buy more and hire more. A small business can't expand without doing that."

eBay has evolved into being far more than an online flea market for bargain hunters. It's a mirror that at times reflects the psyche of the world.

"We've seen over and over again that eBay tends to be a mirror of new trends," Fiore said. "In 2003 it was our DSL and cable categories that grew 243 percent year over. The 'Blackout of 2003' produced a huge spike in generators ... the same with hurricane Isabel. We saw 67 percent growth week over week after power outage. SARS? We had huge sales in protective masks. In May, at the height of the epidemic, protective masks sales grew 137 percent week over week."

The point is that eBay expects to see the same sort of sales trend setting phenomenon as small businesses lead the country toward economic recovery.

"Back in 2002 the entire year of business buying activity accounted for about $1 billion in sales," Fiore said. "But in the second quarter of 2003 business buying accounted for about $1.5 billion in sales — that's very rapid growth."

eBay's business-to-business growth isn't exclusive to a couple of categories of goods and services — it's sweeping growth across many different industries that leads the company to believe it can be a viable small business brand.

"We're observing very rapid growth in key categories of our industry marketplace as well as in office equipment and computers," Fiore said. "But we're also seeing small businesses use eBay to pickup new inventory to sell. That leads us to believe we really have the opportunity to build eBay into a top small business brand. It's exciting because we're reaching a real inflection point where small business buying is taking on a life of its own."

Most of eBay's B2B focus has been on vertical industries — agriculture, electronics, restaurant supplies, and the like. This year, eBay hopes to broaden its range of small business industries to include services companies, such as insurance companies, lawyers, and even travel agents.

Put simply, Fiore said, "97 percent of small businesses need PCs and office equipment — and we've got it. So we're branching out."

Also new this year, eBay intends to follow up its first small business giveaway with a second promotion that encourages small businesses to "dream big and save big." Expect to see a series of weekly giveaways, once again based on small business testimonials, coming your way soon.

If 2004 really is the "Year of the Small Business," then eBay for Business makes a great place to start — doing business, that is.

Do you have a comment or question about this article or other small business topics in general? Speak out in the SmallBusinessComputing.com Forums. Join the discussion today!

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