Small Businesses Growing With eBay

By Patricia Fusco | Posted February 26, 2004

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A paradigm shift is a change from one way of thinking to another. It's a revolutionary transformation, a sort of metamorphosis that marks an abrupt change in the form or structure of an entity. It doesn't just happen — a paradigm shift is driven by agents of change.

Oddly enough, eBay Business is becoming an agent of change in the way that small businesses do business. Small-business buying on eBay is up from $1 billion in 2002 to $2 billion in 2003. This isn't a slight change in the way small businesses utilize the Web to buy and sell goods and supplies — eBay is a force to reckon with — a small-business tool that can't be ignored.

Small businesses spanning many different industries — from accountants and jewelers to photographers and restaurant owners — are using eBay as a cost-conscious marketplace for access to new equipment and supplies required to start, operate and grow their businesses.

To meet the growing needs of small businesses, eBay has responded by adding new services that help address specific issues, such as improving cash flow, hiring and shipping.

The new services include equipment leasing and financing provided by Direct Capital, employment services through Monster.com, and greater integrated shipping solutions through the U.S. Postal Service. The new services complement existing transaction facilitators, such as PayPal, which provides secure online payment solutions for small businesses.

Jordan Glazier, eBay business general manager, said the company is actively enabling small business owners to build a richer future.

"Whether they are saving money on equipment and inventory, tapping eBay as a cost-effective sales channel, or utilizing one of the many services we offer, small business owners are making eBay an integral part of starting, operating and growing their businesses," Glazier said.

From Fledgling, To Forerunner
Andre M. Hedrick started PyX Technologies about two-and-a-half years ago. The high-tech small business consists of four co-founders, including Hedrick. PyX Technologies builds and maintains data storage solutions at one-tenth of the cost, using one-tenth of the space, that larger storage vendors provide. Hedrick refers to the business startup as a classic Cinderella story. And to a certain extent, the company's success to date all started with a couple of purchases made through eBay.

"We decided to do our own startup from scratch and turned to eBay to buy gigabit cards and switches for our research and development lab," Hedrick said. "The cost savings were tremendous — we bought world-class equipment for couple of hundred dollars. These things were selling for $1,000-plus new. If eBay wasn't available, I don't think we could have pulled it off."

In August 2003, PyX Technologies became the first company in the world to deliver iSCSI (define) server and client software to original equipment makers and value-added resellers that meets and exceeds existing data error recovery systems. This leap in data storage technology offers an enterprise-level error recovery system previously only available through expensive Fibre Channel (define) architectures.

Hedrick used the savings that buying through eBay provided — said to be about $60,000 — to grow the business. Hedrick is still running PyX Technologies out of his garage, but that's by choice, not necessity. And the eBay gear is still making appearances at tradeshows, demonstrating PyX Technologies' revolutionary storage systems, to this day. For the small company, eBay has changed the way dot-com startup came to market.

"If you think about how dot-coms started in years past, they got their money from venture capital firms first, and then went to market. All they had to have was an idea and the money came pouring in," Hedrick said. "We've picked up funding the old-fashioned way — the same way HP originally did. We funded 90 percent of the startup ourselves. With a little funding from a couple of angle investors, we're coming out the door profitable."

Tooling Around Sales
But small businesses aren't just buying stuff on eBay — they are also selling their goods on eBay in record numbers. Right now, there are about 430,000 entrepreneurs tapping into eBay to peddle their wares on a full- or part-time basis. About a year ago, 150,000 entrepreneurs reported using eBay to buy and sell items over the Web.

Marsha and William Pater, owners of Pater Tool Supply near Chicago, wanted to expand their business. They decided to try selling drill bits, abrasives and sanding paraphernalia, as well as a omnium-gatherum of overstocked industrial tools on eBay. Today, the Paters run more than 500 item listings on eBay, which adds about $10,000 to its sales coffer each month. Selling on eBay has given Marsha Pater the flexibility to leave her other job and spend more time with her husband to grow their business.

All sellers on sites such as eBay are rated by feedback — the number next to their name. Seller ratings are based on customer satisfaction. Keeping that number high is critical to being a successful seller on eBay, along with writing clear, interesting descriptions of items, providing photos, setting competitive prices, and being available to answer buyer's questions.

Sellers pay a small fee to list each item on an auction site. They also pay a commission once the items are sold. Buyers usually pay for shipping, and the must-have items they purchase, of course.

eBay brings together all business-related item listings under one destination at Business Marketplace, which was launched January 2003. Today, there are more than one million business-related item listings on eBay, compared to about 500,000 listings a year ago. Maybe it's time your small business joined the eBay revolution — it wouldn't be a paradigm shift without you.

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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