Lots and Lots of Wholesale Lots at eBay

eBay, the world’s online marketplace, is serving a growing community of small businesses and independent retail stores looking for wholesale inventory to get ready for this year’s holiday season.

Under eBay’s wholesale lots categories, buyers can find great savings on a wide range of goods from companies and distributors offering excess merchandise or end-of-life products in small- to moderate-sized bulk lots.

Wholesale lots are among the fastest growing categories on eBay, with a growth rate of 465 percent in annualized gross merchandise sales, based on second quarter 2003 financial reports. There are nearly 200 wholesale lot categories on eBay, across a wide range of products including office equipment, apparel, DVDs, music, jewelry, computers and electronics, sporting goods, and toys.

“Wholesale trading on eBay is a natural fit for our marketplace where we have a large audience of small businesses and individual sellers looking to find new sources of supply,” said Karl Wiley, senior category manager of wholesale for eBay. “Buyers of wholesale lots find eBay to be extremely flexible and convenient for finding great deals on inventory for their resale businesses, while sellers, with large amounts of excess or closeout inventory, are able to liquidate product easily.”

A growing list of companies are tapping into the wholesale market opportunity on eBay. For example, Artisan Entertainment sells DVD catalog titles reaching an audience of small business buyers that typically have been out of their reach.

“Selling on eBay allows us to alleviate our inventory risks and at the same time realize a higher per-unit price than through traditional liquidators,” said Bob Denton, Artisan Entertainment’s chief operating officer.

For some small businesses and resellers, eBay has become an important source of wholesale inventory. Max Wasserman, user id: XYZXYZ, purchases wholesale lots of brand new DVDs and VHS tapes on eBay, and then resells them in his brick and mortar store, as well as on eBay.

“One of the challenges of owning a small business is sourcing supply. eBay provides us with steady access to quality DVDs and VHS products at prices we can’t find elsewhere,” said Wasserman.

Wholesale lots on eBay enables sellers to reach a global marketplace. United Traders sells apparel on behalf of a 100-year old department store chain. “We started selling wholesale lots in March 2003,” said Randy Hadeed, president of United Traders. “In the past four months we’ve generated more in sales for our client than was achieved in all of 2002. By selling wholesale lots on eBay, we’ve revolutionized their business.”

For small businesses looking to stock up on inventory for the holiday season eBay will kick-off a wholesale promotion on its site starting in late September. eBay’s wholesale lots categories are available at its wholesale subsiteor within eBay Business — another subsite that brings together all business-to-business buyers and sellers under a single Web destination and offers savings on a big selection of goods and materials needed to start, operate, and grow a business.

In Related News …
FairMarket , a provider of online auction and promotions software, last week said its shareholders had approved a sale of “substantially all” of its assets to eBay. Fairmarket customers include Dell, CompUSA and SAM’S CLUB. FairMarket will continue in its Woburn, Mass., location under the new name of Dynabazaar, Inc.

FairMarket owns proprietary technology to run promotional auctions, contests and games, coupons and rebates. It keeps track of loyalty points accumulated by users and manages the process of exchanging points for goods. It also provides storefront technology and commerce tools to let merchants create private-label stores within eBay or on the Web.

For example, FairMarket developed and hosted a Web site a co-promotion between Burger King and eBay, in which customers received points for purchases at the fast food restaurants which they could use to buy items on eBay. FairMarket provided technology to manage the allocation of the points, as well as tools to analyze consumer purchase patterns and demographics.

EBay has taken part in many such co-promotions in an effort to extend its audience.

“It would be an opportunity for a third party to introduce itself by promoting its brand with in association with eBay,” eBay spokesperson Kevin Pursglove said, “and to introduce eBay to a new audience.”

FairMarket announced the $4.5 million cash acquisition agreement in June, following a year-long relationship in which eBay used FairMarket’s platform for creating online promotions and loyalty programs. In May 2002, eBay made a strategic investment of $2 million in FairMarket in exchange for 952,380 shares of preferred stock at a per share price of $2.10.

It was a good time to sell. For the second quarter of 2003, FairMarket reported revenue of $1.5 million, up 12.6 percent, compared to revenue of $1.3 million in the second quarter of 2002. Its second-quarter net loss was $1.9 million, compared to a net loss of $7.2 million for the second quarter of 2002, thanks to the revenue increase and a decrease in total operating expenses.

The purchase involves only FairMarket intellectual property and technology assets; Dynabazaar will not be able to use them in its own business. Pursglove said eBay hasn’t yet determined which FairMarket employees it might absorb, but the company is evaluating executive, technical and administrative staff.

FairMarket’s board of directors will decide the next step for the company, according to president and CEO Nanda Krish.

“There is a transition service agreement in place where we help them move the business over to eBay in the next four months,” Krish said. “The next step is to close the deal.” Krish pointed out that Dynabazaar will continue to be a public company with $52.7 million in cash.