eBay for Manufacturers

Calloway Golf. Dell Computers. HP. JBL, Harmon Kardon, and Infinity.

What these manufacturers have in common is that they all sell merchandise on eBay, direct to consumers. And they're just a few of many; hundreds and thousands of smaller specialty manufacturers have developed eBay businesses that function as supplemental sales channels to their main businesses.

If you choose to sell your products on eBay, you have some distribution questions to answer. The chief question, of course, is what kind of products you want to sell on eBaythat is, do you want to sell your entire product line, selected products, or do you want to use eBay as a outlet for your overstock and distressed merchandise? The latter option is one that many of the big boys take; they find eBay a great way to move product that had no outlet previously. In addition, using eBay for closeout product helps to minimize channel conflict, as you're selling products online that aren't available (or even wanted by) your traditional retail channels.

For example, Dell Financial Services (stores.ebay.com/Dell-Financial-Services) operates an eBay Store that sells refurbished computers that have come off-lease from their corporate clients. As you can see in Figure 12.1, this is a great way for Dell to move these recycled products that it might otherwise have no way to offer to the public.

Figure 12.1. The eBay Store of Dell Financial Services, which sells refurbished computer systems.

Back to the issue of channel conflict: This is definitely something that most businesses need to address. It's nice to establish a new stream of sales, but not if it ticks off your established retail partners. The last thing a bricks-and-mortar retailer wants to see is the same product he's buying from you offered for sale directly from you to the general public; retailers don't really like competing with their suppliers for business. It's best if you can find some way to distinguish your eBay sales from the sales you make otherwise.

In addition, if you're going to sell on eBay, you better be set up to ship directly to consumers. Some companies are, some aren't; don't assume that the distribution operation you have fine-tuned to service bulk orders to distributors and retailers can also handle one-off orders direct to individuals. Servicing individual consumers isn't nearly as easy as you might think; not only could you screw up the individual's orders, shoehorning direct-to-consumer shipments into your warehouse could cause stress to your existing operation. I'm not kidding here; think carefully before you add B2C sales to what was exclusively a B2B operation.

That said, selling on eBay has helped many manufacturers, both small and large, move overstock and clearance merchandise and add a nice supplemental revenue stream to their existing businesses. And, of course, if you're just starting out, there's no reason not to consider eBay as your primary sales channel.

If you do decide to sell on eBay, it's a good idea to open an eBay Store. Yes, you can use the traditional auction process (perhaps supplemented with Buy It Now listings) to move a lot of merchandise, but you probably have a lot more items in the warehouse than you can list for auction at any given time. Make sure you route a fresh supply of merchandise into your weekly auctions, but then supplement those listings with stock merchandise in your eBay Store. This combination works well for manufacturers in all product categories.