Online retail entrepreneurs shouldn`t put all their eggs in an eBay basket
Having started on eBay as an online retailer in 2003, RockBottomGolf.com CEO Tom Rath knows a thing or two about selling on the world`s biggest online auction.
His advice to other entrepreneurs looking to leverage his experience: take advantage of eBay to start out, but look to the day when eBay generates some, but not the majority of total online sales.
"Ebay is an ideal approach to launch a new business because it`s a pay as you-go-model and you can quickly test new products, said Rath, speaking June 9 at the 2008 Internet Retailer Conference & Exhibition in Chicago. "It`s an instantly recognized brand and you`re immediately a global retailer."
RockBottomGolf.com, No. 308 in the Internet Retailer Top 500 Guide, generates total online sales of about $22 million of which about 20%—$4.4 million—still comes from listing golf equipment for sale on eBay. "When we got started we wanted to outsource 100% of our technology so we didn`t have a server in the room," Rath told attendees during a workshop session, "You and the Third-Party Platforms." "EBay helped us acquire customers."
Despite the lower start-up advantages of selling via an online auction, eBay also presents some disadvantages. "You are basically on your own with customer service," Rath said. "The fee increases also never seem to cease and there is still no true shopping cart experience. Customer service costs are also more expensive.
"We`ve found that eBay customers are generally more needy and less experienced with Internet shopping. Our eBay customer service costs are three times higher than on our own web site."
Today, RockBottomGolf.com leverages its eBay buyers into customers for its own web site. "We`re converting eBayers to RockBottomGolf.com, but there are always advantages to selling on eBay," he said. "It`s still the greatest liquidation channel in the world."