ShareThisBy ROGER FILLION
Monday, November 06, 2006
Thomas Burns is among the tens of millions of people who make the vast eBay economy hum.
Surrounded by shelves crammed with around 100,000 record albums, Burns auctions vintage vinyl on eBay to make a living. He knows the payoffs . . . and pitfalls.
Burns works from a 2,000-square-foot space overflowing with jazz LPs, CDs, comics and the like. He sells to customers as far away as Australia and Brazil.
The payoffs: Burns reaps about $100,000 a year in eBay sales, through auctions and fixed-price deals. And he can reel in that money from a remote mountain town nestled near snow-capped peaks.
The pitfalls: Ironically, eBay's huge success since its start in 1995 has made it tougher for those such as Burns to make a living from the site.
So Burns is among those who've turned to other sites such as GEMM.com and musicstacks.com to sell some of his records. But he's hardly abandoned eBay.
"It is still one of the biggest sites for collectibles," says Burns, just back from a trip where he bought two private collections of vintage jazz vinyl. "Most of the stuff I bought is going on eBay."
EBay is one of the Internet's greatest success stories, an online phenomenon that began as a way to make some cash after cleaning out your attic or garage.
It's evolved into the world's largest online marketplace, a global bazaar where virtual storefronts dominate the landscape and hundreds of thousands of sellers, big and small, use it to make cash. Among the items sold this year: Barry Bonds' 715th home run ball and oceanfront property in Mexico.
But even as it has become an economic driver, eBay _ which had $5.6 billion in revenue over the past 12 months _ is enduring growth pains. Wall Street has hit the stock, which has dropped about one-third in the past two years. Sales are slowing, and rivals abound. Sellers gripe about fee increases and lower selling prices.
That said, Thomas Burns is among the many sticking around. He turned to eBay in 1997, about a year before the company went public and became a Wall Street darling.
At the time, Burns was selling records from a store in an Evergreen, Colo. strip mall. But after checking out eBay's Web site, Burns decided to give it a whirl.
It not only "looked fun," recalls Burns, but records on eBay were going for as much as four times the price he was fetching at his bricks-and-mortar shop.
Burns' business hit pay dirt. "Right out of the gate we were doing $2,000 a week."
Fast-forward to today. Tens of millions more people have flocked to eBay, many to sell records, Zippo lighters, cars, you name it.
The result: lower prices for items sold. Numerous eBay-engineered fee increases also have cut into sellers' bottom lines. And frequent changes in eBay's sales policies have forced people such as Burns to bob and weave to stay in sync with eBay corporate in Silicon Valley, Calif.
"EBay has been much more difficult as they have grown," says Burns. "From 1997 through 2000, we would put up 30 to 50 items a week and bring in a minimum of $2,000 a week. Now, I put up hundreds of items a week to make the same amount of money."
Burns is among some 1.3 million people globally who make a full or partial living hawking goods on eBay, according to a June ACNielsen International Research survey done for eBay.
Worldwide, eBay counted 211.9 million registered users as of Sept. 30. As a national population, eBay's online community would rank No. 5 worldwide, behind China, India, the United States and Indonesia.
At any one time, about 105 million items are listed for sale. The value of goods sold totaled $44.3 billion in 2005.
"EBay is one of the great examples of globalization," says Ken Hillis, professor of media studies at the University of North Carolina and an editor of the book "Everyday eBay."
The eBay economy has given birth to scores of spin-off businesses, too.
There's the "professional closet cleaner and organizer" _ in the words of author and businessman Daniel Nissanoff _ who will sort through your belongings and sell the stuff you don't want via eBay.
Other outfits peddle technology to boost the odds you'll win an auction in the final moments of bidding.
And "drop-off" stores will auction your goods for you on eBay. Employees snap a digital photo, write a description and post a listing. And that's just the tip of the iceberg.
"The eBay ecosystem companies are growing by leaps and bounds," says Nissanoff, author of Futureshop, a book on the auction economy.
Forrester Research projects the U.S. online auction market will grow to $65 billion in 2010 from $28 billion in 2005.
Still, eBay's format doesn't work for everything and everyone. A September online survey of 1,225 people conducted by the Web site AuctionBytes.com found many who sell on eBay want to leave for other sites.
"EBay sellers vote with their pocketbooks," says Ina Steiner, AuctionByte's editor. "Right now they're being squeezed on both ends _ higher fees and lower prices."
What's it all mean for eBay's future? Depends on whom is asked.
"It's hard to know where they're going. But I think they're grasping to some degree," says Steiner.
Grasping, perhaps, but hardly sitting still. Last year, eBay bought a 25 percent stake in Craigslist. That gave eBay a firsthand look at classified-style trading.
That's just one of many strategic bets. To expand its reach, eBay has bought online exchanges here and abroad, the comparison shopping service Shopping.com, and online apartment listing service Rent.com.
