Going Pro on eBay
April 3, 2000

If you want to buy a Donna Karan sweater or Prada bag on the Internet, there are a couple of options. You could check out boo.com, the ambitious London-based fashion site, or Bluefly.com, a site for deals on designer goods. Both of these well-funded sites sell designer and otherwise hip and trendy clothes and accessories at lower prices than you'd find at department stores like Barneys or Bloomingdale's. Then there's Rich Birnbaum, a guy who operates a small company called Wear America. Every day, Birnbaum drives from his suburban home to his small office in Englewood Cliffs, N.J., and puts between 150 and 200 items of designer clothing and accessories up for sale on eBay and other auction sites. Birnbaum's got great prices on Armani shirts, Fendi bags, Gucci loafers, Calvin Klein coats and Ralph Lauren sweaters. A one-man Loehmann's for the Web.

If you think eBay is still just a glorified flea market where people sell an unimaginable range of random collectibles, check this out. Unlike lots of people who get the eBay bug, Birnbaum didn't start auction selling because he unearthed a bunch of stuff in his attic. Up until a year and a half ago, Birnbaum had an old-fashioned business as a clothing distributor. But because of changes in European Union laws about the gray market in which Birnbaum was selling, he decided to move online. He began selling last January, and by the year's end he'd racked up $1 million in sales. And that's just the beginning. As Birnbaum will be the first to tell you, he has big plans. In two years, he wants Wear America to be doing $30 million in sales.

When Birnbaum decided to migrate his business online, he considered his options. He could open up a dot-com storefront like the legions of other small businesses out there. But that would mean spending lots of money on marketing to get customers. "Bluefly and Boo are spending tens of millions of dollars on marketing and advertising to build a brand, but meanwhile no one's actually created a brand that stands out yet," says Birnbaum.

Then he considered eBay, where the only customer acquisition costs involved are the listing fees ranging from $0.25 to $1.00 per item. On eBay, the markets are already there and customers automatically come to you. Or at least they did to Birnbaum. He's now doing 700 to 1000 auctions a week, of which about 75% result in a sale. Birnbaum sees eBay not just as an auction site, but as a new and unheralded Internet sales channel for small businesses. "Auctions are the cheapest way to get a customer," says Birnbaum, who sells a few items on his Website WearAmerica.com, but floats most of his goods for sale on auction sites. Birnbaum is able to do such volumes, he says, thanks to an auction management service startup called Andale. Wear America is a bare-bones operation consisting only of Birnbaum's brother and the part-time services of several high school students and retirees. Since he started using Andale, Birnbaum says he's improved the efficiency of his business by leaps and bounds. With Andale, he can automate the whole process of selling his products. Birnbaum can keep track of inventory in ways he'd never be able to with an Excel spreadsheet. He can automatically take items that don't sell and put them up for auction again or sell multiple items of the same products by specifying when he wants the listings to go up. I met Birnbaum at a dinner in which Andale honored several "power sellers" with interesting stories.

Many of Birnbaum's customers are residents of towns you've never heard of – people who lives in rural or less-than-cosmopolitan areas and have no decent way of getting their hands on cashmere Donna Karan sweaters or Gucci muscle tanks. He figures he gets a lot of business through word of mouth. At least that how he explains shipping 12 orders last month to Worthington, Minn., (population 9,977) and seven orders to Big Spring, Texas (population 23,093). Birnbaum's most popular sellers are anything Prada and, if you can believe it, S.T. Dupont lighters, which retail for $1,200 but which Birnbaum sells for $350 to $750.

"If you're out at a bar or a club and you light up a $30 cigar you want to have a nice lighter," he explains.

Birnbaum's probably never going to give Bluefly or Boo a real run for their money, but he could wind up putting his kids through college and buying a nice dream home or two with the all the money he's looking to make on auction sites.

And you thought eBay was just for Pez dispensers.