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The humble beginnings of an eBay Powerseller

(Posted August, 2003):

OK, I admit it. I'm obsessed with computers, with eBay, and with making money on the Internet. I've worked with computers since the mid-1960's, when I got hooked back in college (I guess that sort of dates me, doesn't it)? But the length of time that I’ve spent with computers doesn't give me an advantage over you when it comes to Internet success, as you'll find out. I'll give you a brief bio of myself, it might just encourage you to realize that you, too, can be successful with online auctions and/or the Internet.

When I got out of college (actually business school, no formal degree), I knew how to program computers that are now obsolete. Back then a computer took up large rooms, sat on raised floors so that all the wires could be hidden, and had much less power as far as memory or speed than the computer on your desk or lap. For $10,000 a month or so, you could lease a machine that had 64K memory and could crank out paychecks, invoices, accounting and inventory reports, and a few other repetitive tasks. In order to keep that $10,000 a month computer going you had to have a staff of people to program, debug, operate, and maintain the beast, as well as other people to punch little holes into cards that would feed the information into the computer through a punch card reader. Plus of course, people to manage the people.

I made a living for several years programming computers with languages that are relatively obsolete now. It's sometimes fun to look back. In the early 70's, when I was designing computer systems, I remember saying to my boss that the dates we were programming into the systems wouldn't work when the calendar rolled around to the year 2000, since we stored the date with 2 digits. He said not to worry, that was too far off to concern ourselves with, and he was right. He had retired, I had gone down a different career path, and the company had gone out of business well before Y2K became a worry.

Fast forward to 1989. I had become somewhat of a success as a computer consultant. But the language I was skilled in was past its prime. I had to find a new skill or a new career. And instead of starting over and learning a new skill, I decided to go into retail. I opened up a store selling, of all things, baseball cards, which were cheap, fun, and considered a bit of an "investment" at the time. It also reacquainted me with my childhood passion for the cards. I had collected, flipped, put them on my spokes, and all the things that made old cards in mint condition valuable.

For several years, selling cards, and branching out to diversified products like comics, autographs, and whatever I could find to put in our store, paid the bills. I used a PC to communicate on a private bulletin board system that connected me with thousands of other dealers, so that we could wheel and deal on a wholesale basis. I bought and I sold, and the computer was very useful, but nothing magical. At the time, the Internet was used by mostly government agencies and colleges, and the world wide web (WWW) had not been invented. Neither had DSL or cable modems been invented.

Things began to change. Trading cards became more expensive, driving out some of the collectors, and making the "investment" aspect disappear. Where once demand exceeded supply, now the trading card manufacturers had rushed in and printed way too many cards than could be consumed by every man, woman, and child in the U.S. Of course that was originally disguised by the fact that many dealers were speculating and counting on the fact that prices would go up as fast in 1992 as they did in 1985. Unfortunately, since values of collectibles are mostly driven by the law of supply and demand, and since there were probably 100 times as much supply as there was in 1985, and half the demand, times got tough. The people and dealers who remained in the market were banking on the fact that rookie cards of players like Gregg Jefferies would be worth as much as rookie cards of Pete Rose, and that Jose Canseco cards would be worth as much as Mickey Mantle someday. My dealer associates and I all invested in cases and cases of the current cards that contained those players, it was considered a way to get rich.

The bubble burst, though, as all must. It became very depressing to be a card dealer in the early to mid 90's. We were temporarily saved by "fads" like pogs, though, so the nimble stayed in business, waiting for the next wave of speculation which would bring us great success and riches. The truly nimble started to search out future fads. For example, we were early into items like beanie babies, yo-yo's, even hackey sacks. But the real riches weren't so temporary, they were to come from a very unexpected source. Read on.

What-bay?

In 1998, things were becoming very dark indeed for our business. Our little store had continued to expand over the years, we opened in 1989 remember, and at the end of our lease in 1997, we had a rift with our landlord over perceived value of the space we were renting. So rather than pay more for the same space, we found a better, bigger store with a better, cheaper rent a few blocks away with double the square footage. I had no idea what a stroke of luck that would become. But it didn't look so good after we moved in.

Expenses began to mount. To furnish a larger store meant more fixtures such as shelves and display cases. In order to take advantage of the extra space, we had to purchase more inventory to put into the cases and onto the shelves. Cash was going out faster than it was coming in, especially since some of our very good customers didn't seem to be able to find us since we moved, even though we only moved a few blocks.

It was the winter of 1998, cold and dreary, and though I am usually a very optimistic kind of person, I was very depressed about the future. I went so far as to try to figure out the pros and cons of bankruptcy (mostly cons, I'm afraid), and at my age the ability to start a career working for an employer again, in a tight economic market, was none too promising.

On a day when I was particularly depressed, a dealer friend from another town called me to see how I was doing. He had a similar card store and we frequently compared notes. I asked him how he had been keeping busy and he said he had been running auctions to get rid of dead inventory. Now to me, at the time, auctions meant where you would give some stuff to an auction house, and a fast-talking guy would stand in front of a bunch of people and see what he could get for it. I never imagined that something virtually worthless in my store could command any attention in an auction of that type, but I listened to my friend. He went on to say that he was running about 20 auctions a week, and he would get a few envelopes with money in them every day. Huh? 20 auctions a week? Where? How?

He spoke the magic word. Ebay, he said, check out www.ebay.com. I asked him to spell it again for me, and off I went that night to see what he was talking about. I registered that night and just sort of surfed around for a while. I was encouraged because I knew my friend was successful in selling his junk, and I had pretty much the same junk, so I figured I could be successful too. But the more I learned about eBay, the more I got excited. I learned about dutch auctions, which meant that if you had a lot of something, you could sell it to a lot of people at the same time and same price, leveraging the time and effort of listing the auction, while lowering the fees. But what did I have a lot of?

Well, here's how I started. At the time, beanie babies were red hot, so much so that prices had peaked and wholesalers that used to supply me with the hot beanies at a good price that I could profit from, had gotten greedy. It was becoming tougher and tougher to buy low and sell high. However, what I did find was a good supplier of a revolutionary, economical, protector for beanie baby tags. I had set up at some card shows and beanie baby shows, and though I couldn't compete with the big sellers on the beanies themselves, I always seemed to sell out of the tag protectors at a good profit. After doing some searching on eBay, I found that there was one seller on the auctions that sold the same tag protectors as I had, but at about 4 times my cost! And he was selling a ton of them. Ka-ching!

I was so excited that I couldn't sleep. I was tempted to buy a big load of the tag protectors and list them myself at a lower price than the other seller. But what if the other seller lowered his price also? Should I buy the big load or not? I couldn't afford it at the time, but my wife and I decided to go for it. I figured if we were that close to bankruptcy, what's a little more debt to run away from, right? But there was a problem, and that was eBay rules and regulations (even then before they were the Goliath they are now).

In order to do a dutch auction, I had to have at least 10 feedback points. If I couldn't do a dutch auction, the whole plan was useless, or at least not hugely profitable. So I set about selling little things and begging for quick feedback exchanges. Lucky for me, at the time, eBay feedback didn't have to be transaction related, so I found some of my store customers and dealer friends that were registered and asked for some feedback from a few of them. My first positive was on February 7th, and I got my 10th on February 12th, it seemed like an eternity because that's all that was on my mind at the time, getting set up so that I could do dutch auctions.

So there I was on February 12th, 1998, an eBay "pro" with 10 feedback points, a computer, a load of beanie baby tag protectors, and a dream. What would happen? Well, my memory isn't what it used to be, and it seems like a long time ago (5+ years on eBay now as I write this), so I can't provide exact statistics, but my first dutch auction was a huge success. Dutch auctions, and the ability to easily relist an ended auction to just keep doing the same thing over and over again, was the ticket for me. I've never looked back. I remember auctions that had close to 100 winning bidders, many if not most for multiple lots. At the time our main auction was for 55 tag protectors. They came loose in a box of 1000, so we had to count out 55, rebox, tape, label and ship. I had two people that pretty much did that all day long, box after box after box of 55 tag protectors. The postal clerks saw us go from a package or two a week to several dozen a day and just could not believe what we were shipping.

I'm telling this story to tell you how I got started. I started with nothing but a dream and a single product, which fortunately I could get plenty of. I learned all I could and most of all I was so thrilled to make a sale that I treated my customers right. Some of them gave me advice, telling me about similar products that they'd like to see me sell, and in time I did just that. If only I would have had the benefit of all the knowledge that's available today to teach me the quicker and easier ways to avoid the mistakes I was making, it would have been so much easier. So you see, with this site, my mission is to make your life easier, and hopefully help you have more fun and success on the auctions.

Again, don't let my story make you think that you can't do what I did. Of course you can't do exactly what I did. You probably don't want to sell tag protectors (we still sell them but not as many and not as high a price as we did back then). You might not want to do dutch auctions (just as well if you're a beginner, you need 50 feedback points now to start doing that). Many, if not most, eBay sellers do single item auctions, and many do very well. You can too. I'll give you plenty of information in this book to show you how.

My main point in this article is this. At the time I started on eBay, I was in serious financial trouble. I had no prior eBay skills. I was alone and learned the ropes all by myself. And I succeeded beyond my wildest dreams, even considering there were serious disadvantages, such as no training courses, horrendous response times (sometimes the site was down entire days), fewer buyers since eBay was still relatively unknown, and few if any tools available to help a seller. Yes, there is more seller competition now, but there are far more buyers also. If you want to succeed on eBay, you will get a ton of information out of this site. If you want to go another route to make money on the Internet, we'll show you ways to do that also. Of course, you can do more than one thing. I do, I figure why put all your eggs in one basket? In fact as you'll see in other articles, using eBay can be a terrific way to generate free traffic for your web site or advertising for your other Internet endeavors.

--Dennis Becker, MDM Sports