Live video interview with Brendan Elias on the Kerri Anne Show
Source: The Australian Financial Review
The New Internet Entrepreneurs
Selling goods through global marketplace eBay is proving extremely lucrative to a new breed of online dealers.
Brendan Elias has the kind of job you might see advertised on a sheet of A4 taped to a telegraph pole: earn thousands working just hours a day.
But in Elias’ case, it’s hundreds of thousands of dollars for just a few hours’ work a day. And the job wasn’t advertised on a pole. It wasn’t advertised anywhere.
Elias, a Commerce/Law student at the University of NSW, is one of growing breed of second-wave internet entrepreneurs, who has started a business within one of the fastest-growing economies in the world: the online auction site, eBay, a global marketplace where more than $US34 billion ($44 billion) worth of new and second-hand goods changed hands last year – 44 per cent more than the previous year.
In his spare time, Elias runs a store on eBay he calls the Electronics Surplus Warehouse, that sells gizmos like portable electronic breath testers and “pocket bikes” – tiny, petrol-powered motorbikes for kids – that, for the most part, he’s imported directly from manufacturers in China. As the only middle man in distribution chain, he says he’s able to sell at a healthy 50 per cent or, in some cases, 100 per cent net profit, and still come in cheaper than retailers.
Ebay estimates that, in the United States, close to half a million people earn their entire living this way: setting up electronic shopsfronts on the site that, for minimal start-up costs, can instantly address a huge national or, if they choose to ship overseas, global market.
Though eBay’s been around since the very start of the dotcom boom – it was founded in San Jose, California in 1995 – it’s still enjoying the staggering growth rates you’d only expect from a start-up. Last calendar year the number of items listed for sale, either by auction or, increasingly, for immediate purchase, grew by 45 per cent, according to eBay’s figures, so that now there are 44 million items for sale on eBay sites somewhere in the world at any one time. An estimated 4 million items are sold on any given day.
A handful of those are Elias’. His business has expanded from the spare room in his house to rented space in a warehouse in the Sydney industrial suburb of Botany, where he has completely outsourced the handling of the bigger auction items like the pocket bikes. He’s even hired someone to handle listing the goods on eBay, and responding to customer queries.
“This is why it’s cool. I don’t see the goods, I don’t see the customers. I don’t even see the money. It just appears as ones and zeroes in my bank account,” he says “All I do is send an email, and the bikes go out.”
Alex Popyrin was an investment banker, and before that an executive at an internet service provider, before he decided to pack it in and set up a store, Sold Smart, on eBay.
Unlike elias, whose business “just evolved” after he sold some second-hand DVD players online, Popyrin took a more systematic approach, hiring programmers and developing software that interfaces with eBay, that automates all of his back-end processes.
His business, which does about 90 per cent of its sales through the auction site, specializes in selling goods on consignment for manufacturers in Australia and Asia. For a commission, Sold Smart simply lists goods for auction on behalf of its clients, and handles the auction process. It employs 12 people, and sells about $8000 worth of goods every day, including weekends, he says.
Part of the appeal of the eBay stores, says Elias, is that they can supply goods to customers who don’t have access to big metropolitan retail outlets. More than 50 per cent of the auctions he runs are won by people in regional and rural Australia, “who don’t mind paying for the postage”, he says.
The low barriers to entry to the world of online auctions is both a blessing and a curse. Sellers like Elias and Popyrin say that as soon as an item starts to become popular on eBay, the market can quickly be flooded and profits evaporate.
“A year ago I was doing a lot of electric scooters, and then everyone was doing electric scooters, so I’m out of it now. There are just too many, “ Popyrin says.
In January, eBay worldwide raised some of the fees it charges to list goods on the service, leading to an outcry from many eBay stores, which in the US have formed a coalition known as the Professional eBay Sellers Alliance.
PESA said it was “dismayed” at the fee increase, which for full-time stores would mean an average 22 per cent increase in eBay costs.
“For sellers who often operate on exceedingly low margins, the substantial increase in fees will dramatically affect their business.” it says in a statement “ That is unprecedented and will have broad marketplace implications.”
The biggest implication for eBay is that some full-time sellers, complaining that eBay is abusing its near-monopoly status, are looking to new markets to sell their goods.
eBay’s competitors, such as ePier.com and iOffer.com, report that their numbers are growing, fed by dissatisfaction among some eBay sellers. Another online auction start-up, Wagglepop.com, says that most of the large-scale sellers it will have when it launches next month will be eBay defectors.
But most of those competitors are focused on the US market, leaving eBay sellers in Australia with far fewer options for defection. The main competitor to eBay, Yahoo!’s sold.com.au, was closed in late 2003, and that internet address now takes buyers to eBay’s Australian site.
Another site, stuff.com.au, says that it’s now considering a “change of emphasis” in the listings business that could accommodate the virtual stores of full-time sellers defecting from eBay.
Dion Weston, an executive director of HotHouse Interactive, which operates stuff.com.au, says that the change there is not in direct response to the increase in prices at eBay, but more a response to the trend in full-time selling, where “there’s now more real commerce taking place online, rather that just lifestyle enhancement”.
Still, he admits, stuff.com.au is just a “modest operation” compared with the “juggernaut” eBay.
Back at eBay, Elias says that he’s not too bothered by eBay’s prices anyhow, because most of the money he pays is in the form of commissions on completed sales.
“If it weren’t for eBay, I wouldn’t have made the sale in the first place, so I don’t mind so much”, he says.
Source: Off to work, the ebay way
First lured to eBay in search of a Monkey Magic DVD he couldn’t find anywhere else, Mr Elias recognised an opportunity to earn some cash while he studied for his law degree at the University of NSW. He snapped up 100 DVD players on eBay in a bulk auction and then sold them off individually. Despite 40 of the players not working, he doubled his money.
Next, Mr Elias focused on auctioning offbeat items such as alcohol breath testers and digital pedometers. Now he has two people working for him, a warehouse for his stock and claims he works less than two hours a day. These days he sells small all-terrain vehicles (ATVs) and petrol-powered scooters.
“I don’t see the goods, I don’t see the customers and I don’t see the money. I just see it in my bank account,” Mr Elias says.
Due to finish his law degree this year, Mr Elias has no plans to practise law. “All my friends are looking for those coveted (graduate) positions but eBay’s a better way to make money. I’m making more than I’ll ever make as a lawyer.”
It’s truly a global trade. The Australian Customs Service director of cargo assurance for NSW, Doug Greaves, estimates eBay purchases now constitute 60 per cent of inbound parcels processed at its Sydney gateway facility. While it’s not an official statistic, Mr Graves says the growth has been remarkable.
Customs processes all incoming parcels, with some unexpected results. One bidder recently imported a cured human head bought on eBay as an artefact.”
Source: The New Generation Of Entrepreneurs
Young, entrepreneurial Australians with little more than a computer and a digital camera are taking their futures and their finances into their own hands and creating successful virtual business ventures on eBay.com.au.
Australians in their 20′s and 30′s are quitting their day jobs and building businesses on eBay where business start-up costs are lower than traditional businesses and the financial rewards are great. Some report that their eBay business, which required minimal capital to get off the ground,is making them more money and giving them more freedom than their five years of university training or corporate jobs could ever offer. Selling full-time on eBay.com.au to an audience of 135 million members worldwide – a customer base far greater than any offline retail environment – can result in cash flow beyond many sellers’expectations.
The top young eBay entrepreneurs in Australia are known to make upwards of $12,000 profit a monthand are selling everything from brand new plasma screen TVs to home saunas!
Brendan Elias, 23 from Sydney, is close to completing his law degree however has turned his attention to eBay as his primary source of income. “From my experiences with eBay.com.au and the booming growth in online shopping, it seemed to me that my potential income as an eBay seller far outstripped my potential income as a lawyer.” Brendan travels internationally to source inventory to sell on eBay.com.au. He sells everything from pocket bikes, dune buggies, pedometers, alcohol breath testers and electronic scooters.
A regular at exhibitions and trade shows in both Asia and North America, Brendan’s winning edge is a result of selling unique and trend driven items on eBay at hugely competitive prices. An eBay business can offer Australians substantial financial rewards in conjunction with flexible work hours. Not only that, eBay entrepreneurs: • Feel empowered by building their own successful business from scratch with limited capital • Often report experiencing greater job security (in a world of retrenchments).
Throughout the world an increasing number of people are using eBay to generate a living, a trend that seems to be spearheaded by the USA. “We’re seeing an emerging trend of Australians using eBay to generate their primary source of income. We believe this is a mirrored effect of what is happening in the US where more than 430,000 people are making a full-time living selling on eBay,” said Angie Cursley, eBay Australia Spokeswoman. eBay.com.au provides the perfect marketplace for everyday Australians to launch a successful business and escape the confines of the 9 to 5 rat race.
Source: Testing Suppliers, & Sourcing Tips
Brendan Elias buys directly from factories in China but still uses eBay first for product ideas and lifecycle. Elias looks at eBay listings from non-professional sellers selling single new items or second-hand items to get ideas of items that would be worth sourcing and selling commercially. He currently specializes in All Terrain Vehicles (ATVs) and pocket bikes but warns “don’t delude yourself with products which have ended their product cycle. A couple of years ago aluminum scooters were selling for $150. Now they sell at the Bondi Market for $30. If you were buying aluminum scooters now for resale, you could be making a loss.”
Network through eBay
While it is eBay policy that if an item is listed for sale on eBay it cannot be sold offline, once there is a relationship between buyer and seller there is no prohibition on them contacting each other directly in the future.
Elias adds “three years ago no one was selling digital pedometers on eBay. I realised it would be great to sell the item commercially, and found a seller selling small volumes on eBay who didn’t know how to market them. I bought one from him, and after that I paid him to buy a large quantity of the pedometers for me from Canada, and they were a huge success for me.”
Test potential suppliers
There is no foolproof way to check whether an overseas supplier is genuine. Before handing over hard-earned cash, Elias recommends reading all communications from the potential supplier thoroughly and critically. Thoroughly ask questions to avoid any misunderstanding, and if the responses fudge around the issue, or do not really answer the questions, and then it is wiser not to proceed with that supplier.
Brendan Elias points out that there are fraudsters who advertise on internet databases with links to fake websites that when checked do not work properly. “Investigate their website, click through the links, and if the supplier doesn’t have a working website then you should be suspicious.”
Elias believes that speaking the local language is a critical success factor. If you don’t have the language skills it is better to arrange someone who can ask the questions for you, rather than relying on the overseas supplier to communicate effectively in English. “A small expense here could save you thousands later,” he says.
Consider drop-shipping cautiously
Elias bases his success on controlling distribution and product as much as possible. “It’s all a question of quality control. I don’t want to put the quality of items I am selling in the hands of drop-shippers. On eBay, people buy based on my feedback rating; my reputation is everything. I don’t want other companies to control how my customers see me in terms of post, the quality of the item, and any delays.”
Observe legal requirements
Elias warns, “don’t take action before thoroughly researching”. This research includes the applicable taxes and any restrictions on imports. “It may seem obvious but it is important to check out applicable Customs duties before you buy. There can be exorbitant duties on clothing, textiles and footwear.”