Is eBay a Good Partner for VARs?
eBay is wooing the IT channel. The drums of the tech press corps have been beating ever louder since March. The crescendo peaked Monday at TechXNY.There, with considerable fanfare and a half-day seminar for resellers, eBay unveiled its idea of how VARs can turn used equipment into profits.
The centerpiece of the long-heralded plan is something eBay has dubbed its "Asset Recovery Center," immediately trumpeting the company's ignorance of the reseller community and the used IT equipment market. "Asset recovery" is several steps removed from eBay's business of facilitating sales of used (and new) goods.
Asset recovery is the business of separating the most valuable components of used goods from their worthless parts, either reusing or selling the good stuff and disposing of the trash in a legal and environmentally responsible manner.
Most of the profits and expenses lie in the separation and disposal ends of the process. eBay can only facilitate sales. So, the question becomes, "To whom can an IT reseller sell used goods via eBay?" The answers are two, and neither is very profitable.
Genuine asset-recovery services take lots of used hardware off the hands of resellers—whose customers don't know what to do with their washed-up hardware and expect the guy who sold it to them to take it back, or who insist upon this favor as a condition of selling them new hardware. Full-service asset-recovery firms, those capable of the separation, selling and disposal functions described above, are rare compared with the numbers of resellers and their customers.
When sellers are plentiful and buyers are scarce, profits are nearly invisible. Add eBay's fees to the transaction, and profits can become visibly negative. So who, besides eBay, benefits from an Asset Recovery Center? Its namesakes, of course!
"Disposition partners"—a rare euphemism that eBay apparently borrowed from the business liquidation auction industry—stand to benefit from an increase in the number of used equipment sellers. An Asset Recovery Center where buyers and sellers can find each other is no more useful to sellers than Goggle.
It is the disposition partners who have difficulty locating resellers with used hardware for sale.
eBay "is planning to market the availability of its [Asset Recovery Center] service to solution providers to introduce traditional suppliers [resellers] to so-called disposition partners," according to an eBay news release.
"VARs said the eBay trade-in program, which will be run with Dealtree Inc., represents one of the biggest new opportunities at the show," declares a recent story on eBay's reseller efforts. Yet nowhere in the rest of the story can one find a single VAR quoted as saying he will even try the Asset Recovery Center, let alone hailing it with open arms.
Instead, we hear from David Stern, an eBay senior category manager; Paul Fletcher, president of Dealtree, the auction management and logistics firm anointed to "run with" eBay's Asset Recovery Center; and Eric Crawford, described as a partner in "Nashville, Tenn.-based" Essex Technology Group, which is indeed an IBM Premier Business Partner—but it's not the firm working with eBay.
Crawford instead works at Essex Technology Group of Nashville. This is a liquidator of distressed consumer-products inventories, including digital cameras, TVs, housewares, car audio components, "grab boxes," and oh yes, "laptops, PDAs, and desktops." Now, Crawford's words begin to make sense.
Essex Technology Group, the IT solution provider, is headquartered in Rochelle Park, N.J., with eleven other New England locations and none in Tennessee.
"Instead of VARs liquidating their customers' assets for 20 to 40 cents on the dollar, we can get them 50 to 60 cents on the dollar," Crawford says. One looks in vain for a VAR to confirm this claim.
So much for eBay's Asset Recovery Center. Let's move on.
The other eBay channel available to resellers is the same one that my eighth-grade son uses to dispose of old video games and get cash for new ones: eBay's direct sales and auction service. How well-suited is that for VARs?
Here's a clue: eBay "seller assistants" typically charge about 30 percent of an item's sale price, plus expenses for eBay selling fees and possibly PayPal fees, for doing virtually all of the work involved in an eBay auction or fixed-price sale. If you do it yourself, here's what you can expect.
The labor, if you want top dollar, includes sprucing up the item; photographing it from the most flattering perspective(s) possible; itemizing the item's features, benefits, wear-and-tear, missing parts and/or user documentation; researching the market price of similar items; completing eBay's five-page auction listing input form; answering any e-mailed questions from prospective bidders; collecting payment if the listing is successful; and packing and shipping the item to the buyer. This to-do list and the going rate for its performance should give you pause.
Would it be more profitable to just call any asset-recovery service in Google and have them haul this stuff away? Only you can answer that question, and you should before selling anything on eBay.
David Hakala is a veteran technology journalist and eBay seller based in Denver. He is writing his first book in more than 10 years, under the entirely too long working title, "The Kingdom and the Power and the Glory of eBay: How and Why 'The World's Online Marketplace' Succumbed to Fundamentalist Right-Wing Nut Jobs, And What You Can Do About It." He can be reached at email@example.com.