Building your own Web site or using eBay can be the vehicle to sell slow-moving inventory and expand your market presence
Apr 1, 2010 12:00 PM, By Rick Weber
CARNEGIE Body president Richard Sippola said his company examined its inventory a year ago and realized that it had way too much. Company executives decided to sell some products online, focusing on eBay. They got aggressive and watched the money pour in.
“In the last 12 months, we've sold over $100,000 worth of products online,” he said. “This was slow-moving inventory. We made about 10-12% gross profit. Not bad, considering some of the inventory had been on the shelves five to 10 years. Most of our sales occurred in other territories, not Cleveland (their home base). We had sales from England, Canada, Pennsylvania, Hawaii, Massachusetts, Colorado. Over 90% of the sales were outside of our home state. This is an opportunity for you to not only get rid of slow-moving inventory, but expand your market presence.”
The presentation, “Online Sales: Get Your Share,” also featured Layton Truck Equipment general manager Steve Hayes.
Hayes said Layton pondered online sales for about five years before getting active two years ago.
“We had a lot of growth the past five to 10 years,” he said. But the parts department was not growing at the same pace as the rest of the company. We looked at that and said, ‘Why is that happening?’ Sam's Club and Home Depot were selling toolboxes. Years ago, pickups on dealer lots didn't have hitches on them — and now they all come with hitches and brake controls.
“We saw people buying stuff online and not buying from us. So we said, ‘This is something we think we need to get into. How do we want to get into it?’ The first thing we said was, ‘Let's develop our own Web site.’ The other option was eBay.”
Hayes said there are advantages to creating your own Web site: you control the look and feel of the site; save the fees paid to other sites; can integrate with your current accounting platform; know that it works well for customers who know who you are; and that there's no competition once you have them on your site.
The disadvantages: there is a programming and development cost, and a cost to drive traffic to your site; you must maintain your own server or pay for that service; customers may not trust you if they don't know you.
“You have to get people to your Web site,” Hayes said. “That's something you have to spend money to do if you develop your own Web site.”
He said software development can run from a few hundred dollars to the tens of thousands.
“You see ads on TV: ‘Get your Web site running in two days for $25.’ Realistically, our cost was between $10,000 and $20,000. The up-front cost for the server is $2500, plus maintenance fees to keep the server running, and connection fees.”
Driving traffic
How do you drive traffic to your Web site?
“Google Ad Words is an inexpensive method,” he said. “You can set your budget and pay on a cost-per-exposure basis. Depending on what you're selling, they will give you a cost per exposure or cost per click. You say, ‘OK, it's a dollar to get somebody to click on. At the beginning of the day, when somebody searches ‘snowplow’ or whatever you're trying to sell, you come up with a sponsor list. The cost of that referral comes off your daily budget. When you have spent the budgeted amount for the day, your sponsored listing will disappear. That's an effective tool. We've used it well to drive people to our Web site.”
Then there's the option of using an existing Web site. The advantages: there are no programming/development costs and no Web site-hosting costs; customers already shop there; and they may perceive additional security if they are familiar with the site.
“If they don't know you, they don't know what you will do with their credit card information,” he said. “That's a valid issue for a lot of online buyers. That's something the online sites have addressed very well. The biggest thing we've found is that the customers are there. Go where the customers are.”
The disadvantages: fees may be charged, because the existing sites are all in there to make a profit; you can't control the policies in place so you have to conform to them; your competition may be using the same site; and there is negative feedback if you don't perform.
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