Across the wasteland of failed Internet B2B marketplaces, there is a small-but-hardy sprout of new growth occurring on eBay, a site more associated with comic book collectibles than the latest electronic components. Large electronic manufacturers such as Sun Microsystems, IBM and Dell Computer are selling products on eBay. Motorola chose the marketplace to launch its V60 cell phone. According to Todd Ludwak, eBay's director of computer categories, the San Jose, Calif. company is logging $2.3B in domestic sales of electronic products, $3.5B globally.
eBay's electronics trade isn't all game platforms and low-cost DVD players. Ludwak explains that Dell Finance uses eBay to unload end-of-lease computer systems. "Dell finance is one of our biggest customers," said Ludwak. He also noted that eBay will launch a genuine B2B marketplace on its own in early 2002 as a response to the growing industrial activity on the site. "The best ideas on eBay bubble up from the community," said Ludwak. "So we dedicated resources and added structure to speed the velocity of this development." The B2B marketplace, accessible directly at ebaybusiness.com, will target small- to mid-size companies.
Many electronics vendors use eBay as a way to troll for customers. Mike Sheldon, vp of operations at Network Hardware Resale, a Santa Barbara, Calif.-based company that sells new and used Cisco networking products, says he lists equipment on eBay to find customers who often end up purchasing the products directly. "We use it more for marketing than actual sales," says Sheldon. He notes that 10 to 15% of his new customers find the company via eBay. Yet because network products are configurable, the sale is usually completed offline.
Many of Sheldon's customers are engineers studying for Cisco's certification. They buy used equipment to create a lab for training purposes, since it costs thousands less than new Cisco equipment. Sheldon noted that sales originated on eBay add up to a hefty total. "We get five to ten million dollars per year of new business from eBay."
At Phoenix-based electronics distributor Avnet Inc., design engineers were at first doubtful when told that many of their colleagues were clicking on to eBay to purchase equipment. The skeptics quickly checked for themselves and discovered Xilinx FPGAs on eBay were selling at hundreds of dollars below Avnet's price for the equipment.
Jeff Ittel, president of Avnet's chip division, Avnet Cilicon, warned that shopping FPGAs online was not a safe way to acquire complex products. "Engineers purchasing products such as FPGAs and other highly complex semiconductor components through an auction like eBay are taking a big risk," said Ittel. "By sourcing these components through eBay, they may get a better price up front, but they don't get the benefits of the kind of support they would get if they bought it through Avnet Cilicon or from the manufacturers."
Ittel believes eBay is more suited for consumer electronics sales than for selling equipment that requires ongoing design and support work. "eBay is fine for Christmas presents," he says.