On-line bargain basement

April 1, 2003
Well-known website expands into the realm of manufacturing equipment.

Well-known website expands into the realm of manufacturing equipment.

By Charles Bates
senior editor

The eBay Business site offers items in three main categories: industrial equipment and supplies (including metalworking), business technology, and wholesale lots.

Two grinders and a large lathe are three of the machines Gary Reed, president and owner of Lock-NStitch, bought on eBay Business.

Danny Rail and Greg Smith of DDTI show off two of the five drill presses purchased on eBay.

Greg Smith, president of DDTI, credits his company's transformation to shopping on eBay Business. Here, he works with a lathe recently purchased on the site.

For one electronics contractor, a website helped it stock its entire facility with machines and disposable tooling at a savings of up to 90% off manufacturer prices. Another company completely equipped its machine shop at pennies on the dollar as compared to retail. And for a third company selling industrial supplies, posting products on-line netted an additional $3 million in sales.

Most associate eBay as an auction site for such things as sports memorabilia, autographed merchandise, and other collectibles. But the site's new eBay Business section is gaining popularity among companies as an on-line marketplace for business-related products, including those used in manufacturing.

According to Greg Smith, president of DDTI, eBay Business has allowed his company to change the focus of its business. The Gainesville, Ga., company was originally an electronics contractor that designed prototypes for OEMs. But one of its customers wanted both design and manufacturing services on a project, so Smith went shopping for equipment.

Knowing secondary-market prices would be too high, he logged onto eBay's metal working category and made some key purchases. He bought 400 pieces of industry-standard tooling worth $100,000 for $15,000; a used CNC mill with an MSRP of $150,000 for $17,000 (shipping included); three electronic panels valued at $30,000 for $10,000; and a $12,000 CNC plasma cutter for $5,000.

"We also buy all our computer systems, laboratory equipment, Allen-Bradley control components, sensors, electrical components, valves and fittings, CNC tooling, and even rubber bands on eBay," says Smith. "I tell everyone who visits our shop that it is 99% eBay."

For Lock-N-Stitch in Turlock, Calif., eBay Business helped expand the company's manufacturing capabilities to keep more work inhouse. This manufacturing and service repair company, which specializes in cast metals, was spending $60,000/year on subcontractor fees for services it couldn't directly provide customers. "Machinery costs were too prohibitive," says Gary Reed, owner of Lock-N-Stitch, "and we didn't have the capital necessary to expand the business." However, the company could afford the equipment listed on eBay to stock a new machine shop and eliminate subcontracting costs.

A company that knows what it's lookingfor and is comfortable with buying-good used equipment can do extremely well on eBay, says Reed. He estimates that in the past year, his company paid $50,000 for nearly $700,000 worth of equipment and supplies. Some of Reed's bargains include a Cincinnati Monoset tool cutter/grinder for $2,200, a 35-hp screw air compressor for $780, a CNC tool/cutter grinder that cost $ 7,200, and three air-filtration units for $800.

Within eBay Business' three main categories — industrial equipment and supplies, business technology, and wholesale lots — there are more than 500,000 new business-item listings each week. Among these are over 20,000 in the metalworking categoriesof tooling and accessories, machine tools, components, metalfabrication equipment, and inspection and measurement.

The site benefits both buyers and sellers, says Jordan Glazier, general manager of eBay Business. While the site offers buyers selection, convenience, and cost savings, it lets sellers effectively expand their normal geographic areas and gain access to a universal audience and difficult-toreach customers.

Reliable Tools in Irwindale, Calif., sells about 250 items per week on eBay Business, and owner Mariano Ruiz estimates that 60% of overall company income is a result of the website. In fact, Reliable employs 12 people just to handle its eBay business for selling the company's machine-shop tooling, inspection equipment, electronic test equipment, and laboratory surplus items to customers worldwide.

Companies like DDTI, Lock-NStitch, and Reliable Tools are three examples out of the 10,000-plus successful transactions happening weekly at From the approximate 3,000 machine tools (including 800 lathes), 2,500 cutting tools, and 2,000 welding items listed at any time, a machine tool sells every 33 min and a piece of welding equipment every 11 min.

Traditionally, companies sell more used and refurbished equipment or lastyear's models on the site. This type of equipmentis a perfect match for most eBay buyers, which are typically small businesses with less than 25 employees and more inclined to purchase used equipment. But the site also has new equipment listings, especially in the tooling section, and most OEMs consider eBay an alternative, complementary channel to existing sales venues.

Many sellers are business and individual end users, equipment dealers, and manufacturers. U.S. and foreign brands available include Miller, Bridgeport, South Bend, Hardinge, Starrett, Mitutoyo, Kennametal, Monarch, Atlas, and Haas. During the past two years, eBay's business and industrial area has grown 90% annually. Metalworking, says Glazier, is the largest category with a run rate of $45 million in gross merchandise sales.

What's the secret of the site's success? "A lot of it is contributed to eBay's existing base of avid users and a solid technological platform on which to build the Business section," says Glazier. The site, as a whole, boasts 61 million registered users and spans over 18,000 categories.

The eBay Business section provides the same features, services, and functionality of traditionaleBay. Besides the familiar-auction-type environment, the site offers a buy-it-now feature where items are listed at a set price. This format represents about 25% of metalworking listings, and its transactions are fast, benefiting shops needing critical equipment "yesterday."

Another feature of the site is the seller's feedback rating. Every seller has a feedback score based on comments left by anyone who has done business with them on eBay. " Current buyers learn how sellers have dealt with past customers," says Glazier. "Sellers are forced to wear their reputations on their sleeves, which makes for selfregulation in the marketplace."