Manufacturers use online markets as sales outlets
When Eric Gantly went to trade in his $300,000 laser-cutting machine' for a newer model, the manufacturer told him it was worthless, and offered him $5,000 for the spare parts.
So Gantly, president of Frigo Design, Inc. in Brewerton, posted the five-year-old piece of equipment on eBay. Within one week, he sold the machine for about $50,000, he says.
Gantly and other Central New York-based manufacturers are using online markets such as eBay and its "Manufacturing & Metalworking" category to buy and sell both new and used manufacturing equipment.
Frigo Design manufactures custom-built frames and panels for appliances (for example: covers for refrigerators to match them with cabinet patterns and colors). The firm began selling its products on its Web site (www.fhgodesign.com) in 2001, and started auctioning its goods on eBay soon after, Gently says "[eBay] gives people another avenue to find us," Gantly says. "People looking on eBay are looking for a specialty product or a bargain."
The sale of the laser cutter was the only time Frigo used eBay to sell its used equipment. Providing the ability to locate niche manufacturers in need of used equipment for their operations is a significant draw for eBay's Manufacturing & Metalworking category, says Benjamin Hanna, senior manager of eBay business.
In the second quarter of 2005 eBay sold an average of about 350 welding machines, 300 toolholding products, 100 end-mills, 100 micrometers, 70 pieces of metalworking equipment, and 30 industrial sewing machines per day.
About 50 percent of Bameveld-based Hud-Son Forest Equipment's revenue is generated through its online operations, says Christopher Sharrow, who deals exclusively with the firm's Internet sales.
Until Hud-Son began offering products on its Web site as well as the sites of eBay, Yahoo!, and Amazon, the firm's sales came exclusively from its catalog and trade shows, Sharrow says. Today, these avenues generate only about half of the firm's sales, and that number is steadily decreasing.
Soon after Hud-Son began offering online sales, the firm stopped using Amazon, because the site lacked the customer base to make the price of posting products cost-effective, Sharrow says.
"Amazon is just much smaller and not geared to what we deal with," Sharrow adds.
Amazon's equipment sales are limited to office supplies, computers, and electronics. A search for Hud-Son Forest Equipment on Yahoo! returns 43,800 hits, and a Google search for the firm returns 1.9 million Web sites, many of which lead to the firm's eBay products.
eBay has 30,000 manufacturing items listed on its Web site on any given day, Hanna says.
Hud-Son manufactures and sells logging equipment and tractors to a variety of customers throughout the United States. The firm also salvages and resells snowmobiles. Hud-Son's clients range from large corporations to individual proprietors and homeowners, and eBay helps the firm access the breadth of customers it needs to reach, Sharrow says.
While eBay has been around since 1995, the corporation launched its eBay business & industrial division in early 2003, after monitoring the skyrocketing number of equipment and business-use items posted in the site's "other" category, Hanna says.
"We started saying: 'look, there's something going on here that we better pay attention to," Hanna says.
In addition to the manufacturing & metalworking category, eBay business includes construction, health care, food service and retail, and laboratory and life sciences divisions, Hanna says.
Of the $10.9 billion of eBay's total merchandise sales in the second quarter of 2005, $1.5 billion came from the firm's business & industrial category. eBay does not break down its sales into business and industrial's sub-categories, Hanna says.