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eBay says that car audio has become a fast growing category for the online auction Web site, with sales last year climbing 110 percent.
eBay began offering mobile electronics three years ago — two years after its launch — but it truly started focusing on the segment a year ago," said eBay consumer electronics GM Gary Calega. Based on the company's fourth quarter sales in mobile electronics, including mobile video, sales are running at an annual rate of $80 million, he said. As a result eBay has started promoting and sponsoring key autosound events such as the Spring Break Nationals in Daytona.
Three months ago eBay also set up a special category for car video and navigation which is "growing very rapidly," Calega said, adding, "We're starting to see a lot of activity there."
Although car audio poses a problem for Internet sales, as it requires installation, Calega said it has the benefit of attracting a core audience of enthusiasts who keep returning to eBay to sell old products as they upgrade.
"What's interesting about car audio is there's a real community. They are real enthusiasts and they like to chat with others who have the same interests and they tell their friends about what they buy and where," Calega said.
Calega pointed to several success stories of early car audio sellers on eBay who have created multimillion dollar businesses through on line selling.
Ikesound.com, which sells mainly 12-volt products, has become the single largest seller on all of eBay, Calega said. Ikesound owner Ike Arvilli said the company, which runs a Web site in addition to an eBay store, could gross $10 million this year with the bulk of that business from eBay sales.
Arvilli began dabbling in eBay sales more than three years ago. He ran a retail 12-volt operation selling at flea markets in the Ft. Lauderdale, Fla., area. "My brother bought a computer on eBay and said, 'go look at it, people are selling what you sell.' So I said, 'here I am selling in 90 degrees, nine hours a day, to a small audience. On eBay, I can sell to someone who lives in Ohio or New York.' So we took one speaker and put it online. My brother conducted the auctions, and I got the product and shipped it." In five months Ikesound was grossing $50,000 a month. Arvilli closed his retail operation, his wife became the full time customer service manager and he rented a warehouse with office space. Today the company has 14 employees.
Another success story is Sound2000B which invested the money it earned on eBay to open a brick & mortar 12-volt storefront in Atlanta, Ga. According to co-owner and marketing manager, Veynep Ceyhun, she and a partner began selling their own personal items on eBay and then began looking at items to sell commercially. After dabbling in computer parts they switched to car audio by chance, on the advice of a friend who runs a local Atlanta autosound shop called American Audio.
"We had no car audio background. We started out with speakers and we had a lot of demand so we looked for other products," Ceyhun said.
Early products included Pioneer speakers and Aiwa decks. "When we started selling speakers, people started asking for a sub and we asked what a sub was."
The company grossed $2,200 in its first month and closed its first year at $800,000, Ceyhun said. It opened a store six months after launching on eBay and it now grosses $3.5 million, with approximately 20 to 30 percent of that from the brick & mortar store.
Both Ikesound and Sound2000B say profit margins on eBay generally fall in the 10 to 15 percent range, so sellers must concentrate on high volume items to make a profit.
"People who shop on eBay are very price sensitive so you have to be right on price. You also pay 2.5 to 3 percent of your sales in eBay commissions and 2.5 percent to credit card companies, so you lose 5 percent of your sales on commissions," Ceyhun said.
eBay's attraction to Sound2000B was that is solved the problem of starting a Web site and developing traffic. "A Web site has to be advertised and Internet advertising is not effective enough," Ceyhun said. "You have to have a user-friendly site and it's very expensive to generate enough traffic to make a profit. On eBay you already have millions of users without going through the hassle of advertising. Also a lot of people are suspicious about buying on the Internet but they trust eBay because of its name and its feedback rating system. If you are a seller on eBay with a good feedback rating, people will have more trust in you and in providing you payment information."
Arvilli says the drawback to selling on eBay is that competition is fierce price-wise and many suppliers are still very skittish about allowing their products to be sold on the Web.
Some home audio companies have set up "b" good stores on eBay, moving their Internet outlet stores over to the auction site, including Harman Kardon and Kenwood. Both companies, however, stated that they would not sell car audio "b" goods over the Internet due to the installation requirement.
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