NFIB

Bidding for Business
04/ 15/ 2002

by Jackie Ross

Partners Michael O'Harro and Charles Shoup don't have a storefront, a Web site or even an advertising campaign. What they do have is a tremendously profitable small business called Champions Stuff.

O'Harro and Shoup sell their collection of 100,000 vintage photographs on eBay, the popular Internet auction site that receives over 1.7 million visitors a day. "We thought about having our own site, but we just can't keep up with it," O'Harro says.

Ebay allows sellers to reach consumers on an international level. It's free, it's user-friendly, and it's just that simple. At least, it has been for Champions Stuff, a business that combines two previous companies the partners started independently.

Nightclub and bar veteran O'Harro started a chain of sports bars in 1983, Champions, with 26 locations throughout the United States. He met Shoup over 10 years ago, while looking for sports memorabilia to decorate the bars. Shoup, a former commercial photographer, owned a chain of stores that specialized in collectible photographs.

The two did not formally partner until 1999, however. They had both retired and were looking for a hobby. O'Harro had built up an impressive collection of sports photos, and Shoup has over 100,000 photos and negatives, more photos than anyone in the world. He has even donated over $150,000 in memorabilia to the Smithsonian Museums in Washington, D.C. A friend suggested the two sell the photos on eBay.

It wasn't a natural transition for O'Harro. "I didn't even have a computer until about two years ago," he says. "I was one of those anti-computer kind of guys." But eBay's user-friendliness had O'Harro and Shoup up and selling photos by April of 1999.

Sales immediately took off. What started as a hobby is now a full-time business. Champions Stuff now sells about 1,000 photos per week and has over 1,500 items posted on the site on any given day. "I'm really thrilled, although it is more than we bargained for," O'Harro says. "It kinda fell on us."

Champions Stuff's story isn't unusual, says Kevin Pursglove, eBay's spokesman. "It happens quite a bit. Many times, users started listing items as a hobby on the weekends, and eventually ended up using eBay as a primary source of business."

Likewise, already-established business owners use eBay in place of their own Web sites to generate sales. "I've been astonished at the number of businesses on Main Street who are selling surplus merchandise on eBay," says Kennedy Smith, the executive director of The National Main Street Center. "It's a way for them to expand their bricks-and-mortar store."

It cost Shoup and O'Harro almost nothing to start Champions Stuff. They had the photos already, and using eBay is free-the site takes a small percentage of every sale. So the two had to buy only computer equipment, such as a scanner, computers and eventually, their own server. They covered those expenses in less than three months. Champions Stuff outsources invoicing and collection services, because they have become too time-consuming to organize in-house.

"It's a huge money-maker," Shoup says of their eBay-based business. "There's really no downside, except that there's not enough time to manage it." The company currently has a staff of four full-time workers, including the partners and two part-time employees.

"Everything is right there-you know what your employees are doing, because you see it right there on the site," Shoup says. "There's no theft [eBay monitors buyers and sellers carefully, and protects against fraud on either end], no rent and a significantly lower payroll [than his bricks-and-mortar retail chain]."

But Champions Stuff is a lot like any other business. "We only sell about half the pictures we put up," O'Harro says. "And you don't have to make money on everything that sells. If you aren't selling, you have a sale-you lower the opening bid to generate interest."

The partners stress the same business techniques they perfected as entrepreneurs decades ago. "Customer service, customer service, customer service," O'Harro says. Champions Stuff interacts with buyers via e-mail, ships promptly and offers a money-back guarantee on all items. "Be honest and up-front," he says. Like with any business, consumers have to feel they can trust the seller.

"It takes hard work," O'Harro says. "I have terrible eyesight after staring at the screen for 12 hours a day. But the beauty of the site is that you can spend one hour a week doing it or 50 hours a week doing it, and you can still be successful."

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Other auction sites

http://www.edeal.com
Edeal hosts auctions and provides various applications that enable small firms to conduct business online, such as credit card service, long-distance service and the reverse auctions that connect services with small businesses.

http://auctions.yahoo.com
The largest search engine on the Internet also has an auction site. With free posting and no transaction fee, sellers do not have to give a percentage of their profits to Yahoo! as they do with eBay.

http://www.haggle.com
Haggle initially auctioned only computers and related technology but expanded by popular demand. The site still maintains one of the largest selection of computers and printers, and offers a specific small business section of office equipment.

$746 billion in sales will be done via online auctions by 2004. Source: Forrester Research

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This article originally appeared in the January/February 2001 issue of MyBusiness Magazine, NFIB's member magazine.

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