eBay's Rhine Gold
Thousands of German startups are using the auction site to
sell goods
In
the U.S., ground zero of modern capitalism, it is almost an article of faith:
Europeans have grown risk-averse and lack entrepreneurial zeal. But don't tell
that to the thousands of folks who use eBay Inc. to do an end run around decades
of state-imposed regulations and old ways of thinking. One of them is German
businessman Norbert Otto, who recalls the exact moment he realized selling ski
gear over eBay had become far more than a hobby for him.
Some
experienced businesspeople see eBay as a growth opportunity in an otherwise
slack economy. In 2003, Sven Asböck and Frank Hoffmann, who had worked for a
mail-order company that went bankrupt, launched DTG Dynamic-Trade in Neumünster,
an hour north of Hamburg. The business snatches up all sorts of surplus
merchandise, then sells the stuff on eBay. Sales have doubled every year, to $6
million in 2005, and the company employs 22 full-time workers. "We sell
everything you can imagine," says Asböck. No kidding: Current offerings include
bedroom sets, toasters, and telescopic rifle sights.
The business of supporting German e-merchants has also grown into a thriving
industry. More package deliveries are generated by eBay for Deutsche Post and
its DHL unit than the biggest catalog retailers. One customer is Bielefeld-based
SE.LL Marketing, which helps customers such as toy train maker Brio unload
excess merchandise on eBay. SE.LL rarely even sees the goods it auctions off,
having outsourced the warehousing, packing, and shipping to DHL. "We want to
focus on services. Fulfillment is not our core business," says SE.LL co-founder
Christof Sander, 29, a former manager at German media company Bertelsmann.
In Rabenkirchen, eBay -- combined with the easy availability of logistics
services and software -- has created a hotbed of e-commerce. For two decades
Otto coached basketball, track, and other sports at municipal sports clubs and
ran a ski shop on the side. But then the financially strapped local government
cut his hours in half, and a recession devastated his shop's sales. In 2002,
when son Jan, then 17, asked for money for driving lessons, Norbert told him he
would have to earn it by selling off some of the ski shop's excess inventory.
The skis sold quickly on eBay -- at twice their wholesale price.
Soon Jan found himself behind the wheel of a battered blue cargo van, ferrying
Chinese-made parkas and plastic sleds from the port of Rotterdam. Sport Otto
began hiring staff, using part-timers to avoid paying health and pension
contributions that can nearly equal an employee's take-home pay. The fledgling
company also took over a cluster of small buildings in Rabenkirchen that had
been vacant ever since the former tenant, a construction company, shut down.
BUYING A BENZ
At first glance, the Ottos don't appear to run an especially
tight ship. Swim goggles, baseball bats, and mosquito nets are arranged
haphazardly on wooden shelves. Yet every item is bar-coded and scanned. From a
desk equipped with two flat screens and littered with wholesale sporting goods
catalogs, Jan knows when to redeploy snowboarding trousers from the barn to the
packing shed. As customers bid, software tallies the average price and profit on
each sale.
The business hasn't made the Ottos rich. Their one luxury is a Mercedes-Benz
SUV. Jan lives in the same building used to pack orders, while Norbert occupies
a modest apartment above Sport Otto's offices. Both start work at 7 a.m. and
often don't finish until late in the evening. They dream of building a modern,
computer-driven warehouse and buying products directly from Asian suppliers. For
now, Norbert says, "we're investing everything back into the business." Spoken
like a true entrepreneur.