EHobbies To Double Sales Through Amazon, EBay Deals

By Michelle Tsai

The hobby and toy e-tailer is making its assortment available as a third-party retailer, hoping to boost its exposure.

Betting that partnering with potential competitors will boost rather than hurt growth, eHobbies will debut nearly all its products on the sites of Amazon.com Inc. and eBay Inc. in May.

Big retailers like J.C. Penney Co. and Hewlett-Packard Co. have placed their wares on Amazon and eBay to capture more sales, and the same strategy may be even more advantageous for smaller e-tailers. EHobbies sells slot cars, radio-controlled toys, plastic models, and telescopes and binoculars.

"I don't think I'd win against Amazon even 50% of the time," said Chief Executive Seth Greenberg, adding that the popularity of Amazon and eBay is indisputable. "We want to be where customers are comfortable shopping."

EHobbies currently sells a few items in eBay auctions but will soon set up eight to 10 eBay stores to focus on specific hobbies. The stores will sell products at fixed prices.

The benefits outweigh the cost of these partnerships, said Greenberg. Selling through the large shopping portals allows eHobbies to cut down on less efficient marketing through comparison-shopping engines. Greenberg also hopes eHobbies can convince the customers that purchase through Amazon and eBay to go directly to its Web site.

Since eHobbies began selling about a third of its 75,000 product stock-keeping units through Amazon on Dec. 20, the company's business has already grown nearly 20%. That's not bad considering eHobbies has had its hands tied behind its back, said Greenberg, pointing out that eHobbies hasn't been integrated into the Amazon template yet and that Amazon customers could only find eHobbies' products by specific searching. In about a month, eHobbies should be built into Amazon's categories, said Greenberg.

The executive notes that because Amazon wanted to increase its products in the toys category, the shopping portal moved quicker to work with eHobbies than it normally does with small third-party merchants. "We're the benefactors of something between Amazon and Toys ‘R' Us," said Greenberg, referring to the lawsuits the two filed against each other last year regarding an exclusive toy selling agreement. He added that only about 1,000 of its SKUs overlap with Toys "R" Us Inc. merchandise.

The company had about $10 million in sales in 2004 and expects that figure to double this year due to selling via Amazon and eBay.

Not that there aren't limitations to being a third-party retailer. EHobbies hasn't been able to provide its Amazon customers with the same level of service it provides via its own Web site. Customers with questions are only provided with an e-mail address for eHobbies and can't use the running dialog feature that eHobbies provides on its own site. Amazon also doesn't provide PayPal as a payment option, something that eHobbies' direct customers use.

But without these kinds of partnerships, growth for a smaller retailer like eHobbies can come with enormous marketing costs. The company doesn't have the budget to pay for catalog postage or mailing lists of potential customers, said Greenberg. So the e-tailer will have to depend on Amazon and eBay to bring in much of its new business.

In preparation, eHobbies plans to replace its back-end system with a platform that can easily push out data for thousands of products to Amazon and eBay and take in orders as well as integrate with distribution feeds from manufacturers. Greenberg said the site doesn't have any urgent problems with Bock Interactive Inc., which currently handles order processing, but nevertheless the e-tailer wants a more powerful system to handle bigger sales this Christmas. EHobbies will choose a platform by the end of March and implement the technology during the summer.