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eBay Case Study: Building a Brand

Robert Raisbeck

The University of the Cumberlands

BADM 648: Entrepreneurial Strategy

Professor: Dr. Wanda Corner

February 13, 2021

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Introduction

Some businesses are created with a vision to become large global firms from the start.

Such was Microsoft’s case in the early 80s when computers were a luxury, and Bill Gates

recognized that every household in the world would have a personal computer in the near future.

However, other businesses are very specialized and are designed only to serve a niche market.

There are also part-time hustles that have become more popular in our modern gig economy,

which provide the owner with a supplementary income. Other small business concepts include a

lifestyle business that can turn the owner’s hobby or passion into a lucrative venture.

Starting a small business on a budget is no easy task, but today thanks to the internet,

there are cheap and easier ways to reach customers. Creating an online presence has never been

easier. Online sites and services such as Google, Facebook, eBay, and PayPal can help small

business owners get started with a few basic but powerful tools for free or at a minimal cost. For

specialty stores and niche markets, eBay can provide the perfect opportunity for newcomers to

distribute their products and reach a broad market. This paper will explore a vintage toy store’s

case and explain why the above tools are ideal for getting started.

Marketing Overview

There is nothing new about vintage collectible toys, pun intended. Collectibles have been

around for a long time, and they have grown in popularity. As adult collectors either continue or

rekindle their love for their favorite childhood brands, the collectible toy industry continues to

grow at unprecedented levels. Fueled by nostalgia, adult collectors are flocking to toy stores,

garage sales, vintage stores, and online sites such as eBay in search of the toys they had or

wished they had as children. According to the Collectibles Industry Report 2000, the industry

added 40 million collectors in 1999 alone, and the $10.4 billion retail collectors market is
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projected to continue growing (as cited in Prior, 2000, p. 33). Popular collectible toy lines

include Barbies, G.I. Joe, He-Man, Hotwheels, Matchbox, My Little Pony, Star Wars, Teenage

Mutant Ninja Turtles, Transformers, among others.

The trend has grown so much that toy manufacturers are cashing in as they realize that a

portion of their customers are not children (Bamford, 2012, p. 53). Hasbro, Mattel, and other

large toy companies release new lines reminiscent of older toys or exact replicas of original

1980s toys called reissues to target adult consumers. Mattel caters to adult collectors as they

release limited-edition Barbie dolls with a higher price point.

The limited availability of the above toys has paved the way for opportunistic individuals

to buy large amounts of merchandise to resell on sites such as eBay (scalpers). In other cases,

3D printing has become a phenomenon both in the vintage toy market and for newer collectible

items. Because vintage toys are no longer manufactured, finding some items or their accessories

can be a challenge. Entrepreneurial collectors have addressed this issue by printing replicas of

hard-to-find accessories and selling them on the internet. Other printed parts that either replace

broken ones or complement new collectibles to help them appear more like their original 1980s

designs have sprung up. Additionally, others have created replacement stickers to replace worn-

out ones.

The opportunities mentioned above all target similar consumers, adult toy collectors who

seek to complete or complement their collection. They vary a bit in their narrow focus or market

niche, and the most successful now have their own web page that collectors use to order their

products. However, they all have something in common; they utilized eBay as their first channel

of distribution. This channel helped the sellers raise awareness of their products while building
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brand awareness and a reliable business reputation, as evidenced from the customer’s feedback,

an important metric on eBay.

The Business Plan

Before starting, it is recommended for the entrepreneur to sit down and think about his

future endeavor. He or she needs to answer a few questions about their project. Will this be a

hobby, or do they expect more from this project? What do they hope to achieve? Out of the

options mentioned above, what will be the focus? Original vintage toys, reissues, spare parts, or

all of the above? Will they specialize in a brand, category, or toyline? E.g., Transformers, G.I.

Joe, Barbie, etc. Will they have a broad scope in their shop or focus on a small niche, such as

replacement parts?

Outside of these questions that will help the seller establish an e-commerce shop from the

marketing perspective, there are also technical and financial considerations. Will the seller

simply take snapshots of the items and sell them “as is” because he or she will compete solely on

price? Will there be an investment in cleaning implements and a camera or cellphone to take

better quality photos? Is the lighting and space in the seller’s home sufficient to set up a small

studio, or will an investment be required to set up a home photo studio?

Answering the above questions will help us set up a business plan from the marketing,

financial, and technical or operational perspectives. The importance of planning cannot be

understated. As Kuratko (2020) states, “The entire business plan process forces the entrepreneur

to analyze all aspects of the venture and prepare an effective strategy to deal with the

uncertainties that arise. Thus, a business plan may help an entrepreneur avoid a project doomed

to failure.” (p. 292).

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Marketing

The owner of the online store needs to research and understand their potential buyer or

customer. This information will help the entrepreneur understand their target, and he or she will

be able to create a marketing and communication strategy that will attract these buyers.

Additionally, it is also essential to research the market as stated in the above section and even the

sellers who are in direct competition. With this information, the future store owner will be able

to create a marketing and communications strategy that will attract the desired customers and

compete with already established sellers.

The marketing mix helps the entrepreneur take an analytical approach to strategy by

looking at marketing from the perspective of the 4Ps, Product, Promotion, Price, and Place, or

4Cs as known in a new customer-centric iteration (Kuratko, 2020, p. 234). The first of these is

Product or Co-create and centers on the product itself, which the entrepreneur must define in

terms of quality and condition. The store owner must determine the products to be sold and what

level of service they will provide (Delgado, 2019, Product section para. 1). Will the seller offer

free shipping and free returns as part of his service? How will the product be packed and

shipped? Careful bubble-wrapping, labeling, and packaging of a vintage toy will help ensure the

seller a good rating.

Everything from the product itself, its condition, how it is packed and delivered should be

considered part of the product and service. Here is where an essential differentiating factor

comes into place, branding. Printing custom boxes, labels, and business cards to include in the

package will help create brand awareness and a consistent look and feel. This branding can

complement the online store, which can start by displaying the products sold on well-taken
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photos, including the seller’s brand or webpage. An example can be seen in the picture below

(taken from eBay):

The second item in the marketing mix is the Promotion or Communities in the 4Cs. How

will your customers know about your products and services? How will your customers reach

you? How will you communicate with your target audience? This marketing mix aspect covers

topics that include advertising, sales promotions, PR, online marketing, and other activities that

direct potential buyers to the online store (Delgado, 2019, Communication section para. 1).

Having an account on Facebook, Twitter, YouTube, Instagram, LinkedIn, Pinterest, and

eBay is absolutely free, making it a great start. The first step in promoting the brand is to create

a simple but attractive logo. Additionally, a few toy collecting images can be taken from scratch

or downloaded from a free image bank and used throughout all media applications. It is vital to

have a unified and consistent look throughout all forms of communication. This look helps build

the brand and ensures the customer that they are in the right place. A unique look also helps the

business owner project a positive image that differentiates their business from rivals.

Creating a page on Facebook is easy, and the fact that it has over one billion users makes

it a requirement for the entrepreneur (Kuratko, 2020, p. 240). This page can contain links to

other sites, including the eBay store. The business owner can join other toy collector

communities on Facebook and Instagram and participate actively in these. Remember that
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Promotion under the new paradigm is Communities, can help the business promote itself by

creating content and participating in communities where the other members also create content.

Taking advantage of these communities, our generation’s connectivity, collaborating with

collectors, and creating content in the ideal context will keep the customer at the center as the

store and its brand is promoted for free (Kuratko, 2020, p. 234).

The third P of the marketing mix is for Place or Choice in the 4Cs. This covers

distribution channels, sales locations, and the management of these. From the marketing

perspective, eBay is an ideal channel that anyone can use to start selling a product. Most

collectors search on eBay for missing items and also to gauge the price of their collectibles.

Even if the store is new, customers can easily find their products as the lists that pop up are

generally ordered by relevance, price, new listings, and items about to end their bidding process.

This is great because no search engine optimization is required (SEO).

While the eBay store can be promoted on other sites such as YouTube, LinkedIn, or

Instagram, the products can also be promoted and sold through Facebook marketplace.

However, if the business owner is new, chances are he might generate fewer sales on both of

these sites unless he builds his online reputation by getting a few positive reviews first. PayPal

does offer some buyer protection, but the seller incurs additional fees.

Price or Costumizeble in the 4Cs is the final point in the marketing mix. This is a crucial

component of the marketing mix and should reflect the store owner’s strategy. Expense margins

and discounts should be carefully considered. The price of collectibles varies according to the

rarity and condition of the item sold. Will the seller charge extra for services that can add value,

such as proper cleaning and restoration, free shipping, or perfectly packed items. The
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entrepreneur can also compete on price by selling the items as they are found, which can help

him gain visibility if the buyer is filtering the items they searched for by price.

Price does not have to remain static as the seller can modify his pricing strategy once he

has built a credible online reputation through many positive reviews. Many buyers prefer to pay

a premium and get their collectibles from reliable sellers. Starting with competitive prices can

help attract the first customers, and as reviews start rating the seller’s quality and reputation, the

credibility of the store will increase. Once this feedback ranks the seller’s store as reputable, the

store can not only increase its price but branch off and sell the products on other pages, such as

Facebook, or even their own page. Hence, eBay is a great starting point for any new seller.

Financial Planning

A critical component of any new venture is its financial planning, as it can help determine

the project’s viability. If this venture is something the entrepreneur sees as a long-term project, it

is worth investing in a few items as they will eventually break even. Quality pictures help the

buyer identify the item’s condition and also sends a message about the seller’s professionalism.

If the images are poor or appear to be careless snapshots, the seller would probably not care and

ship the item in a careless way, causing the collectible to arrive damaged. Having a good phone

or digital camera and a well-lit and clutter-free area will enable the seller to take pictures that

focus on the collectible.

Other necessary expenses to consider are shipping costs, packaging materials,

promotional materials, and eBay and PayPal fees. Knowing the weight of the items and

dimensions of the boxes to be used can help the seller calculate the adequate shipping cost

regardless of whether they charge or offer free shipping. Boxes, tape, bubble wrap, and other

packaging materials are essential expenses to be considered. There are plenty of promotional
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materials such as business cards or stickers with the seller’s brand and logo that can be printed at

low cost, but they are ar still an expense.

A significant cost to consider is the product bought with the objective to resell it at a

higher value. Coming by vintage toys requires a considerable investment in time. Hunting

garage sales, goodwill stores, antique stores take time. Additionally, the store owner must be

aware of the current market prices to buy these items at a reasonable price and then turn a profit.

The entrepreneur must understand the tax implications when reporting this income. It

might be an excellent idea to incorporate the store as a small business or consult an accountant to

take advantage of the tax code because many expenses, such as the camera, cellphone, and

internet use, can be deducted.

A final issue to consider the profitability of the venture is the seller fees charged by eBay

and transactional fees if PayPal is used. eBay charges two fees when selling items, the insertion

fees and final value fees. The seller can list up to 200 items without being charged insertion fees,

and afterward, $0.35 per item will be charged (eBay, n/d). If an item is not sold and then

relisted, this counts as a reinsertion, and it is important to plan accordingly. Listing the items for

more extended periods, such as 10-day auctions or 30 day fixed price listings, can help reduce

this. The second fee or final value fee is always charged, which for this category is about 10% of

the total price, including shipping. The buyer pays for the sales tax, which varies by state or

country. PayPal charges the seller a fee of $0.30 and 2.9% per transaction, which must be

considered in addition to the fees mentioned above (Hsiao, 2020, Payment Processing Fees:

PayPal section, para. 1). While this might seem daunting, there are a few online calculators that

can help calculate all these fees and transaction costs to help determine the final profit per item,

such as https://www.ebayfeescalculator.com/usa-ebay-calculator/.
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Other Considerations

A crucial element to keep in mind is the culture of the target audience. While hyperbole

might help boost sales, it is not accepted in the world of vintage collectibles. Clear, honest

communication that describes the item sold and discloses the product’s flaws is expected. If the

product is sold as “mint,” the buyer will expect a flawless product without a single scratch or

blemish. While pictures help, they can sometimes miss details that a natural eye can spot when

the item is received. Managing these expectations will ensure the seller positive feedback and a

high rating.

Conclusion

To conclude, pursuing an entrepreneurial opportunity on eBay is highly recommended if

the above recommendations are heeded. It is a great place to start because eBay is one of the

most popular sites for collectors and other niche product buyers. Outside of the exposure

provided, the entrepreneur can begin to establish his online reputation and credibility. Even

established sellers, such as Wheeljack’s Lab, continue to sell through eBay because the global

exposure enables him to acquire new customers. Another benefit established sellers have is the

ability to charge a premium, which can compensate for the fees and transaction costs. As the

business expands, the entrepreneur can sell through Facebook or even their own site, but

remaining on eBay will help them build their brand and drive more traffic to their site.
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References

Bamford, V. (2012). Not Just Child’s Play. Grocer, 53–55.

Delgado, H. (2019). Marketing Mix Online on the Internet and the 4 Pes. Retrieved February

14, 2021, from https://disenowebakus.net/en/online-marketing-mix

eBay (n/d). Selling fees. https://www.ebay.com/help/selling/fees-credits-invoices/selling- fees?

id=4364

Kuratko, D. (2020). Entrepreneurship Theory, Process, Practice. Cengage Learning.

Hsiao, A. (2020, June 17). How to Calculate Ebay and PayPal Fees. The Balance Small

Business. https://www.thebalancesmb.com/what-to-know-about-ebay-and-paypal-fees-

before-you-sell-1140371

Prior, M. (2000). Collectibles industry soars thanks to adult consumers. DSN Retailing Today,

39(19), 33–34.