EcommerceBytes-Update, Number 225 - October 19, 2008 - ISSN 1528-6703     3 of 7 Founder Talks about Decision to Leave eBay

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Bruce Hershenson was an eBay success story, racking up 75,203 feedback under the User ID since March 1998. But Bruce left the marketplace completely this year and now runs his auction business on his own website at AuctionBytes checked in with Bruce to see why a PowerSeller who had done $20 million in business on eBay, would leave, and how his auction business is faring now that he's on his own. He's got some strong opinions about eBay's current direction, and shares them in this exclusive interview.

AuctionBytes: Can you talk a little bit about your business and what you sell?

Bruce Hershenson: We solely auction items, and we never buy anything (we believe that auction houses should not also auction their own items, because it puts them in direct competition with their consignors, and also sets up a strong conflict of interest with their bidders). We solely auction movie paper (movie posters, lobby cards, photos, and related paper memorabilia), and we have been the world's leading auctioneer of movie paper for 19 years.

AuctionBytes: You had been selling on eBay for a long time, what was it that pushed you to launch your own site?

Bruce Hershenson: We sold approximately 330,000 on eBay in a 10 year period, for sales of approximately $20 million. Had eBay not drastically changed both of their fee structure and their rules, we would still be selling there! They literally raised our fees over one third, at a time when they delivered fewer buyers who paid lower prices! Their removing sellers' ability to leave feedback makes all sellers of vintage items a target for blackmailers, and the rest of their recent changes were equally wrong-headed.

AuctionBytes: Was it necessary to leave eBay completely? Why not go multi-channel?

Bruce Hershenson: Unlike the majority of eBay sellers, we run complete auctions each week (every Tuesday and Thursday). We can't have part of the auction run on eBay and part of it run elsewhere, because all of the items close in a small time period (we briefly considered keeping one of our weekly auctions on eBay, and moving the other off eBay, but we concluded this would greatly confuse our bidders, and besides, we wanted to switch to a time extended format, which eBay does not offer).

AuctionBytes: Can you give us some background on what level of business (in terms of number of auctions and Gross Merchandise Sales) you were doing on eBay and how it changed over time?

Bruce Hershenson: In 2004 and 2005, we sold over 50,000 items per year on eBay for sales of over $2 million per year. In 2006 and 2007, sold similar quantities for similar dollars, but it was clear that eBay was delivering fewer and fewer new buyers and that the new buyers they were delivering were spending less (both overall and on individual items). This was a clear trend that was continuing to escalate over time.

AuctionBytes: What level of business are you doing now on your own website, and how many registered users do you have?

Bruce Hershenson: In 2007, on eBay, we sold approximately $1 million of posters in each four-month period of the year. In the first four months of 2008, still on eBay, we sold approximately $1 million of posters. In the second four-month period of 2008, we again sold approximately $1 million of posters, and the vast majority of this was on our own site (we had only a few remaining eBay sales at the beginning of this period), which means that we continued to sell at the exact same rate we sold on eBay. This is especially remarkable, because it includes the time when we first set up our auctions site, and it also is the slowest time of year for selling posters, and it also comes during poor economic times for the U.S. We have registered just under 4000 bidders on our site, with dozens signing up every few days.

AuctionBytes: To what do you attribute your success on your own site?

Bruce Hershenson: We were the world's leading auctioneer of vintage movie posters for 10 years before we ever sold our first item on eBay, and throughout the 10 years we sold through eBay, we never relinquished our individual identity in the slightest. All of our 30,000+ customers knew that they were OUR customers, and NOT eBay customers. We had an weekly e-mail club we started in 1998 with 38 members, and it now has 4300+ members. We regularly e-mail our customers when we sell items similar to what they purchased from us before.

AuctionBytes: How important is email marketing to existing customers, and do you have any tips on how small sellers can get started doing that?

Bruce Hershenson: We believe our e-mail marketing is essential to the success of our business. From the very beginning of our online sales, we have e-mailed all of our customers and at the head of every e-mail is a paragraph telling them they can opt out of our e-mails, and then we truly NEVER again e-mail them (approximately one half of our customers have either opted out, or they changed their e-mail, so we have to block them because we have no current e-mail for them).

We run lots of contests and special promotions and give really excellent prizes, which certainly accounts for a lot of our customers continuing to receive our e-mails. We also have a lot of "content" within our e-mails that is of interest to collectors, and that helps as well (no one wants to simply receive e-mails trying to get someone to buy items).

AuctionBytes: What kind of marketing do you do for your site?

Bruce Hershenson: We spend money on Google AdWords each week, and run a couple of ads in trade publications, but otherwise, we spend next to no money either advertising for new buyers, or for new consignors. The vast majority of our new customers and new consignors come from good word-of-mouth. We spend LOTS of money on superior packaging, customer service, and giving free bonuses to our customers, and we feel that money is far better spent in that fashion than if we spent it doing advertising.

AuctionBytes: Do you spend more time marketing your site than you did marketing your eBay business?

Bruce Hershenson: We spend a similar amount of time marketing our own site as we did our eBay business, because Google AdWords pretty much manage themselves, and that is the only significant difference between how we marketed our eBay business and how we market our own site.

AuctionBytes: What about your costs of marketing your site?

Bruce Hershenson: Our overhead costs went down greatly when we stopped paying eBay's humongous fees (our current auction host, who manages our auctions, charges a tiny percentage of what eBay did). But instead of putting that difference in our pocket, we spend it on Google AdWords, discounted shipping, and excellent free bonuses to our customers (including high-quality limited-edition T-shirts that cost us $9-$11 each, for EVERY buyer in our special event auctions). We have a little bit of money left over, so we do better than we did on eBay, and our customers do far better, for they pay less shipping, and get cool free bonuses. The only loser is eBay itself, but I have no sympathy for them, because they had a "good thing" going, and they killed it themselves!

AuctionBytes: I've seen you use the words "Kafka-esque" and "totalitarian" when referring to the environment on eBay for sellers. What do you mean, and why do you think that environment exists?

Bruce Hershenson: In the world of eBay, every seller runs the risk of being shut down on a moment's notice, with no recourse, and no one to contact at eBay. Often this happens because someone at eBay (sometimes a low-level employee) has made a simple mistake, and sometimes this happens because the seller has broken one of eBay's huge number of complex rules (I doubt any eBay employee is knowledgeable about every one of their rules, some of which are contradictory). When this occurs, the seller is often able to become reinstated, but it sometimes takes weeks, and there is never any apology or compensation from eBay. I feel this truly qualifies as a Kafka-esque experience! In addition, eBay constantly changes their rules, sometimes changing them 180 degrees from their last rule change, and it can be dizzying for sellers to try to keep up with the endless (and sometimes incomprehensible) changes.

AuctionBytes: Based on your experience, what do you think low-volume sellers who are not in the position of creating their own successful auction platform should do if they want to decrease their dependence on eBay?

Bruce Hershenson: I have heard many smaller sellers complain that the alternate selling sites do not have the traffic that eBay does, and therefore they give up on them. They forget that the eBay I first encountered in 1998 had very little traffic, and it was only after many people like me supported it that it gained substantial traffic. I think that over time, many eBay sellers will gravitate to one of the alternate selling sites, and that that site will become real competition to eBay. Until that happens, I suggest that all small sellers look for alternate ways to diversify, opening an inexpensive website, exploring selling on many alternative sites, etc. If today a seller's business is 100% eBay related, they can look to make it only 90% eBay in a few months time. It may not seem like a big difference, but it is an important first step to becoming less dependent on eBay.

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to

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