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GlacierBayDVD was eBay's number two PowerSeller in terms of feedback, but in February 2006, the company went out of business. In an interview with AuctionBytes, GlacierBayDVD owner Randy Smythe revealed what went wrong. In Part 2 of that interview published here, Smythe talks more about his business and the issue of selling on multiple channels instead of selling exclusively on eBay. (Interview has been edited for length.)

In part 1, we left Smythe talking about the issue of selling on multiple channels. "I felt more comfortable with eBay, and I didn't want to spend the money on the website," Smythe said.

AB: Were you selling exclusively on eBay?

RS: Yes.

AB: Up until the end?

RS: No, the last year we had the website up, we tried selling on Amazon and a little on Half. But I didn't like that, because basically in order to increase sales you had to be the lowest price. So again, if you don't pay fees, you have to be the lowest price, so you're cutting your margins somewhere.

Our website came into being in 2005. It took us quite a while because we did it ourselves. I probably paid a lot more money than I,... The tools that are available today, I could have gotten that website up and running very quickly.

It did pretty well. I think we did almost $200,000 in sales off the website in the first year, and that was from March to December. But because cash flow was tight, we couldn't invest in any kind of marketing for it, so we had to see if we could move our existing customers over.

And that became a problem. You can't really contact your own customers through the eBay system. They kind of slap your hand if you send them an email.

AB: You were using ChannelAdvisor Merchant, were they giving you advice about your website, Google Adwords,...?

RS: When we started to do the website, that's when they started to get into syndication and that other stuff. And they talked to me about it, and in my particular case, cash was so tight, that I just didn't want to take a chance on spending money on something I wasn't sure was going to happen.

AB: Because you were going to have to pay the upfront costs of setting it up plus a commission?

RS: On eBay, you're listing things, but you're doing that fairly smartly, and you're paying on the sale. In the AdWords situation, I have to figure out what keywords to pick and then I'm paying for someone to come to the site. I have no idea if I'm going to get a sale out of it.

So how do I figure out how much this is going to cost me? I've got to basically test it for 3 months or 4 months to figure out how much it's going to cost me. I'm not going to throw $10,000 a month at this on the hope it's going to generate $100,000 in sales. I couldn't get past that. eBay's a lot easier, you put an item up, if it sells, you make money.

AB: And Google Adwords is tricky?

RS: Well we tried it, a real limited one for the website, but you have to do a lot of work to find the right title. The amount of money you have to spend up front, I mean, I don't know when you're going to get the ROI on that, I don't have any idea.

AB: Google never reached out to you, did they?

RS: Yeah, they did. I worked with Google on a small test, but again, that was middle of 2005, and by that time I had already realized that we were broken. And I was trying to find a way to change the way the model without shutting down and starting over again.

AB: In hindsight, it seems logical to create your own website. But back then, eBay was really good enough to stay and sell exclusively.

RS: I believe I 'm a victim of market changes on eBay . I take full responsibility for the decisions I made, but I'm a victim of market changes on eBay - the increased competition, the price pressure to sell things for a lot less because of the increased competition. Kind of like, almost a kind of a whoring of the market, and you've heard this from other sellers, what's happened is ridiculous. You can buy things on eBay so low-priced, I don't know why people don't just buy it on eBay and sell it on Amazon.

AB: Sometimes you can buy it cheaper on eBay, but when you actually factor in S&H, it's not always cheaper.

RS: In my position, I had basically three choices. I could start selling elsewhere, like on the website or find another venue; I could die slowly, which was the choice I made (laughter); or I could play the game that these other people are playing and start discounting and everything else.

I raised my Shipping & Handling and took away my flat shipping, in October/November of 2004, so by that time I had already realized I needed to generate more revenue because my sales were going down, and I needed my total sales,...Because the S&H went up a buck, I could go a little bit lower on my price on the product. So I fell victim to that a little bit.

AB: Would you say that all the problems you're talking about, would you say they are unique to the media category?

RS: I don't have a tremendous amount of experience in other categories, but in talking to people and reading the message boards, it's probably a little bit the same with every category. I think it's harder in a commodity category. In a commodity category, price becomes everything. I think any of the commodity categories on eBay, you've got this. The other categories, I think you got the one-dollar Buy It Now and the $25 shipping.

To me, customers are not dumb either, and they look at and do the total price and say this is not a bad deal. People buy on total price.

AB: Did eBay suspend your account, what led up to you're becoming NARU?

RS: I made a change in the model, I went to more of a Stores model, with fewer and fewer auctions. It worked on a profitability standpoint, I was able to get the eBay fees down, but it wasn't enough to get out of the hole I'd dug myself, and I made the decision in January, that if 4th quarter sales weren't up to a certain level, I would continue, but I had no hope whatsoever of getting out of the hole I was in.

AB: So, you decided you would make a decision in January 2006 based on the fourth quarter 2005 results?

RS: Yes. So I called eBay and told them I was shutting it down. And, they said, Okay, this is the amount of money you're going to owe us. At the time I was trying to negotiate with another company to buy Glacier Bay, so I negotiated that for about a month and a half, and it fell through, because eBay wanted the full amount and they weren't really interested in negotiating at all.

AB: Who was the other company?

RS: I don't really want to bring them up. It's another company that is a fairly big company, it's not a Fortune 500 company, but it's a fairly large media company.

AB: What happened with BuySafe?

RS: I signed up with BuySafe because it was a marketing thing, I wanted to find a way to differentiate myself from somebody else. Then they signed up everybody in the media category.

BuySafe was initially a marketing thing. Never in my wildest dreams thought I'd ever have to use it. And when this whole thing happened, I contacted BuySafe and told them, they said they'd take care of any orders that were not fulfilled. I had, I believe, 200 orders that they took care of for me. So BuySafe did exactly what they said they'd do, and they took care of those customers that I could not fill those orders.

AB: So they've never come after you?

RS: no.

AB: I think (reporter) Rob Hof of BusinessWeek had an order with you.

RS: I talked to Rob. Actually, after you tried to track me down initially, when it happened, Rob was the second one on the line. I didn't talk to him. I just got back to him about maybe two weeks or a month ago just to talk about some stuff, and I forgot to ask him whatever happened to his order. Once I shut down and my vendors would not provide me with product, there was just a certain group of orders I couldn't fill. And PayPal had already stopped my ability to do anything with PayPal, so basically I just had to let BuySafe take care of those. I received a bill from BuySafe.

AB: I think Rob blogged about the incident and said he did get satisfaction from BuySafe.

RS: All my customers were taken care of. BuySafe sent everybody for that whole month that bought from me an email that said this is how you take care of an email claim.

AB: Let me move on, what's the biggest mistake you see eBay sellers making?

RS: The way eBay is right now, the biggest mistake sellers make is they're not aggressively looking elsewhere.

AB: So you are an advocate of multi-channel selling?

RS: Yes, I'm an advocate of multi-channel because I should have done it.

AB: So should they have their own website.

RS: Well there's ProStores, but I don't think they're going to be able to move people to ProStores because people are so uptight at eBay. But there's another one called Monster Commerce, Amazon just announced they're going to do WebStores, those are more what I'm talking about. The big companies have their own websites. If you're a ChannelAdvisor customer, they have their own store. I just believe that you have to look at eBay as a customer acquisition tool if you are a seller. That's what sellers need to do. eBay wants to keep everybody there.

AB: Did you look at eBay as a home on the Internet, a place where you do business on the Internet?

RS: When I was doing it, I looked at it that way the way the old-timers looked at it. I loved eBay, I loved being on eBay, it was fantastic for me.

Honestly, if I could have gotten my profits turned around, I probably would have continued to stay, the lifestyle/income equation. It had the right lifestyle, with the correct income.

Stay tuned for Part 3 of AuctionBytes' interview with GlacierBayDVD in which Randy Smythe discusses his reasons for believing eBay is a "ship without a rudder."

Part 1 can be found online at http://auctionbytes.com/cab/abn/y06/m09/i29/s01.

GlacierBayDVD Interview Part 3: "eBay - A Ship Without a Rudder"
http://auctionbytes.com/cab/abn/y06/m10/i04/s02

Comment on this interview series on the AuctionBytes Blog at http://digbig.com/4nden.

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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 ina@ecommercebytes.com.

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