How to Use eBay to Save Money and Time on Procurement
Answered November 23 2020
Fifteen years ago, sourcing parts on the open market was uncommon and somewhat risky. Businesses were more comfortable ordering parts from vendors who they’ve been loyal to for years. But at what cost? If a business could get a part cheaper and faster, why wouldn’t they? Once a business learns that they can obtain great parts on eBay, they also realize that it’s a great outlet for selling surplus items. This is why so many people have taken the leap to sourcing and selling parts on eBay.
What Is eBay?
Many questions arise when considering ordering from a less traditional setting, such as:
- What is eBay?
- Is eBay a safe procurement and selling option for my company?
- How does it work?
- What can we do with extra parts that support equipment we no longer have or that has been replaced?
- What about the “expensed” parts not accounted for as inventory that have never gone into service?
- How do we find balance between having the parts we need when we need them and having too many parts in stock?
If the parts are in inventory, they carry value. This value adds up quickly when the accounting department is reviewing a spreadsheet, seeing millions of dollars to pay taxes on year after year.
Fortunately, the ability to quickly acquire and sell parts has improved with technology. Open market and auction sites such as eBay, Amazon, and Craigslist have transformed how consumers get what they need. This is also true for industry. Individual companies vary in their ability to get parts to keep critical equipment running. But we now have the ability to research parts quickly for a direct replacement, saving time and money.
How eBay Works
- A seller lists an item on eBay. This can be almost anything from antiques to cars, books to sporting goods. The seller can choose to accept only bids for the item (an auction-style listing) or to offer the Buy It Now option, which allows buyers to purchase the item immediately at a fixed price.
- In an online auction, the bidding opens at a price the seller specifies and remains on eBay for a certain number of days. Buyers then place bids on the item. When the listing ends, the buyer with the highest bid wins.
- In a Buy It Now listing, the first buyer willing to pay the seller's price gets the item.
Generally, industrial parts tend to be of the Buy It Now listing type, rather than Auction. This means that the price is somewhat fixed; however, there is a Best Offer option. Best Offer allows the item to be sold below the asking price to the best offer that is accepted by the seller. Often the parties will counter-offer until both are happy and the sale is complete.
Let’s use an example of a random item you might need for your industry, such as an electrical relay. Most parts have some kind of part number on them somewhere. In this case, it’s GENERAL ELECTRIC CR120E01002, which is obsolete from the original equipment manufacturer (OEM). If you type this into Google, there are several results, and eBay will likely be one of the options. Doing a quick Google search of the item is a way to view which businesses offer it, what their list price is, and availability. The results of these listings could show the item priced at a few hundred dollars. Often, however, retail locations that advertise an item might not actually have it in stock.
With eBay, the seller will have the item they are advertising and a picture of the actual item. If an eBay vendor doesn’t have an item, there wouldn’t be a listing for it. Listings are added every minute, so if it’s not there today, it might be available tomorrow. In the case of the electrical relay, there are Buy It Now listings for new old stock from $69 and used from $54. Available items vary from brand-new to used for nearly everything you can imagine.
The Benefits of Using eBay to Source Parts
The real beauty of eBay is in the variety. There are OEM parts, used parts, and parts you could use as replacements if you have the engineering and creativity to solve the problem. Yes, it’s great when we have newer equipment and can buy a direct replacement OEM part from the manufacturer. However, having a new system installed tends to be outside most budgets unless money has been allocated years earlier for the upgrade. The reality is that equipment ages and is replaced with more current versions. The inability to source OEM replacements leaves one with few options. When our legacy equipment needs parts, I always take the time to look on eBay. Often, someone in the world has exactly what we need listed as “used” or “New Old Stock (NOS).”
Sometimes in the workplace, we’re not able to find that one specific part that we desperately need, even on eBay. Maybe it hasn’t been manufactured for years. Involving subject matter experts is where we can procure a replacement part that will produce the desired input and output required, but not be from the same manufacturer that previously installed it. Most of us make things work beyond service life and improve equipment uptime by re-engineering the defects out. There is a lot available on eBay, so with a little ingenuity, many problems can be solved for little cost.
Speaking of cost, using eBay can make a business much more efficient. Once a business gets comfortable buying products on eBay, they can also begin to see the benefits of selling. So many businesses have storerooms filled with parts that are critical for their equipment (or were critical long ago!). Back when the wait-time to get parts was lengthy, employees felt the need to hoard critical parts. They had the procurement theory, “If I need two, then I should order five, so I won’t have to do this again.”
Craftsmen sometimes have their own “private tool locker” for their equipment that has spares for everything. This creates inefficiency and a surplus of parts that may not ever be used. Selling on eBay is an easy way of reducing stock of those excess parts. Have someone take the time to list and manage a few eBay listings. The company will appreciate the income from the reduced inventory, therefore less tax burden, and reduced scrapping of parts.
Selling Parts on eBay
To sell unneeded parts on eBay, it’s important to first establish the open market value of the item before trying to list it. Again, I suggest doing a Google search for the item. Just because it cost $400 five years ago doesn’t mean it will sell for that today. Sometimes it’s significantly less or possibly more! If the item is currently being manufactured, what is the “new” sales price? What is your competition? How many others are currently listed for sale on eBay?
It’s also necessary to know how your item will be packaged for shipment. A buyer will want to know how much it will cost to ship, who will pay for shipping, and how long it will take to arrive. Fortunately, as long as the basic specs of the package are known (dimensions, weight, etc.), eBay makes it easy by providing shipping calculator tools. Once the listing is active, it’s important to monitor the listing for questions, etc. and be available and responsive to interested parties. Once the auction is over, both buyer and seller rate each other on the transaction. It’s very important to establish an excellent feedback score to be a trusted seller.
How to Assure Safety and Authenticity of Parts
People who are inexperienced with eBay are often nervous to use the site because they’re concerned about fraud and returns, especially in the workplace. It’s vital to understand the seller’s and buyer’s responsibilities to avoid such a situation. As a buyer, know what you need. All eBay listings should have detailed pictures of the part that you’ll be getting. It will also have the seller’s information, previous buyer feedback, and the ability to view other items they’re selling. Show the listing to your crafts people who work on the equipment. Team up with the procurement folks to purchase parts. Ask the right questions and understand what a certain part number description means by the manufacturer.
I highly encourage contacting the seller to ask any questions before purchasing. Most sellers are looking for excellent feedback and will answer your questions promptly. Read through the seller’s feedback for any negative transactions to see where their weaknesses have been in the past. Read their return policy. If the price is too good to be true, there should be a red flag. Above all, make sure you’re comfortable with the transaction.
Buying items on eBay should be no different than anything else bought online. One of the best improvements I’ve seen with eBay are their payment protections. If there’s a problem with a purchase, it should first be negotiated between the buyer and seller. If they’re unable to resolve the issue, eBay will help with online support. Depending on how the item was paid for, there should be fraud protection in place.
PayPal, an online financial service, is now owned by eBay. If a PayPal account was used, PayPal will investigate the transaction and often refund the buyer. Of course, many people also use their corporate credit cards, and there are fraud protections built into those as well. That being said, after having completed over 2,000 transactions and 20 years of buying and selling, I have never had to file a claim to this day.
My Experience with eBay
I started using eBay, one of the first auction websites, about 20 years ago. I had been restoring classic cars, and sometimes those parts are hard to find. However, with the popularity of classic cars, many engine and body parts were turning up on eBay. I was rather comfortable bidding in auctions because I had been to many in-person auctions with my dad, who at the time did a lot of freight-salvage and resale. Through eBay, I ended up finding genuine new and used parts for a fraction of the price of buying reproductions!
Back then and now, a lot of freight-salvage is found for sale on eBay. Imagine a freight box of 24 battery packs for camera flash systems. The outside of the delivery box gets damaged by equipment moving it, or while in transport, and is set aside for a damage claim. Once it’s cleared by the freight company's insurance, the majority of the individual boxed units inside often have no damage. Once inspected, they are often sold at a discounted price on the open market. This new online commerce opened a great opportunity, making eBay a pioneer of e-commerce.
eBay has evolved over the years. When I started selling items, we sent cashier’s checks via mail and dropped packages off at the FedEx location after payment cleared. It was a 7-to-10 day process. Today, purchases and payments are completed in minutes. Delivery options have also improved over the years. In these days of Amazon Prime, we know packages can be delivered the next day if needed.
eBay is vast. People have started businesses that exclusively sell on eBay. And they’re huge! There are large companies that base their business model on reselling other companies’ overstock. Many companies have started to repurpose closed companies’ parts that were procured at auction or are consigned through their websites. There are also hundreds of parts search engines out there that will take you down a rabbit hole when you request a part from them. On eBay, an item is either there or isn’t. I’ve had many conversations with maintenance personnel at conferences across the country. Many appreciate the ability to search the internet to quickly find the information on their equipment. They can then find what they need to get their legacy equipment running.
So how did I make the jump to using eBay for my company? As with many businesses, we relied on many of the same local vendors to supply us with needed parts for years, because they were trusted and we had accounts with them. Several times I showed my team the items we needed from the eBay listings and the saving potential. Becoming an asset manager allowed me to make decisions about parts procurement. So naturally, I registered on eBay. Over the past eight years, I can account for a savings of approximately $250,000 in parts acquisition alone! Word tends to get around. Now, craftsmen in my company will request their needed parts for repairs with links from eBay when they aren’t a store-stock item.
There are many examples we have had buying on eBay. One that stands out was procuring some resistors that were needing to be replaced in a combustion blower system. This system has two blowers and two drive units that have been obsolete by the OEM. Our purchasing department reached out to the OEM for replacement parts and was informed that they were no longer stocked nor available. The unfortunate problem with this application was more than just some resistors; they were part of a layered board system on the drive. Direct replacement, therefore, was the only option for drive repair.
This was a big problem for us. Having one of the drives down reduced production by more than 30% due to lost air supply for heating. I did a little research online and found the part number of the resistors. We then compared the two pulled from the drive to match a repair kit for this style drive for $100. (I’m sure back then the kit was much more expensive through the OEM.) I was able to call the seller and had them “next day air” the purchase to get us back to 100% air output the next day. If we hadn’t had eBay as an option this time, it could have required additional time and expense, and further sacrificed productivity.
We’ve also been able to reduce our unneeded inventory of parts by selling on eBay. Every company has some low-hanging fruit that needs to go. Sometimes a part no longer has value to the company, but you know it has value for another. It’s important to take inventory and assess needs before deciding whether or not to offer it for sale. Deciding if it’s special to the operation or has many uses will clean a lot of parts from a list. Looking at the electrical, automation, and drive items take some time to value.
One time, we had a spring reel and cup component that we didn’t use anymore, so we identified it as “Not Used” in our plant. The part, however, was still being sold and used by others in the industry, and they now cost much more than we paid years ago. We sold our stock of these on eBay to the same buyer three times in the past year for a total of 16 parts. I won’t discuss the specific price, but I can say that the buyer saved $80 per part, for a total procurement saving of $1,280. We also achieved an ROI of 90% after the fees and time spent, and returned a little over $5,000 into the budget. It was a real win-win.
Not everyone is comfortable using eBay. I’ve talked with many that have noted that their company won’t stray from the traditional procurement process. Change is often difficult for some, but it can’t hurt to get online and do some investigating. Show the others what is available. Try one or two low-risk or inexpensive items to see the results. Having open communication with the leadership team, with support from the top, is critical for success. eBay is not the answer to every need, but it is a tool to put in the toolbox. One cannot always rely on availability of an item, nor is every seller trusted. eBay is not a system for daily sustainability, nor is it a means to replace your normal procurement of high-turn items. However, it’s a great supplemental resource.
Think of it as the junk drawer in the kitchen. Maybe it has what you need, maybe not. But it’s definitely worth a look. In the bigger picture, eBay is more than just getting some dollars for unused equipment or parts, but potentially making someone else’s business successful and cost-effective. We can make use of the equipment and parts that might have been sent to the landfill or scrap piles. The economic and ecological benefits of finding an end user for parts that potentially could have been tossed or scrapped is reason enough to give it a try. With over one billion listings every day, consider using eBay for industrial parts.
Brian Burns is an Asset Manager and Open Market Manager of industrial equipment in the steel industry in the USA. He has spent 30 years working in operations, maintenance, and asset management. His leadership training at Skolkovo School of Business in Moscow, Russia has also contributed to his education. Brian has a bachelor's degree in Physical Education and Associates Degree in Industrial Technologies. He has an industrial plant electrical license, is a Certified Reliability Leader, and a Certified Maintenance Manager.
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