If you are considering the purchase of a 1965 Silver Cloud III or a 1999
Silver Seraph, you are likely to give the car much more scrutiny than if you’re
visiting a Rolls-Royce dealer to select a new Phantom. Buying a previously owned
car—whether a classic or a more recent vintage—requires a spirit of caveat
emptor, and in the realm of high-end automobiles due diligence is especially
critical. So would you buy a car without seeing it for yourself? Believe it or
not, in the burgeoning online eBay Motors marketplace, that is exactly what most
buyers do.
Simon Rothman, the global vice president for eBay Motors, says his
division was actually the brainchild of eBay users. In 1999 the company noticed
that eBay sellers were using the model car section to peddle the real deal.
Rather than quashing the trend, eBay encouraged it by creating a designated auto
category that led to the launch of eBay Motors in 2000. If you haven’t visited
the site before, you might be surprised by the expansive selection of
automobiles and accessories—in the fourth quarter of 2004, eBay Motors generated
a gross merchandise volume of $11.1 billion.
It is an exponential growth
that even eBay didn’t expect, says Rothman. “If you look at the numbers, eBay’s
expectations for the Motors division were incredibly low,” he explains.
Admittedly, the idea of using a collectibles marketplace to sell cars seemed
far-fetched. “There were those,” acknowledges Rothman, “who asked, ‘We’re going
to go from selling Beanie Babies to Bugattis?’ But eBay has always been a
corporation that understands innovation, rewards and respects it.” Because of
eBay’s roots in collectibles, classic cars formed the core of early offerings,
but from rare, antique, and project cars, dealers and individuals expanded to
exotic models, and eventually delved into the sale of common vehicles and parts.
Now, a car sells every minute, a Mustang every 34 minutes, and a Corvette every
hour; sales growth means the company’s statistics must be continually
revised.
According to Rothman, eBay sees itself as “a tool, a platform, an
enabler that helps make marketplaces more efficient.” Since automobiles first
rolled off of assembly lines, he says, there has been “very little innovation on
the distribution of cars. eBay Motors has moved the center of gravity over to
the consumer” to create a “revolution in the auto industry.”
The reputations of buyers and sellers is key in the online world of eBay Motors.
After every transaction concludes, both parties may leave feedback that lets
the eBay community know whether or not everything went well.
(Click image to enlarge)
All of this begs
the question of how, for example, anyone in California can spend tens of
thousands of dollars on a car in Florida without ever having driven it. It would
seem as sensible—and risky—as getting a mail-order bride. But eBay Motors’ 10
million monthly visitors disagree. Among them is Bill Thoreson, who purchased a
1967 Ford Mustang fastback on eBay with the help of Kompolt, an auction company
that facilitated the sale. Because of the resources offered by Kompolt and eBay,
Thoreson says his transaction—his first experience with an online auction—felt
safe. “I think the most important thing to know before purchasing a high-end car
on eBay is to really feel comfortable with the seller and the auction company.
The staff at Kompolt was very professional at walking me through the process of
registering, meeting the requirements of prequalifying, and test bidding,” he
says. “It was also reassuring to me that eBay was involved because of the
safeguards they have in place. The instructional information on their auction
site was very helpful to me. This all made me feel very comfortable with the
idea of bidding on a high-end car I’d never seen in person.”
Rothman, who
bought a Porsche on eBay for himself, claims that the process of online car
commerce can be highly personal. “Something that’s been completely
underestimated is the intimacy that develops between the buyer and seller of a
car,” he says. “Over the course of vehicle purchase, they get to know each other
extremely well.”
Furthermore, with eBay’s standard of vehicle documentation
(dealer Brian Hanold says he provides up to 60 high-quality photos of each
vehicle) and the feedback ratings system sellers and buyers use to build
reputations, the online marketplace may be more transparent than its traditional
counterparts. Hanold, whom eBay currently ranks as a Titanium PowerSeller for
his volume, avers that in the land of eBay, reputation is king. “Not one vehicle
sale is worth damaging my reputation,” he says.
In addition to its rating
system, eBay implements measures such as Vehicle Purchase Protection, which
covers the value of an automobile up to $20,000. Higher-end consumers can
opt to use third-party escrow agents, but according to Rothman, they often feel
they don’t have to. eBay dealers fight hard to win bidders’ trust—it is, after
all, a winning proposition. Each morning before 9 am, eBay Motors sells more
cars than the average dealership sells in a year. With such sales volume,
dealers like Hanold can afford to offer bidders’ guarantees. “Ninety percent of
my sales are sight unseen,” Hanold says, “but if my customer wants to fly or
drive into the town of the vehicle’s location and is not thrilled, his or her
deposit will be refunded.”
eBay Motors opened Hanold’s business to the
world. His eBay-linked web site,
www.hotautoweb.com, sells high-end vehicles
to customers throughout North America, Australia, and Europe. eBay serves
bidders in a similar fashion. Says Seattle-based Thoreson, “Buying on eBay
brought the marketplace to me, in the comfort of my home, at my convenience.
This allowed me to be exposed to cars that I normally would not have any access
to because of the limited supply in any one geographic region.”
Thoreson also
appreciated the expedience of his car purchase. “When the bidding was over and I
was the high bidder, I was contacted within minutes,” he says. “The money was
wire transferred within 24 hours, and I owned a new car. It is basically a
one-of-a-kind original, restored and modified by legendary builder Troy
Trepanier. The waiting period can be several years if you want one of the top
car builders to build you a car. eBay offered an opportunity to get an awesome
car, without the wait.”
eBay Motors,
www.ebay.com/motors