THE likes of Tartan Treasures, Burntisland Books and Timland Celtic are unlikely to be busying Scotland's corporate advisers any time soon, but they represent a burgeoning sector that has grown out of the online auction site, eBay.
An estimated 15,000 or more eBay ventures are run from Scotland turning over £150m a year, according to newly released figures. While many are bedroom enterprises earning only a few pounds a week, others are developing into sizeable businesses, t
aking on staff and expanding away from their eBay base.
New data suggests that across the UK the number of people running a business through eBay has grown by 160% to 178,000 over the past two years, including Kirriemuir-based Andy Jackson, a former candidate on The Apprentice before being fired by Sir Alan Sugar, who made part of his living from trading cars on eBay. And the most successful eBay-based businesses boast turnovers of several million pounds.
There is also plenty of anecdotal evidence that the internet auction site is providing a valuable route for many budding entrepreneurs to try out ideas with little risk or upfront outlay, potentially significant given Scotland's low business birthrate.
Although he has now moved on to other ventures Stuart Ebdy, who won the Scottish Young Entrepreneur of the Year award in 2006, believes trading on eBay as a teenager gave him a taste for business.
"I used to go to an auction market in Aberdeen where people sold boxes of stuff for £1 and I'd go through them and sell what I could on eBay," says Stuart, 25, who now runs a print and design company and is involved in five other businesses. "I was only making a few quid but I think that made me realise that business wasn't as hard as it seemed and it's all about selling something for more than you bought it for.
"It also made me realise how important customer satisfaction is. Bad feedback left on the site by buyers could be very damaging and I always worked very hard to get 100% positive feedback and I think that has carried through to what I'm doing now."
Although Colin Mason, professor of Entrepreneurship in the Hunter Centre at the University of Strathclyde in Glasgow, admits eBay was a "fascinating phenomenon" he stresses it is important not to overestimate the number of people making a full-time living from it.
Figures from a survey he carries out of home-based although mainly full-time businesses suggest 7% of them had some sales through eBay but fewer than 1% generated more than half their sales from it.
"Some of these businesses will also just be replacements for the car boot sale or whatever rather than net new activity but it is a whole new space for entrepreneurship and it must be encouraging more people to think about business," says Mason.
"It is also interesting that companies are now being set up to support the eBay economy and handle packaging and posting and so on for those who trade on it."
Bernard Vincent, programme manager for the eBusiness Clubs Scotland initiative and an ecommerce consultant, says the online auction site had been a "overwhelming" success, but adds: "I get a little sceptical when people talk about eBay entrepreneurs – to call someone an entrepreneur because they sell a few bits and bobs on eBay is stretching it at a bit. There a few very successful ones on there and a mass of people who just dabble."
However, eBay did provide a useful learning curve for people to try their hand at business. "It teaches them about the need to make a profit but also about managing customers both of which are vital in business valuable," says Vincent.
Those lessons have provided a launchpad for some to go on to develop larger enterprises. Denice Purdie began her business selling handmade soaps on eBay. Four years later she is busy running 'real' shops in Inveraray and Dunoon which developed from it. She set up her eBay shop after a car accident forced her husband to leave the Royal Navy, cutting the family's income by two thirds.
"As well as the public we also got a lot of larger wholesale orders as shops were looking for stock on eBay," says the 39-year-old from near Loch Fyne who runs Purdie's Scottish Soaps. "Since we live in the back of beyond it would have been difficult for me to sell to them in the traditional way."
Purdie believes her eBay venture gave her valuable experience in areas such as pricing, product display, stock control and distribution with little risk or financial outlay. "You get also far more customer feedback by selling on eBay than you do in a shop," she says. "If someone buys something from your shop and doesn't like it they probably just won't come back but with eBay every customer can rate your service."
Dr Jonathan Levie, project leader of the Global Entrepreneurship Monitor at the Hunter Centre, believes the customer focus needed to be successful on eBay is a valuable lesson. "One of the things I try to stress to my students is to get close to their customers," he says. "So many new entrepreneurs seem to be afraid of asking customers what they want and the eBay system provides instant feedback."
The website can also provide new sales channels to existing businesses. Stewart MacInnes, who runs Falkirk-based gifts outlet Scottish Touch, set up an eBay shop a year ago to complement his shop and standalone e-commerce site. "We've looked at other auction sites but nothing compares to eBay – everyone knows it and it has been very successful for us," he says.
MacInnes cites the charges – particularly if customers also pay with PayPal – as being one of the downsides. "It probably works out around 6% a sale for us, but we do get a lot of business from it and that is what you are paying for," he says.
He cautions that those who solely trade on eBay risk placing all their eggs in one basket. "If the site ever went down for a long period of time they would have real difficulties and they are also at the mercy of eBay if they wanted to raise their fees."
Last week eBay announced it was changing its fee structure. Although listing fees for items are being reduced, commission for some items will rise to 7.5%. Those who trade on eBay also need to be aware that they need to declare gains to the taxman in the same way any small business does and need to be VAT registered if turnover is above £64,000.
The full article contains 1120 words and appears in Scotland On Sunday newspaper.
