Bidding for a bigger share

People think there’s just one company that offers online auctions. EBay dominates the roost, but more than a dozen other contenders are out there, trying to make money and gain loyal users.

One of the contenders is ePier.com, a Spokane auction site that’s now in its eighth year. Its first several years were rocky. But company CEO James Kim said he’s convinced the company is poised to grow by adding more customers and turning into a thriving online e-commerce site.

“I have more ideas than I have time to implement them,” said Kim, 38. “I’m convinced that the business model we have for ePier is a good one.”

Kim and other site owners like him have good reasons lately to think eBay is vulnerable. Since early this year, an eBay revolt has erupted as many of the site’s sellers and buyers reacted negatively to changes made in selling fees, seller ranking systems and alleged favored treatment of large retailers.

The result, said Kim, is that more people are turning to smaller auction sites.

“Our users have told us they like ePier because it’s like how eBay was before it got large,” he said.

“Small” definitely still applies to ePier. According to Web site statistics provided by Quantcast.com, eBay draws about 63 million unique visitors per month. EPier gets about 43,000 per month, according to Quantcast’s data.

Grants Pass-based Onlineauction.com, the only other Northwest auction site, draws about 33,000 visitors per month.

Chris Fain, the owner of Onlineauction, said his site got a major boost in users and traffic this past February. He claims Onlineauction’s 14 million total items listed at his site makes his operation the second largest in number of items being sold in auctions.

The ePier site says it has about 500,000 items listed for sale. About 100,000 users worldwide have signed up, he said.

Fain agreed with Kim that despite eBay’s huge lead, the online auction segment is still strong and can be targeted by businesses that can build a loyal base of buyers and sellers.

The general formula for making money is to charge either fees for listing items or take a commission on each item sold, with the amount of commission varying according to the sale price. Some of the revolt voiced by eBay regulars is the increase in listing fees and the share of the sale price being claimed by eBay.

Many sites, like Onlineauction or ePier, also get revenue by offering sellers ways to enhance or highlight their items, providing some items more visibility when competing for buyers’ notice.

The majority of online auction sellers are individuals who are recycling items or who make a weekend business out of finding things at garage sales and selling them online. As eBay has grown larger, however, many retail businesses have opened storefronts online and simply sell their merchandise directly through the online site.

Kim said eBay’s vast number of visitors and the glut of retailers using that site have changed the attraction that site once had – that bargains were fairly easy to find.

“So the reason we think we’re attractive is that gems and good deals can be found at ePier,” he said.

Kim’s pricing system is based on making selling quick and painless, he said. A user registers at ePier for free and pays nothing to list an item for sale.

If items sell, ePier gets a percentage of the sale price, but it’s much lower than what eBay gets. If a seller sells an item for $100, he’ll pay ePier $2.75. That same sale on eBay would cost the seller $6.82.

Like all other online sites, ePier also allows sellers to pay extra for tools to make listings stand out. Kim also offers sellers premium services that can be paid in monthly or yearly amounts.

Fain’s system at Onlineauction is even more basic. He takes no fees either to list an item or after it sells. He gets most of his revenue, he said, by having sellers pay either a monthly $8 subscription or a $96 annual membership.

A few years ago, Fain offered to buy ePier but Kim and he couldn’t agree on a price.

Kim is candid in saying he considers ePier’s value to be about $600,000, which he said is about six times its annual revenue.

The company is profitable and Kim is convinced he can accelerate its growth if he can find an investor who will provide some capital to allow the site to add more features and streamline its services.

For now, the company staff is Kim and two part-time workers. Kim said he works 60 to 70 hours a week, and enjoys doing it.

He graduated from Mead High School in 1988 and earned a biology degree from Pomona College in Los Angeles. He worked nine months at Stanford’s research center, where he learned he had no interest in science or research.

When the Internet boomed around 1994, Kim decided to develop a user-friendly business Web site. By 1998, he had registered about 60 Web domain names, including ePier. “A pier is a place for ships to unload or take on cargo. And I figured any name with an ‘E’ in front of it had to be worth something,” he said.

He moved the company to a duplex he purchased on North Regal, two blocks west of Spokane Community College. Three years ago, Kim decided to take a number of computer programming courses to help him as he built out ePier.

“I realized back then that I had a minimal understanding of my own site,” he said.

His efforts in the past year have been focused on rebuilding the underlying database that manages all listings and records, and enhancing the bandwidth ePier uses so that pages load more quickly.

An optimist, Kim is certain he’s headed in the right direction and that over the next 12 months ePier will pick up momentum.

“I’m very satisfied and proud of what I’ve built. I love that ePier has become a useful tool for people to sell things and being a place where they can make money and find things at lower cost than somewhere else.”