It was 2005 and I had about $300 in my bank account. I was in college, working a couple of part time jobs to pay the bills and I believed with all my heart that there had to be other ways to make money besides selling my time for a paycheck.
Ebay had really grown in popularity and the name was popping up all over the place. In my city there were several Ebay stores dedicated to selling and shipping goods on the platform, so people were really starting to catch on to the value of auction-based selling. I knew if there were stores popping up that there must be lots of opportunity out there to make money in a unique way.
Soon I had joined Ebay as a customer and spent hours each day simply studying the platform to understand more about how people were making money by selling with this technology. I'd never been to a live auction and e-commerce was still a new concept for me, so it took a while to begin truly understanding how the system worked.
That winter while I was home for the holiday break I was sitting in my parent's house reading Ebay listings and one in particular stuck out to me. Instead of a product, this person was selling information for $18. If I paid the fee I could get the name and email address for her wig supplier in China. She swore that she'd made lots of money herself by selling his products and was ready to exit the market, but not before making a little extra cash by selling off her knowledge.
After doing my research I came to the belief that this woman was legit, so I bought her information and immediately contacted the supplier to get started as a wig seller.
At that time, the market for lace front wigs was enormous. A seller could purchase wigs for $99-150 and resell them in the U.S. for upwards of $400. It was an easy sell with a great upside!
For my first attempt I decided to put out a listing for a custom lace wig. The customer could choose their hair length up to 18", hair color from a chart I found on the internet, and describe the texture they'd like their wig to have. The auction began at 99 cents and lasted a week. When it was over, the auction ended at around $450, enough to purchase the customer's wig, a wig to start my inventory and a little cash to keep my bank account from hitting $0.
Right about now you might be thinking "wow, she's such a risk taker," but when we really dissect the story this was a very calculated decision. With $300 in my bank account and holiday hours coming up at my job to help me save a little more I knew that if I had been swindled I would have the means to pay back my customer and end my Ebay endeavors at no more than a minor loss. But I also knew that if this was successful it would be much more lucrative than my job at the Gap could provide me at $5.15 per hour or the Sprint store at $8 per hour.
About 3 weeks later I received the custom lace wig from my supplier in China and it was gorgeous. I proudly shipped my very first custom lace wig to the buyer and collected my positive review on Ebay to begin building my reputation as a seller.
Several months into this business my parents began to catch on to what I was doing and they began to get curious. My father began asking questions about the money I was making, wondering if it could be more lucrative than the current investments he had in slow growth CD's.
Once I explained how it all worked, my dad got absolutely giddy. After my first accidental investor pitch, he handed me $1,000 cash and asked me to double it. I excitedly accepted the challenge and within months, he had $2,000 cash back in his hands.
Running an Ebay business was an enlightening experience to say the least. I was able to learn how e-commerce works, how lucrative it can be, and even had the chance to work with vendors across the globe to purchase goods. How many people do you know that can tell you they've talked with factories in Qingdao and Shandong and held inventory worth thousands of dollars in their college dorm room?
Of course, this story doesn't end with me becoming independently wealthy and quitting school to open a wig shop. It ends in failure as most first time entrepreneurs do.
As it turns out, the woman who was exiting the business had likely seen the writing on the wall. Chinese vendors had become hip to what U.S. Ebayers were doing, so they began selling their own wares on the Ebay marketplace directly to customers. By cutting out the middle-man (ME!) customers were able to get the same products for less than half the price. The wigs also began selling in local wig stores nationwide, so they became less of a hot commodity, meaning demand was significantly lower now.
As per the law of supply and demand I was now stuck selling off my inventory at less than I paid for it and closing the door to my auction-based business model.
As the creative, internet savvy woman I am I decided to leave the industry in the same manner I came into it. I created an e-book and sold it for $35 each on Ebay. The book detailed everything I had learned about buying and selling wigs from China along with contact information for the sellers I was buying from. I sold several copies of the book to both buyers who wanted to purchase their personal wigs direct and entrepreneurs who wanted to try their hand at replicating my success.
What I learned from all of this is that business success is often a combination of timing in the market, knowing the trends in your industry, and being a smart problem solver who knows how to manage the technical aspects of running the business. Without all three of these, any business would fail.
If you're interested in learning about some of the knowledge I've acquired since my Ebay business I encourage you to join in on my upcoming business building e-workshop. I'll share tips I've learned as a business owner and some important facts I got from my MBA education. I also have an amazing guest, Danielle Norris, who is coincidentally also an MBA and helps people learn to create social enterprise business models that increase profitability. It will be interactive, educational and tangible.
KRYSTAL COVINGTON, MBA