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The Chatter Newsletter - eBay

Friday, August 20, 2010

Finding the Right Niche on eBay – Knetgolf’s Success Shows the Way

A business model made of pure golf.
Ask the question “Where would you find sunken treasure?” and most people would think of gold-laden galleons sunk off the Spanish Main or long-buried oak chests hidden in secret places on Caribbean islands. But ask Shaun Shienfield, and his immediate response will be, “A golf course, of course!”

Shaun's eBay ID is knetgolf, named after Knetgolf, his family-run business. Knetgolf specializes in selling recycling golf balls retrieved from golf courses and selling them at a discount. knetgolf's success on eBay shows how far you can go if you identify the right niche and nurture your business with care.

“One–hit wonders” are a huge hit with golfers
And the connection with sunken treasure? knetgolf works with scuba divers on more than 200 golf courses around the United States to retrieve sunken golf balls from water hazards. “The balls recovered from water hazards are our lower grade balls,” Shaun hastens to add. Their highest quality balls are retrieved from other areas of a golf course, mostly located in the desert states of the Southwestern United States. “Our best balls – which we call ‘one hit wonders' – are almost indistinguishable from brand new balls. Indeed, many avid golfers have told us they prefer to use our ‘mint' or ‘pearl' grade balls over new ones.”

With over 26 million golfers in the United States, it's no wonder that more than a billion golf balls are lost every year on courses around the country. If you're a regular golfer, the cost of all those lost balls can burn a neat little hole in your pocket. Using recycled golf balls saves golfers a nice chunk of change every year – making the business of recycling golf balls a very compelling business model. Shaun says that knetgolf's mint quality balls can help the average golfer save 50% to 60% on the cost of new balls.

knetgolf hits a birdie – on eBay
knetgolf didn't invent the recycled golf balls industry – there were already several well-established big players in the field. But a key reason why knetgolf has been able to hold its own in this competitive field is its presence on eBay.

Shaun recalls how he discovered the potential of eBay as a channel to market knetgolf's range of inventory. It was 2002. By that time, knetgolf had already been selling online for about four years, through its own website. Shaun was at home one day after work, mulling over ways to promote his golf balls on channels outside of his existing e-commerce site. "Every time I searched for golf related products to see what position our competitors were in, something funny happened - eBay dominated the listings," says Shaun. "I followed the links through and sure enough it was individual sellers from eBay who were in the top 30 rankings. I said to myself, if all of these golf businesses are selling on eBay and are optimized on search engines then perhaps I should give it some thought, sign up an account and begin to sell our golf balls too."

Shaun lost no time in getting an eBay account for knetgolf, and was impressed at how quickly their sales expanded. Today, at least 40% of knetgolf sales come from eBay. That's over 2 million golf balls sold on eBay alone!

“eBay does all the marketing for us”
Besides resulting in expanded sales, Shaun explains that their eBay presence has allowed knetgolf to stay ahead in a competitive industry. “It's eBay that does all the marketing for us,” Shaun declares. “It's a trusted brand name – it would be hard to find a golfer who hasn't heard of eBay. Thanks to their strong brand, we don't have to invest big amounts in advertising or email outreach campaigns. eBay unites the buyer and the seller in remarkably efficient ways. True, we pay fees to eBay—but they're just a small fraction of what it would cost us if we were to invest in marketing efforts ourselves.
knetgolf has a rigorous process to ensure quality
The success of knetgolf demonstrates how eBay empowers small and medium sized family-owned businesses discover how to push the envelope on their entrepreneurial dreams.

knetgolf was started by Shaun's father, Gary, an entrepreneur with experience in clothing, music equipment, and warehouse sales. When he started knetgolf, Gary was in the close-outs and liquidation business, and was looking for a sustainable niche in which to expand. Shaun and his brother Korey were early recruits into the enterprise – as a teenager, Shaun often put in long hours being involved in all aspects of the business, from sorting golf balls into different quality grades to answering the phones to striking deals with companies specializing in retrieving lost balls from courses. Today, as knetgolf's President of eBay Operations, there's no aspect of the business that he doesn't know inside out – a critical skill in a medium-sized business.

A rigorous quality control process
The journey of knetgolf's products begins in over 200 golf courses around the United States . Here, teams under contract to knetgolf scour the fairways, bunkers, and water hazards of the course to retrieve lost golf balls. The balls are then trucked to knetgolf's warehouse and processing facility in Ontario, Canada, where they go through knetgolf's rigorous quality checks before being offered on eBay.

As trucks from the golf courses converge at the knetgolf warehouse, thousands of golf balls cascade into giant holding bins. At this stage, the inventory is far from ready for the market – with balls of various brands, grades, and colors jostling each other in enormous heaps. The balls are then cleaned. At the rate of 40,000 balls an hour, industrial washing machines wash the dirt off the balls, after which they are dried off by powerful dryers. The balls are then soaked overnight in a specially developed solution, to remove stubborn vestiges of dirt and to restore their luster.

Sorting and grading, the next process steps after cleaning, demand the most skills from knetgolf's employees. Experienced graders, sitting at huge sorting tables under white lights, manually place the balls into different bins based on grades, brands, and types of balls. “Our graders inspect the balls like jewelers evaluating gems,” Shaun explains.

After sorting and grading, the balls are then packaged into mesh bags – knetgolf sells them in quantities of two or three dozen per bag – and tagged for shipping.

It's a complex inventory management system – within the three basic grades (mint, Grade A, and Grade B) that knetgolf offers, there are further classifications, based on brands (over 200!), number of dimples on a ball, high and low compression (for distance), range, and several other attributes. knetgolf worked with a third party vendor to build customized software to streamline their complex inventory management and processing needs. Shaun gives kudos to Bill Birss, one of the partners at Knetgolf right from the early days, for customizing the inventory management system to their needs. “Bill's system made sure that the orders are processed in a logical and efficient manner from the moment the eBay customer pays to the moment the item leaves our warehouse. From printing packing slips for our order pickers to exporting our orders to our UPS connect system to ensuring our UPS notifications were automatically sent out to our customers – Bill made all that happen.”

“Keep your eye on the ball”
Their selling volume of over 5 million golf balls a year is no cause for complacency, Shaun says. “In this business, you have to keep your eyes on the ball. No pun intended,” he says seriously. “There's a lot of competition out there that would be glad to get our business. To stay ahead, we're always reviewing our selling and promotional strategies – and needless to say, we watch what the competition is also doing.”

knetgolf 's approach may have lessons for every seller on eBay – irrespective of their size and business. On a daily and weekly basis, Shaun is always monitoring trends in his price-sensitive and highly competitive business – making decisions about going from auction-style to Buy It Now listings, ending listings at different times of the day to get maximum exposure, and making sure they're starting new listings every day of the week.

Keeping customers happy – without breaking the bank
Shaun also realizes that prompt shipping and a friendly product return policy can go a long way to building customer loyalty. “We want our buyers to keep coming back. They'll only do that if they're confident that we ship their purchases quickly, and can be relied on to give them the quality of golf balls they want. So my philosophy is – let's do whatever it takes to make our customers happy, without breaking the bank!” For knetgolf, going the extra mile includes a commitment to ship items in 48 hours, and ensuring delivery within 2 to 3 business days for buyers on the East Coast, and 7 to 8 business days for West Coast buyers. knetgolf also emails shipment tracking numbers to its customers.

And if something does go wrong with a buyer's purchase, knetgolf's robust return policy ensures that they don't lose a buyer. “Many golfers are very particular about the type of ball they use – not only does it have to be their preferred brand, it also needs to have the correct compression and the right number of dimples. Well, occasionally a shipment does go wrong and they get the wrong balls. But we're always happy to give our buyers a full refund or extend credit on future purchases – and we also ask them to keep the balls! We want to keep the buyer through their entire golfing lifetime, so it's important to maintain our good reputation with them, and keep the word-of-mouth going.”

Whether it's using bulk listing tools like Turbo Lister or Selling Manager Pro to make listing more efficient, Shaun makes sure he's on top of the latest seller tools and marketing offerings from eBay, and also on industry news and developments.

knetgolf is a great case study of how entrepreneurs can look on eBay as a strategic partner to take their business to the next level. “With eBay's global reach, today knetgolf sells to buyers in more than 10 countries,” Shaun says. “We're strategic allies. As your business gets better, ours gets better too. And vice versa.”

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