Already this young semester, we have repeatedly discussed entrepreneurial opportunities via finding a market niche and serving it well. Yesterday’s class speaker is the epitome of a successful niche marketer.
Former Monmouth College “Green Army” (building and grounds crew) supervisor Rod Smith sells used NASCAR racing car parts on Ebay under the seller name a-1performancewarehouse. To some, selling used racecar parts on ebay may not sound like much of a business model but Smith excels at it. As he informed the Midwest Entrepreneurs class yesterday afternoon, he has sold 1,447 items on Ebay with total revenues of $122,000 in just the last 90 days. During class, the “ca-ching” ringtone on his cell phone sounded twice; making it 1,449 sales in the last 90 days. The two sales closed during class totaled $425. Smith paid about $150 for the goods sold. This volume of highly profitable sales is commonplace for Smith, who left Monmouth College to pursue his Ebay business full time in the summer of 2010. Indeed, serving the used NASCAR racing car parts niche market—with buyers often as far away as Indonesia and New Zealand—serves Smith well.
Smith’s fascinating entrepreneurial business model is founded about the fact that NASCAR racing teams routinely replace most of the parts on their cars–including the motors–with new parts even when the old ones are still working; typically once per week and often after only one race. These used parts are highly valuable to persons building their own racing cars—Smith sells 95% of his items to car builders—as they are the absolute state of the art and are available through no other source (other than the eight or so other entrepreneurs who, like Smith, travel to North Carolina to buy directly from NASCAR racing teams). Smith makes monthly trips to visit the teams wherein he buys the parts in bulk and then transports them back to his Monmouth, IL warehouse where they are, with the help of his wife and two Monmouth College student interns, sorted, cleaned, inventoried, and, eventually, posted for sale in Ebay auctions.
As was noted in class yesterday, anyone can start an Ebay business with relatively little investment. However, many Ebay entrepreneurs fail when they discover either that there is surprisingly little demand for what they have to sell or that shipping costs and fees paid to Ebay and PayPal—Ebay’s payment service—eat deeply into their profits. Smith, however, a former stock car driver himself who has followed NASCAR for decades, knows that there is great demand for the high-end used racing car parts he handles. Further, he knows what each part is and how they function as a result of having built his own race car engines. He also personally knows the NASCAR team owners who have the parts made for their drivers; in fact, they keep parts especially for him. Smith’s intimate knowledge of the substantive niche market he serves is what sets him apart from many others not fairing so well on Ebay. Also setting him apart is that what he sells is not subject to market downturns as much as many items targeted at collectors or casual buyers. As he explained it in class, the ongoing recession has hit sellers of collectible items hard; these are discretionary items often foregone when discretionary incomes decline. The fact that 95% of his scarce, state-of-the-art car parts are sold to persons re-using them serves as a significant buffer to the ravages of recession.
It will be very hard for us to find a better example of a crafty entrepreneur who has discovered such a viable niche in the market—and then worked harder to better understand and successfully serve it—than Rod Smith; Monmouth’s High-Horsepower Ebay Entrepreneur.
Thursday’s class speaker will be local-boy-made-good—and Monmouth College alumnus—Will Zimmerman, whose company constructs grain storage bins in the region.
Next Tuesday we will welcome to class global tea guru/entrepreneur David Lee Hoffman, who comes to campus from the San Francisco area as part of the Monmouth College Science and Business Initiative.
It promises to be yet another extraordinarily interesting and educational week in Midwest Entrepreneurs class.