The eBay Connection

The online auctioner won&'t break out how much new boxed product it is moving vs. used or refurbished product. But the company claimed a whopping $3.4 billion in annualized gross merchandise volume for computers and networking in the fourth quarter ended Dec. 31, compared with $3 billion in the year ago period. And eBay ranked No. 2 behind CDW as one of the top five alternative sources in CRN&'s 2005 sourcing study.

“I source through eBay once in a while,” said one solution provider, who did not want to be identified for fear of retribution from his authorized distributors. “EBay is just an extension of the gray market.” One difference, the solution provider said, is unauthorized distributors like Arbitech have more credibility than eBay, even though eBay has a rating system aimed at weeding out fraudulent suppliers.

The eBay top 10 list last week on the Computers and Networking portion of the site featured Dell, IBM, HP, Sony, Toshiba, Samsung, Lexmark, ViewSonic, Epson and ATI. And it is not only commodity systems products that are being sold on the site. A search of Cisco on the Computers and Networking site turned up 24,408 products including countless products touted as brand-new and sealed. Among those products: a $25,999.95 universal broadband router touted as new and photographed in its original box.

Cisco, for its part, claims it is moving aggressively on all fronts to shut down the gray market. One of the most alarming trends in the gray market, Cisco says, is the dramatic rise of counterfeit products that carry the Cisco trademark or logo. These fake branded products hurt the vendor&'s bullet-proof-product reputation, Cisco says, and can even take down a network.

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Tom Derosier, co-owner of CPU Guys, a Hanson, Mass.-based system builder, said he will not source new boxed product from eBay because he can&'t verify where it came from. “I don&'t have the time or energy to worry about that,” he said. “I know if I go to D&H I am going to get a real Intel chip and a real Intel motherboard with warranties and next-day replacement. I opt for quality vs. a 1- or 2-point price advantage, if that.”