EBay Merchants to Gain Access to Health Coverage

EBay Inc. said Saturday that it plans to offer health insurance to its community of small entrepreneurs who make their living auctioning goods on the Internet and have helped turn the San Jose-based company into one of the few profitable dot-coms.

The insurance program, to begin in October, is considered a first in the world of e-commerce--no other major online site provides subscribers access to group health coverage. On EBay, subscribers pay to use the Web site as a virtual storefront to display and sell their wares. “We are getting more and more people--husband and wife teams, extended families, groups of women--who have left their jobs to sell full time and don’t have access to insurance,” said company President Meg Whitman on Saturday. She announced the program to rapturous applause during EBay Live--the company’s first convention for sellers and buyers--at the Anaheim Convention Center.

The plan could also help EBay ease brewing dissent from its core merchant base of individuals and mom-and-pop operations that have to compete with corporations such as Walt Disney Co. and IBM that also auction products on the site.

The plan will be available to EBay merchants who gross at least $1,000 a month in sales. This level has been reached by at least 80,000, according to the company. The subscribers sell everything from used cars and Persian carpets to comic books and fine--even not so fine--antiques.

The plan could help EBay retain and build its subscriber base.

“You have someone working in an antique shop without insurance, and now they can get health coverage, which is not cheap, at a good rate if they sell on EBay,” said e-commerce consultant Lauren Freedman, president of the Etailing Group in Chicago.

“It keeps people selling on EBay, which of course makes money for the company,” she added. Offering such a program “builds incredible loyalty. It’s very smart.”

Keeping their merchants happy was indeed an impetus for EBay to offer coverage, said company spokesman Kevin Pursglove, who estimated that small merchants generate 95% of the site’s transactions.

“We are trying to send a message to individual sellers that we listen to them. We want them to stay on EBay,” he said.

“[EBay] seems to be paying more attention to the big businesses these days,” said Brian Anderson, 34, who traveled to the Anaheim convention from Olathe, Kan. He uses EBay to auction items from his family’s pawnshop.

The company will not be contributing to the insurance plan, however, which will be structured similarly to those offered by alumni organizations and other groups.

Pursglove said the number of subscribers who will be eligible has not yet been determined, but about 150,000 subscribers consider selling on EBay to be their full-time jobs, according to a survey the company conducted earlier this year. At least 80,000 gross $2,000 or more a month and are in good standing.

“We were able to pool together our numbers and get some pretty good rates,” said Whitman. The rates, under the program negotiated with Physicians Mutual Insurance Co., will not be formally announced for another month, company officials said.

Mention of the plan drew the loudest applause of Whitman’s keynote speech. The weekend convention drew about 4,000 EBay buyers and sellers.

“This is a dream come true,” said Larry Bennett, who left his full-time job at a ball-bearing factory in Grand Rapids, Mich., 16 months ago to sell camping equipment on EBay. “I’m a stay-at-home dad now, and my wife kept her factory job for the insurance. Now maybe she can quit.” He and his wife chose to celebrate their fifth anniversary by attending the convention.

Full-time merchants such as Bennett were clearly the stars of the gathering in the eyes of EBay and were feted with dinners and other events, in some cases even having their travel expenses covered.

Karen Young has completed 10,000 transactions and has had consistently positive feedback from buyers of her goods, which puts her in an elite tier of EBay merchants. The company flew her from Crawfordsville, Ind., to attend the convention, which continues today.

Describing the prospect of group insurance as “awesome,” she said it would be particularly good for her and her husband.

Young started on the site in 1997, selling “obsolete, used software that was just junk” and eventually began an EBay-only packing supply business. She figured that people who used the site would have a great need for boxes, tape, bubble wrap and packing peanuts.

“Now we have a warehouse that we just expanded and an office,” said Young, 43. Her husband quit his job to become her partner in the business. “Then we had to get insurance ourselves, and that means high rates.”

Many of the full-time sellers said they were in it for the long run, even given the uncertainties of the online world. EBay has remained healthy--Whitman said the company will host $12 billion in transactions this year and make a profit of $1 billion from fees and commissions. But other auction sites by major online players such as Amazon.com and Yahoo have almost faded from the scene.

This did not faze Ronald Hoffman, 43, of Anaheim, who began on EBay selling Beanie Babies and moved on to general collectibles.

“This is not a fad,” said Hoffman, who left his restaurant business to devote 14 hours a day to EBay. “People are always going to buy. It’s what America is based on.”

He did admit to some auction gaffes. “I bought 5,000 collectibles about those boy bands,” he said. “I sold 4,000 of them and got stuck with the rest.”

And what about those leftovers?

“They make great gifts,” he said.