EBay's Panty Raid - Industry Trend or Event

Industry Standard, The, Dec 11, 2000 by Daniel Mcginn

There's a burgeoning market online for underwear. Although declared verboten on eBay, entrepreneurs keep selling used drawers.

UNTIL LAST SUMMER, MARIE CURTIS had no idea there was a gold mine in her dresser. Then a friend told her to go on eBay and type "used panties." She was shocked to find more than 400 women selling their old underwear for up to $30 a pair. So Curtis listed a pair as a joke. They fetched $10. "These were just dime-store panties," she says. "I couldn't believe it."

Since then Curtis, a 31-year-old FedEx courier in Pekin, Ill., has been changing underwear faster than a Victoria's Secret model -- and she claims she's earned $4,000 selling those skivvies, enough to pay bills and buy a bridal gown. Business is so good she's urging her fiance to start selling his used Hanes briefs. "Guys' stuff brings top dollar," she adds.

In a year when so many dot-com investors have lost their shorts, a different group is profiting by selling theirs. In the first week of November there were roughly 670 pairs of underwear for sale on eBay. It may sound like an obscure niche, but used undergarments are becoming "a significant subset of the adult online industry," says Frederick S. Lane, author of Obscene Profits, a book on the economics of pornography.

These entrepreneurs now face a shakeout in the market. EBay recently announced that it will ban used panty sales from the site as part of a broader move to become more family-friendly. "The language [in the used underwear ads] was becoming very suggestive, very racy," says Kevin Pursglove, an eBay spokesman. Still, the ban isn't likely to end the business. Last week a dozen or so used panty auctions could still be found on the site, and a host of dot-undies have started up, independent of eBay, with 43 used underwear sites listed on Yahoo alone. Curtis has created her own adult-oriented auction site, Ebanned.net, where she hopes to earn commissions from other sellers' transactions.

This doesn't mean that easy money is lying in your hamper. Making a profit on the Net takes work. Consider Patty McGee, a 34 year-old Texan. Her problem: So much underwear, so little time. To create an effective ad, "you have to take a picture, edit it to size, download it," says McGee, whose day job at a Houston oil company has only given her enough time to sell a dozen pairs.

McGee is losing market share to savvier competitors like Nancy, a 26-year-old office worker (who, like many sellers, declines to give her last name) in Washington. She relies on her fiance, Rich, a laid-off tire salesman, to keep tabs on her auctions while she's at work. Rich boosts profit margins by employing a cyberage variation of the old grocery store loss-leader strategy. He lists just a few of Nancy's undies on eBay to win customers, then sells most merchandise directly to repeat buyers at higher prices.

Other sellers face a different problem: They can't keep up with demand. Debbie and John, a retired Montana couple, solved that problem through strategic outsourcing. After they unloaded their own unmentionables (30 panties, six bras and three pairs of John's briefs netted $75), Debbie, 53, began taking in neighbors' old underwear on consignment.

That's small potatoes compared to Michelle, a 28-year-old Florida real estate agent whose assembly-line tactics make her the Henry Ford of used underwear. She buys 56 pairs a week ($2 apiece at Marshalls), which are worn by a network of eight friends. "They're wearing new panties every day, and they don't have to wash them," she says. "They love it." To cut raw material costs, Michelle is negotiating to buy direct from an underwear manufacturer. She enlists a friend to do market research, scoping out competitors' auctions and testing how quickly they respond to his e-mails.

Says Michelle: "Our competitive advantage is to be fast, friendly and sweet."

Daniel McGinn is a national correspondent at Newsweek.