In the time zone-crossing, closing-bid-countdown world of online auctions, everyone knows the place to turn a quick buck — or at least, where to get started: eBay. Yet in a transformation that mirrors the way the Internet continually reinvents itself, the auction world has changed. It’s no longer all about eBay.
“Ten years ago, you could probably sell pencil lead for 10 bucks,” said Crystal Wells-Miller, cofounder of the Online Web Traders Alliance and an employee of software developer and merchant service provider Vendio. Now, however, “sellers are disposable on eBay. I hear a lot of people saying, ‘hmm, there’s gotta be something more than just doing this grind every day.'”
“It was like a gold rush,” says Jason Jacobs of Coresense, which develops management software for ecommerce businesses, “and it did what gold rushes do.” That is, the initial frenzy quieted down.
Now, scores of auction prospects promise the same big payoff as the original. Sites like uBid, Bid4Assets, Bidz and specialty e-auctions crowd the web with possibilities large and small.
Matthew Mills, who helped Bidz get off the ground in 1998, left the company on good terms in 2003 to start his own manufacturing company. Still a stockholder, he’s come back as a buyer, seller and fan of the site, which became a publicly traded entity May 1.
“Bidz is on the cusp of doing big things,” he said, “while eBay has maxed itself out.”
As a rising power in the online auction world, Bidz offers “smart merchants great opportunities,” says publicist Igor Krakovsky. “They can benefit from working with us at this time because we’re building new categories beyond the jewelry, watches and art owned and auctioned by Bidz itself. A business can become an exclusive merchant in any specific category if it can handle large volumes of product.”
eBay is the 900-pound gorilla in the auction environment, with 233 million registered users as of the end of the first quarter of the year. Those users generated 588 million listings, which might make a crowded business
environment for some merchants.
With five million users, Krakovsky pointed out, Bidz’s partnerships offer merchants a boost in building brand-name recognition.
Such possibilities might prompt an ecommerce owner to wonder, “Am I missing out?” and “Should I go auction-shopping?”
That depends, say industry consultants, on what you hope to achieve. A clear sense of purpose is critical, said Ralf Von Sosen, vice president of marketing for Infopia, a company that provides consultant services and a software option to manage multiple auctions.
“We’re in this environment that is so fast to jump into new technology that we forget to ask the fundamental questions. It’s kind of boring, but it is important,” he said.
Von Sosen likened the process of adding an auction channel to deciding whether to open an additional brick-and-mortar location.
“How do different sites compare? What are the buyers’ profiles? You want to know who you’re going to encounter — impulse buyers, bargain hunters, price-conscious researched buyers who are looking for exactly what they
want,” Von Sosen said. Merchants must target their efforts much as they’d search out just the right neighborhood for a new store.
While reluctant to stereotype shoppers at well-known auction sites, Von Sosen pointed to some clear trends.
“For example, eBay has a lot of women shoppers, but bid4assets and other sites that handle property seized by U.S. Marshals and real estate foreclosures tend to have a predominantly male base,” he said.
Miller says any merchant who wants to use online auctions must find a good match and stick with it. Otherwise, she warned, a business owner can end up creating merchandise listings in triplicate to meet the requirements of
various auction sites.
“Many ecommerce owners think they’re going to try all these sites, but I encourage my clients to put a value on their own time,” she said. “Is the time required to manage multiple auctions wisely and profitably spent?” Auction management software like that offered by Vendio, Coresense and Infopia can streamline the process — for a price.
“It really depends on what you want,” Miller said. “There isn’t a golden egg out there.”
Coresense’s Jacobs advises caution.
“If I were an ecommerce player looking for ways to augment, I don’t know that I’d look to auctions as my growth strategy,” he said. Some of his company’s brick-and-mortar and multichannel clients have nonetheless found a use for auctions.
“All of them have closeouts, stuff they need to get rid of,” he said. “They sell it on eBay; some sell on Overstock.com.”
For Mills, Bidz was the perfect means to dispose of flat panel televisions returned to his manufacturing company, Clear Solution Partners. Its California facility handles “a tremendous amount of return product,” Mills said. “The retailers send it to us, we fix it, rebox and certify it. But we’d been having issues trying to find a home for them, and Bidz is a great solution.”
Even with Bidz’ required $1 minimum starting price, Clear Solution Partners found it could make more money auctioning off excess flat-screen televisions one at a time as opposed to selling the same inventory to a wholesale
outlet. And auctioning in this fashion is not a labor- or time-intensive venture.
“I don’t need to describe it 100 times; one description matches that whole wall of inventory,” Mills said. “We actually even make a little money on the shipping.”
The company has opted to sign on as a certified merchant with Bidz, which ensures exclusivity on that site.
“We are selling flat panel TVs like crazy, so much that we’ll be bringing in other lines,” he said.
Von Sosen said ecommerce owners must aim for that sort of focused goal-setting when they explore the auction component.
“Are you choosing a marketplace as your core distribution channel? Or did you just pick up 10,000 pink Reebok shoes and you need to throw them on the marketplace?” he posited. “Do you want it to be a customer acquisition tool?
If so, put some loss leaders out there.”
That’s the approach Glenn Randolph, owner of a brick-and-mortar jewelry store in Meadville, Penn., chose. David Jewelers uses online auctioning to gain exposure, build credibility and groom customers.
“We actually budget it as advertising,” he said. For his purposes, eBay is the best option. It also helped David Jewelers take baby steps into the world of online selling.
“We’re located in the Rust Belt, and at one point an awful lot of people were moving away,” he said. That prompted him to look at Internet sales. Over time, Randolph got a better sense of what made money on eBay and what didn’t. He opened a rudimentary website and worked to build a customer base. At one point, he tried comparison site Shopzilla, but it didn’t work as well. Shopping.com did work, but it was acquired by eBay, so he stuck with
what fit his needs.
Around 2002, Randolph experimented with Google keywords and a PPC campaign to drive more traffic to his site. It worked — to a point. But the expensive advertising didn’t always result in sales.
“Since I’m not a national chain, people who came to my site were reluctant to buy.” He realized the eBay feedback system was more valuable to him than the auction revenues his carefully selected, lower-priced eBay Auction and
eBay Store items generated.
“We have 99.8 percent positive customer ratings on 34,000 items, and that reassures first-time buyers,” he said.
Randolph heeded Miller’s advice to communicate with customers, gather information from them, and protect his data. Andale software from Vendio enables David Jewelers to offer customers optional sign-up for special offers via email, thereby acquainting them with the store’s own site. It also runs a consistent checkout platform no matter where purchases originate.
“They can buy multiple items from eBay and from our store all at once, with one payment and one shipping fee,” Randolph said. “The software is not inexpensive but I ask them to customize for me, rather than building things
from the bottom up.”
Coresense and Infopia emphasize the benefits auction management brings to the process of listing items to meet specifications of multiple auction sites, selling, retaining customer information and analyzing what makes the
most money and which fees are wasteful.
For merchants on the smaller end of the spectrum, auction management software is not an option, so careful selection is even more critical. Dallas resident Bobby Beeman operates ToyRanch, which sells collectible toys primarily on eBay. That wasn’t always the case.
“I’ve used a lot of other auction sites in the past — and at times, it’s been good,” he said. “I used Overstock some, and that worked when I was selling a different type of merchandise. Amazon Auction has changed its site
pretty much to a store format. Right now, there aren’t a lot [outside of eBay] that are terribly viable.”
Beeman knows Yahoo! Japan’s auction site would be the perfect fit for what he sells, but until that market opens to foreign sellers, he’s content to stick with eBay.
“It’s just a matter of marrying your items to the site,” he said.
Beeman’s outlook is right on target, according to Von Sosen.
“More is not necessarily better; you need to look at it in terms of, ‘Where do I make a logical investment? Where do I, as a seller, fit in well?'” he said.
Jacobs agrees, whether the investment is measured in hours, dollars or sweat.
The traction any eBay alternate offers has to be significant, Jacobs said. “Especially when you look at the amount of work it takes to manage an auction.”