Bringing in eyeballs is one of the primary advantages big online auctions offer to small businesses, says Sue Rothberg, a senior auctions analyst with Lincoln, Massachusetts, Gomez.com. The company evaluates and rates e-commerce businesses and provides auction scorecards on its Web site.
"Major players, such as Yahoo!, Amazon.com and eBay offer small merchants the ability to establish a storefront," Rothberg says. "Each of these sites has a significant amount of traffic every day; you get volume without having to put out any marketing dollars."
Since most buyers are looking for a deal, though, those eyeballs don't necessarily translate to big profits on auction items. E-commerce analyst Vernon Keenan of Keenan Vision Inc. in San Francisco has a different take, however. "If you go to eBay or Yahoo!, you're getting a critical mass of buyers," he says. "In my view, it's a near-mathematical certainty that you're at least going to find the market price and avoid the danger of under-pricing your product for the market."
While auctions may not be profitable for some businesses, they're certainly bringing in the bucks for other sellers. According to Forrester Research, online auction sales reached $1.4 billion in 1998 and are expected to jump to $19 billion by 2003.
With all this sales commotion, entrepreneurs can get lost in a huge marketplace like eBay, says Keenan. So it pays to find ways to improve access to buyers through marketing services offered by the sites. Some will sell you listing prominence, for example, such as a featured auction spot in a category, or even on the home page. Yahoo! just launched its featured auction area, where sellers can post items for a fee as low as 25 cents. Yahoo! sellers also have a chance to include a thumbnail image of their featured products on a rotating picture gallery. On eBay's home page, a featured spot costs $99, but that doesn't seem too unreasonable when you consider that 1.47 million unique users visit the site every day.