Going Once...Going Twice...

Brand Building

Paulo Santos, the 35-year-old owner of Purplus, a Sausalito, California, discount software company, says exposure is the primary reason for his online auction presence. Sites like Yahoo! Auctions, eBay and Auction World not only provide about half his $1 million in annual sales but have also given him an easy way to build up a brand name and reputation. Santos points to the feedback forums as valuable tools for this task.

"People might be skeptical about whether they should buy a product from us or give us their credit card number or send a check. Then they see we have 3,500 customer [responses] that say things like 'quick shipping,' 'easy transaction,' 'we like them,' and they feel at ease," Santos says. "They're not worried we're going to ship them a box full of rocks."

While good feedback can do wonders for a new company's image and customer base, bad feedback can be devastating. Keenan sees the feedback mechanism as a double-edged sword in that it enables sellers to reach millions of buyers at once but, at the same time, enables just a handful of buyers to pollute the reputation of the seller. It's up to the auction site, he says, to develop rules and a screening process to protect sellers against fraudulent and vindictive comments.

Most sellers have found that keeping feedback entries generally positive comes at a price: intensive customer service, which can cut into auction profit margins. Rozanski says the higher demands of auction customers are not necessarily due to the auction format but to the expectations of online buyers in general.

"E-commerce folks have this intense desire for instant gratification; everybody wants 24/7," Rozanski says, recounting a call from an angry customer who had learned milehighcomics.com was closed over the weekend. Rozanski plans to shape his operation into a 24/7 business over the next year and is also contemplating whether he needs to hire new staff to do so.

Lisa Johnson of Rjsauction@aol.com on eBay, takes extra pains to put customer service first. The Vineland, New Jersey, liquidation business, which Johnson, 36, co-owns with her fiance, Rick Salesky, 44, sells overstock of "As-Seen-on-TV" products and has done some 18,000 transactions since the couple started selling products on eBay in 1998. Johnson says the company's efforts have helped earn it one of the highest ratings of any seller on eBay, not to mention more than $1.5 million (a three-fold increase) in 1999.

Like Rozanski, Johnson believes auction customers are demanding in a different way than offline customers. "People get brave when they're behind a computer and no one can see them. They say things in an e-mail that they won't say to your face," she says. "We can have an extremely irate customer, for whatever reason, writing 'I'm going to do this' and 'I'm going to do that.' Then you call them on the phone, and they're pussycats. By the end of the conversation, they're laughing and joking with you."

Keenan says it's not the online format but the type of customer shopping in auctions that requires more attention. "Value-oriented buyers," like auction shoppers, have a higher expectation for service than people who are used to paying whatever price seems reasonable, he says. If they've already gone through the trouble of price shopping and finding a good deal on a particular product on a site, they're more likely to have issues when it comes to evaluating and accepting the product.

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This article was originally published in the February 2000 print edition of Entrepreneur with the headline: Going Once...Going Twice....

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