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Get Your Fix

Had enough of auctions? Fixed pricing could be just the thing your business craves.

Online auctions aren't for everyone. "If you have rare and collectible items, auctions seem to be the way to go," says Brian Schell, president and owner of Replay Media Inc., a three-employee seller of second-hand books and recordings. "But for things we sell that aren't rare but may not be available locally, fixed pricing seems to be the way to go," adds the 35-year-old Dayton, Ohio, entrepreneur.

Fixed-price marketplaces, where all kinds of pre-owned, overstocked and clearance items are listed and sold at prices determined by sellers instead of bidders, haven't gotten much attention compared to that given to eBay's auction action. But today, 60 percent of items on eBay are noncollectibles such as cars and even real estate. In addition, 40 percent of eBay's transactions have started taking place at fixed prices, either through auctions featuring the "Buy It Now" option to purchase something at a set price without bidding, or via eBay's all-fixed-price subsidiary, Half.com. Driving the growth of fixed price is the fact that these markets have special appeals to both buyers and sellers.

For buyers, the charm is avoiding the delays, hassles and uncertainty of the auction process. "A large percentage of people are looking for an impulse buy," says Rick Antunes, CEO and founder of Carnaby.com, a 20-person Casselberry, Florida, online auction market. "They don't want to wait. They don't want to go through the whole process." Last year, Antunes, 52, added to Carnaby's auction offerings by purchasing a small, fixed-price marketplace called Grababargain.com.

Sellers like fixed-price marketplaces because they make it easy to put large inventories of goods online for sale. Entering items for sale in an auction can be time-consuming because of the need to upload descriptions of unique items and, often, images as well. Fixed-price markets employ huge databases of millions of standard products. "The big success of fixed price is it's database-driven, allowing people to avoid cumbersome ways of doing lists," says Antunes.

It takes just seconds to post a book or CD for sale on Grababargain.com or Half.com, says Schell, who has experience selling through both, as well as on eBay and in his own retail store in Dayton. There's no need to upload detailed descriptions or images because they are already included in the databases fixed-price marketplace operators provide.

Fees for listing items for sale on fixed-price markets are lower than those of auction sites-even nonexistent, with the fixed-price market operators collecting only when items are sold. Listings don't expire in a few days as auction listings do, so fixed-price sellers can keep large inventories online for a long time while looking for buyers.

In addition, fixed-price marketplaces will continue to lure buyers and sellers from conventional online stores as they increase the number of items, sellers and buyers, says Lisa Strand, chief e-commerce analyst at online market tracker Nielsen/NetRatings in Milpitas, California. More users will go for the chance to comparison-shop for standard items; they'll be followed by more sellers seeking the chance to reach more shoppers than they could through stand-alone online stores. "It's a fire that feeds itself," Strand says. The downside is that all those buyers are typically after only one thing: a bargain.

Perhaps the biggest obstacle to fixed-price success is the creation of databases vast enough to offer easy listing of all products. Right now, big fixed-price marketplaces can list tens of millions of items. But that's only a fraction of the products that could be sold. "In the next couple of years, you'll be able to find every item that is made on a database," says Antunes. "Then, fixed price will explode."


Austin, Texas, writer Mark Henricks has covered business and technology for leading publications since 1981.

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This article was originally published in the April 2003 print edition of Entrepreneur with the headline: Get Your Fix.

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