Definition: Virtual auctions on the internet. The seller sells the product or
service to the person who bids the highest price. For sellers,
online auctions open up new sales channels for new products and
offer buyers favorable purchasing conditions.
Online auctions have effectively created a giant virtual
marketplace where people can gather to buy, sell, trade and check
out the goods of the day. They're enormously popular, high-traffic
venues where you can begin selling product almost immediately,
with...
- No overhead or upfront costs
- No sales staff or distributors
- No website of your own
- No initial investment (you'll pay between 2 and 5 percent of
your final sale price to the auction site)
In this massive marketplace, the auction site that rules the
game is eBay. According to the Neilson Ratings, eBay is among the
top ten most-trafficked sites on the Internet. eBay leads the
online auction industry with a more than 60 percent share of the
market, while its closest competitor, Yahoo! Auctions, is only half
its size. Amazon.com Auctions follows at a distant third.
The amount of traffic these sites attract make online auctions
an ideal place to capitalize on readily available, widespread
exposure. However, know this: The competition is fierce in popular
categories, and your product can easily get lost among the hundreds
of listings.
So whether you're selling a knick-knack or two or becoming a
full-time baseball card dealer, there are a number of things you
must do to harness the volumes of traffic heading your way and
generate the highest profits possible:
Step 1. Select your site. First of all, you have to think
about which online auction site you want to use. eBay is the
obvious choice because of its reputation and the amount of traffic
it receives. But different auction sites tend to cater to different
markets. To determine which site is best for your product, check
out the top three or four in your field--look at specialized
auction sites as well as the big ones mentioned above. There are
hundreds of specialized online auctions that cover the spectrum
from antique books to business liquidations.
Check out item quantities and bid lists to see how much demand
there is for your product. While you're there, you might even want
to try bidding on a few items to get a feel for the process and the
competition involved. (But don't ever bid on an item you don't plan
to buy!)
Step 2. Choose your products. Are you going to sell
unique, one-of-a-kind products item by item? Or do you have a
product you can sell in quantity? Is there a demand for your
product? (This is less of an issue for one-of-a-kind items.) What
kind of profit margin do you expect to be making? (This can
determine whether or not you'll have to sell in quantity.)
In the world of online auctions, niche markets are responsible
for 43 percent of total sales. Not bad, hey? But don't disregard
the remaining 57 percent that covers non-niche markets! The bottom
line is, you can make money with both.
Collectibles are the bestselling items at auction sites, with
computer hardware and event tickets in second place, and toys and
books hovering around third. But while popular items may be easy
for you to sell, you could also make a killing on a unique item
with a high profit margin. Believe it or nor, people are making
money hand over fist from specialty items like cigars and
lobster.
Step 3. Look at listing options. The next thing you need
to think about is how you'll sell your product. Auction sites
typically offer a variety of listing options for you to choose
from, including:
- Regular listings. A regular listing is just
that--you pick your category and your product gets listed in it.
While this is the most common (and really the least effective) way
to list your product, you should definitely start with this option.
You'll want to see how your product does before you decide to spend
money on featured listings.
- Reserve price auctions. If you place a
"reserved price" on your item, it means that you've specified the
amount at which it should sell. This is done to prevent "auction
sniping," which happens when bidders lay low until the very last
moment, then grab your item without starting a bidding competition.
Reserved price auctions can be to your benefit, but they may
discourage bidders who are looking for the best deal.
- Dutch auctions. Also known as "English
auctions," these are one of the best ways for people selling in
quantity to place their products because you can list multiple
identical items at once in each auction. However, on eBay you must
have a "feedback rating" (see Step 6) of 50+ and you must have been
registered for more than 60 days before you can choose this
option.
- Featured items. On most of the larger
auction sites, you can get your item rotated through the site's
homepage as well as listed in the "featured items" section for
about $20. For approximately $15, you can have your item appear in
your category's "featured items" section, or simply at the top of
the list. You can also have your photos displayed in a gallery for
about 25 cents, or featured as a large photo at the top of a
gallery for close to $20.
You also have the choice of listing your items for 3, 5, 7 or 10
days--and, of course, you always have the option to re-list at the
end of this time. The standard option is a 7-day listing with an
automatic re-listing for a specified period of time.
Step 4. Choose your category. Explore the product
categories on the various auction sites to broaden your perspective
of what goes where. While you're doing this, check out the
competition in different categories and have a look at how much
bidding is going on. Then do a search on similar and related
products, determine which ones sell best, and see which categories
they're in. You'll usually be able to pick one main category and
one sub-category--use this method for both. And be sure to check to
see how easily your product can be found using the site's search
tools before you settle on a category.
Step 5. Create your ad. Once you've decided how and where
to list your product, you need to turn your attention toward
selling it. And that means you need excellent advertising. So think
about your target market--who's going to buy your product and,
perhaps more importantly, why. You need to grab their attention and
motivate them to buy from you.
How? Well, first you need a very good title. It's really
important that you're specific: Instead of saying "Doll" in your
title, for example, say "Two-foot-tall dancing Elvis doll." Don't
assume your bidders will understand you--make everything as clear
as possible for them. And make it as exciting as possible, too.
You'll probably have to pay a bit more for special formatting like
bolding or highlighting ($1 to $2), but these can be a good way to
grab the attention of potential buyers. Use exciting and convincing
words that draw the buyer to your item: "Unique two-foot-tall
dancing Elvis doll -- Collector's Edition."
The same techniques apply to your product description. Expand as
much as possible on your product--obviously, there's only so much
you can say about a baseball bat, but what if it's an original 1915
Louisville Slugger used by Babe Ruth himself in warm up? Try to
create a story around your product.
Think about other ways you can motivate your bidders. Can you
provide money-back guarantees, free shipping or bonus products?
Tell them what you have to offer! And don't forget about photos!
People don't want to buy what they can't see, and on average,
they'll pay at least 10 percent more for an item that's accompanied
by a photo.
Step 6. Establish trust. The best way to establish
yourself as a trustworthy, reliable seller in an online auction is
by having a good feedback rating. A feedback rating is a listing of
customer comments, rated as positive (+1), neutral (0), or negative
(-1). If you're not trustworthy, your feedback rating will warn
other buyers to stay away from you. If you have a positive rating,
you can increase your sales by as much as 7 to 9 percent (and this
number will steadily increase as the feedback rating system catches
on).
To ensure you get a good feedback rating, make sure you
always:
- List shipping costs (or additional costs) up front;
- Deliver your product right away;
- Deliver exactly what you've advertised;
- Answer buyers' questions immediately; and
- Always, always follow up with great customer service.
Step 7. Get exposure. You've put all this time and effort
into creating a great ad for the auction site, so use it to your
advantage! Draw more traffic to your own site by posting banners or
links to your site on your ad. (Be careful, however, that you
aren't using the ad primarily as a means of redirecting
traffic--this is called a "signpost" and will get you kicked off
the auction site.)
Unfortunately, while eBay will allow you to link directly from
your ad to other items that you're selling on eBay, you can no
longer post links to your homepage on your ad. However, you can
still link to your site from your eBay "About Me" page--so be sure
to take advantage of this option!
Most important is that you keep a list of all your buyers and
e-mail them "thanks for purchasing" messages, new offers,
complementary product information, and newsletters on a regular
basis. Your best customers are your repeat customers--they'll be
responsible for 80 percent of your sales! Once you get your name
out there, you'll do nothing but profit by keeping it out
there.
Step 8. Test! You should always be testing and tweaking
your auction listings. Even if they're really good, you may
discover that one or two simple changes dramatically increase your
sales. Start by doing regular listings on two or three different
auction sites, and, changing only one element at a time, test the
following:
- Ad copy and photos
- Pricing
- Timing
- Different products
Once you've settled on the combination that works best, try out
different auctioning options (Featured if your sales warrant it;
Dutch if you have multiple products) to see which will sell more
products for you at higher winning bids.
eBay reports that as many as 70 percent of the items listed for
auction on their site result in winning bids, so if you're below or
close to this percentage, keep working on it: With these tips under
your belt, you can do much better.
Your ability to set prices that attract bidders, write
compelling ads, choose the best categories that draw the most
potential bidders, and ensure that your auction closes with the
highest profit margin will have a dramatic impact on your success
in the competitive arena of online auctions. But you need to
educate yourself and test the waters carefully before diving in if
you plan to be successful. People do make money through online
auctions, so it's not unreasonable to think you can profit, too.
Just proceed with caution. And market smart.