Online auctions have effectively created a giant virtualmarketplace where people can gather to buy, sell, trade and checkout the goods of the day. They’re enormously popular, high-trafficvenues 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 ofyour final sale price to the auction site)
In this massive marketplace, the auction site that rules thegame is eBay. According to the Neilson Ratings, eBay is among thetop ten most-trafficked sites on the Internet. eBay leads theonline auction industry with a more than 60 percent share of themarket, while its closest competitor, Yahoo! Auctions, is only halfits size. Amazon.com Auctions follows at a distant third.
The amount of traffic these sites attract make online auctionsan ideal place to capitalize on readily available, widespreadexposure. However, know this: The competition is fierce in popularcategories, and your product can easily get lost among the hundredsof listings.
So whether you’re selling a knick-knack or two or becoming afull-time baseball card dealer, there are a number of things youmust do to harness the volumes of traffic heading your way andgenerate the highest profits possible:
Step 1. Select your site. First of all, you have to thinkabout which online auction site you want to use. eBay is theobvious choice because of its reputation and the amount of trafficit receives. But different auction sites tend to cater to differentmarkets. To determine which site is best for your product, checkout the top three or four in your field–look at specializedauction sites as well as the big ones mentioned above. There arehundreds of specialized online auctions that cover the spectrumfrom antique books to business liquidations.
Check out item quantities and bid lists to see how much demandthere is for your product. While you’re there, you might even wantto try bidding on a few items to get a feel for the process and thecompetition involved. (But don’t ever bid on an item you don’t planto buy!)
Step 2. Choose your products. Are you going to sellunique, one-of-a-kind products item by item? Or do you have aproduct you can sell in quantity? Is there a demand for yourproduct? (This is less of an issue for one-of-a-kind items.) Whatkind of profit margin do you expect to be making? (This candetermine whether or not you’ll have to sell in quantity.)
In the world of online auctions, niche markets are responsiblefor 43 percent of total sales. Not bad, hey? But don’t disregardthe remaining 57 percent that covers non-niche markets! The bottomline is, you can make money with both.
Collectibles are the bestselling items at auction sites, withcomputer hardware and event tickets in second place, and toys andbooks hovering around third. But while popular items may be easyfor you to sell, you could also make a killing on a unique itemwith a high profit margin. Believe it or nor, people are makingmoney hand over fist from specialty items like cigars andlobster.
Step 3. Look at listing options. The next thing you needto think about is how you’ll sell your product. Auction sitestypically offer a variety of listing options for you to choosefrom, including:
- Regular listings. A regular listing is justthat–you pick your category and your product gets listed in it.While this is the most common (and really the least effective) wayto list your product, you should definitely start with this option.You’ll want to see how your product does before you decide to spendmoney on featured listings.
- Reserve price auctions. If you place a”reserved price” on your item, it means that you’ve specified theamount at which it should sell. This is done to prevent “auctionsniping,” which happens when bidders lay low until the very lastmoment, then grab your item without starting a bidding competition.Reserved price auctions can be to your benefit, but they maydiscourage bidders who are looking for the best deal.
- Dutch auctions. Also known as “Englishauctions,” these are one of the best ways for people selling inquantity to place their products because you can list multipleidentical items at once in each auction. However, on eBay you musthave a “feedback rating” (see Step 6) of 50+ and you must have beenregistered for more than 60 days before you can choose thisoption.
- Featured items. On most of the largerauction sites, you can get your item rotated through the site’shomepage as well as listed in the “featured items” section forabout $20. For approximately $15, you can have your item appear inyour category’s “featured items” section, or simply at the top ofthe list. You can also have your photos displayed in a gallery forabout 25 cents, or featured as a large photo at the top of agallery for close to $20.
You also have the choice of listing your items for 3, 5, 7 or 10days–and, of course, you always have the option to re-list at theend of this time. The standard option is a 7-day listing with anautomatic re-listing for a specified period of time.
Step 4. Choose your category. Explore the productcategories on the various auction sites to broaden your perspectiveof what goes where. While you’re doing this, check out thecompetition in different categories and have a look at how muchbidding is going on. Then do a search on similar and relatedproducts, determine which ones sell best, and see which categoriesthey’re in. You’ll usually be able to pick one main category andone sub-category–use this method for both. And be sure to check tosee how easily your product can be found using the site’s searchtools before you settle on a category.
Step 5. Create your ad. Once you’ve decided how and whereto list your product, you need to turn your attention towardselling it. And that means you need excellent advertising. So thinkabout your target market–who’s going to buy your product and,perhaps more importantly, why. You need to grab their attention andmotivate them to buy from you.
How? Well, first you need a very good title. It’s reallyimportant that you’re specific: Instead of saying “Doll” in yourtitle, for example, say “Two-foot-tall dancing Elvis doll.” Don’tassume your bidders will understand you–make everything as clearas possible for them. And make it as exciting as possible, too.You’ll probably have to pay a bit more for special formatting likebolding or highlighting ($1 to $2), but these can be a good way tograb the attention of potential buyers. Use exciting and convincingwords that draw the buyer to your item: “Unique two-foot-talldancing Elvis doll — Collector’s Edition.”
The same techniques apply to your product description. Expand asmuch as possible on your product–obviously, there’s only so muchyou can say about a baseball bat, but what if it’s an original 1915Louisville Slugger used by Babe Ruth himself in warm up? Try tocreate a story around your product.
Think about other ways you can motivate your bidders. Can youprovide 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 accompaniedby a photo.
Step 6. Establish trust. The best way to establishyourself as a trustworthy, reliable seller in an online auction isby having a good feedback rating. A feedback rating is a listing ofcustomer comments, rated as positive (+1), neutral (0), or negative(-1). If you’re not trustworthy, your feedback rating will warnother 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 thisnumber will steadily increase as the feedback rating system catcheson).
To ensure you get a good feedback rating, make sure youalways:
- 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 effortinto creating a great ad for the auction site, so use it to youradvantage! Draw more traffic to your own site by posting banners orlinks to your site on your ad. (Be careful, however, that youaren’t using the ad primarily as a means of redirectingtraffic–this is called a “signpost” and will get you kicked offthe auction site.)
Unfortunately, while eBay will allow you to link directly fromyour ad to other items that you’re selling on eBay, you can nolonger post links to your homepage on your ad. However, you canstill link to your site from your eBay “About Me” page–so be sureto take advantage of this option!
Most important is that you keep a list of all your buyers ande-mail them “thanks for purchasing” messages, new offers,complementary product information, and newsletters on a regularbasis. Your best customers are your repeat customers–they’ll beresponsible for 80 percent of your sales! Once you get your nameout there, you’ll do nothing but profit by keeping it outthere.
Step 8. Test! You should always be testing and tweakingyour auction listings. Even if they’re really good, you maydiscover that one or two simple changes dramatically increase yoursales. Start by doing regular listings on two or three differentauction sites, and, changing only one element at a time, test thefollowing:
- Ad copy and photos
- Pricing
- Timing
- Different products
Once you’ve settled on the combination that works best, try outdifferent auctioning options (Featured if your sales warrant it;Dutch if you have multiple products) to see which will sell moreproducts for you at higher winning bids.
eBay reports that as many as 70 percent of the items listed forauction on their site result in winning bids, so if you’re below orclose to this percentage, keep working on it: With these tips underyour belt, you can do much better.
Your ability to set prices that attract bidders, writecompelling ads, choose the best categories that draw the mostpotential bidders, and ensure that your auction closes with thehighest profit margin will have a dramatic impact on your successin the competitive arena of online auctions. But you need toeducate yourself and test the waters carefully before diving in ifyou plan to be successful. People do make money through onlineauctions, so it’s not unreasonable to think you can profit, too.Just proceed with caution. And market smart.
