Copyright 2002 by Richard Seltzer
Originally published by Wiley. The rights have reverted to the author
Please post your reactions/comments/suggestions at Blogging about Books
http://www.samizdat.com/blog/?cat=10
If you keep selling there for a month or more, you can learn some important lessons about ecommerce.
First, you should learn the value of feedback and reputation and relationships. eBay links buyers and sellers, who then contact one another by email and postal mail to take care of details and make payment and deliver the goods. eBay also has a very effective feedback mechanism. Any member can leave feedback -- positive, neutral or negative -- about any other member. That feedback becomes the basis of your community reputation and has an enormous effect on the number of bids you get for the items you sell and how high the prices go.
When I started selling old comic books at eBay, I was getting an average of $2-3 each. After a month, after I'd built up a few dozen positive feedbacks, I was getting $10, $20, even $30 for comparable comics.
If I had used automated transaction software to sell those same comics, it would have saved me time and hassle, but I would never have built relationships and reputation, and I'd have just kept getting $2-3 each.
Successful ecommerce isn't about automated transactions. It's about relationships.
"Relationship" isn't just an intangible concept -- it can directly effect the demand and price for your products and services.
Set up your online business accordingly.
Make it people-intensive rather than automated.
Remember the circle model discussed in Chapter Seven. Go for the center (where people interact with people), rather than the outer orbits with automated selling of branded goods, facing high competition and getting low margins.
First we'll step you through the details of successfully selling at eBay, because you have to actually do this to fully learn the lesson -- reading about it is not enough. Then we'll discuss the importance of building relationships for online business. Last, we'll consider other auction-like business models that don't necessarily involve relationship building.
Required assignment:
• sell at eBay
Electives:
• buy and sell at swap sites
• buy and sell at half.com
First, don't be confused by the name. Online auctions have very little in common with traditional face-to-face auctions.
Second, not all addictions are bad. Buying can be a bad addiction, if you have limited funds. But selling can be a good addiction: I'd like to get my whole family hooked on it, and you as well. This is good news that's fun to spread.
At an online auction, you compete with other individuals for the right to purchase goods, and you set the price by bidding against one another. But there is no auctioneer, and you don't have to show up at a particular physical place at a particular time, and you don't have to wait patiently while other items are sold until the one you want is put on the block. Literally millions of items are on sale auction-style over the Internet every minute of every day.
The rules for how to bid are set by the hundreds of different Web sites that run auctions, and the time frame and deadline for the sale of each of these items is set by the individual sellers. Some auctions last weeks, others just 30 minutes. And the "online" aspect, rather than distancing people and making a social phenomenon machine-like, actually makes it more personal, and more immediate.
When you bid for something you really want at an online auction, you may feel like you are gambling at slot machines, or feel the rushing excitement similar to the final minute of a close-scoring football game.
People who have never met and who live thousands of miles away from one another can get caught up in a bidding frenzy; and the highest bidder, in a rush of pride and adrenalin, may be ready to shout "I won!" regardless of whether the final bid was a bargain.
Designed to quickly turn overstocked inventory into cash, these sites often go out of their way to heighten the excitement and draw buyers back. Some hold "flash auctions" which begin and end in a very short time period, rather than lasting for days or weeks, which is common at sites where individuals sell to one another. For instance, at Egghead www.egghead.com you can try Express Auctions, which last for only one hour, with all bidding (even on merchandise worth hundreds of dollars) starting at just $1. These auctions run from 5 AM to 10 PM (Pacific Time). At FirstAuction www.firstauction.com you will find "Flash Auctions" where the first bid also starts at $1, and the auction lasts 30 minutes plus "overtime" (the bidding keeps going until a five-minute period elapses in which no one places a new bid). Such setups can easily create a bidding frenzy.
Before letting yourself try this kind of auction, consider how good you are at stopping after the first potato chip, the first drink, the first cigarette... Here you are tempted by the opportunity to buy at ridiculously low prices. But once you get started bidding, you may lose sight of the price, as you strive to "win" -- like stuffing one quarter after another into a slot machine, hoping that this next bid will be the one that takes you over the top. There's a risk you could wind up buying things you don't want or need, or even pay more than the retail price. But if you can maintain self control, you can find bargains and hard-to-find collectibles -- along with enjoying the exhilarating experience.
Experience an auction of this kind and you'll never think the way you did before about pricing and selling.
Millions of people gather at eBay, and on a typical day more than five
million items are for sale. In number of users and in diversity of content,
it is comparable to the entire Internet back in 1994, in the early days
of the Web. With thousands of categories and related community discussion
areas, it resembles newsgroups -- linking people with common interests,
in an open, anarchic, self-regulating way.
I
f you thought ecommerce required expensive computers and software and
large technical staffs, think again. To piggyback your efforts on a service
like eBay, all you need is merchandise to sell. You can make a living selling
at eBay, conducting "ecommerce" without even having your own Web site,
without even having an Internet connection or a computer of your own, if
you can occasionally use public-access computers in places like libraries.
eBay isn't a Web site or a store or even an auction house, in the traditional sense. There is no auctioneer, no master of ceremonies. And eBay does not act as the proxy for any seller. It's like a massive electronic flea market or bazaar.
You might be overwhelmed by the immensity of eBay, get lost, not know how to begin to sell here. It's easier than it looks.
Then read eBay's explanations of its processes and charges. There is a non-refundable "insertion" fee for placing an item on sale, which ranges from 30 cents to $3.30, depending on the minimum opening bid that you set for your auction. When an item sells, you and the buyer contact one another by email and arrange for shipment. In your posting, you should make it clear that the buyer will pay for shipping, and indicate the amount. The buyer sends you a check or credit card number (if you have a merchant credit card account). You send the merchandise. At that point eBay charges to your account a Final Value Fee, which for most kinds of merchandise ranges from 1.25% to 5% of the final sales price.
After delivery of the goods, the buyer and seller may input feedback about one another, which then serves as a reference for future buyers who might want to get other things from you. It's a good idea to describe your merchandise with great honesty and detail, mentioning any and all defects, and to ship immediately. High ratings can be very important for future sales. The environment here is like the old pre-Web Internet -- self-regulating, with lots of sharing, and candid comments. If you are accurate in your descriptions and prompt in your deliveries, the system will work in your favor.
For starters, pick one kind of goods to focus on -- something that you know very well. I began with children's books. Within that category, start with items that you know won't sell for very high prices. Save items that might generate competitive bidding until you have built up feedback and perfected your pitch -- you could end up making considerably more that way.
Sell one test item, with a low minimum bid to get used to how the system works. Deliver it instantly when sold. Encourage the buyer to post positive feedback for you.
Once the feedback is online, add listings for many more of the same kind of thing, using your previous posting as the starting point. (For low-priced items, it's important not to waste too much time entering your information.). People bidding on one of these items will probably want similar things as well and will want to consolidate shipments, to save shipping costs, which otherwise might be higher than the cost of the item itself. Mention in each of your descriptions that you have other similar items for sale and would be willing to consolidate shipments. That incentive helps generate interest and pushes the bids higher. When you have 10 positive feedbacks, you get a gold star; after 100 a blue star; 500 purple; 1000 red. These symbols attest to your credibility and reliability, and are very important to bidders.
When you first post items for sale, a sunglasses ("shades") icon appears next to your name. That symbol indicates that you are either a newcomer or you have changed your online name recently, perhaps because of a bad reputation. "Shades" are a warning sign, indicating "Buyer beware. We, in this community, don't know who this guy is." After one month, you lose your "shades". By then, too, you should have some good feedback -- at least a gold star. That's a good time to start experimenting with other categories of goods.
While some people like to browse through categories and sub-categories and sub-sub-categories, others simply click on "Search" and enter words that they'd expect to find in the titles of items they are interested in.
To get started as a seller, you should think what words you would use in the title for your item and search for those words, then click on a variety of items in the list of matches to see what categories they are listed in, how they are described, what kinds of starting prices are typical, how much bidding activity they are getting, and whether the category or other evident factors appear to affect the level of bidding.
If you discover that some individuals have multiple items listed in the same category, search by user name to see the range of what they have on sale, and to see if they list the same kind of thing in just one or several different categories.
Also, see if some individuals are bidding for many different items of the same kind. If so, then search by bidder name and see what you can determine about what draws these heavy buyers to one item rather than another.
For new and nearly-new consumer goods, the category is likely to be very important -- just as it is in navigating through a department store. But for collectibles, the category often doesn't matter because so many buyers use search to find what they want.
In other words, try to pick a category that will help your sale, but don't over-estimate the importance of category. In some cases, buyers, using Search, will find you regardless of where at eBay you hide your auction. And, also, if your item doesn't sell the first time around, you can always relist it in a different category.
Think of eBay as made up of numerous sub-communities: collectors and buyers of particular kinds of things. Over time, these people build relationships with one another through email messages to one another and other online contact.
Their expectations of one another depend on their common experience. The behavior of newcomers (people with little or no feedback) is likely to be unpredictable, while that of the veterans will be more consistent. The newcomer might misinterpret a standard description of the quality and condition of an item, and be disappointed with a purchase even though the seller was quite precise and accurate. On the other hand, a newcomer might bid far higher on an item than an old timer -- not knowing what such items have sold for in the past and how frequently such items are likely to appear again for sale.
You might be reluctant to sell at eBay, even though there is an enormous audience of potential buyers there, because you are afraid that your item will get lost among the millions of others posted there. You might think that you would do better at a focused auction site, devoted just to the kind of thing that you have to sell -- such as baseball cards or comic books. In my experience, that is not the case.
For instance, selling comic books at eBay, I got many bids from people who had no specific interest in comic books at all. They were searching for "dogs" or "Disney" or something else that they avidly collect, and my comics happened to have the right words in the title. If I were selling at a comics-only auction site, I'd never get bids from those kinds of buyers. And those buyers, because they are unfamiliar with prices in this particular category, arriving here tangentially, are likely to bid out of all proportion to what you'd get from regular collectors with experience in this sub-community of eBay and with ready access to reference books about prices for this kind of collectible. Remember, you don't need for millions of people to see your item. All it takes is two enthusiastic bidders to raise the price beyond rational levels.
This buyer behavior means that the words in your title are probably more important than the category you choose. Remember, as a default, eBay's search engine only looks at words in the title. The searcher can choose to search through the description as well, but there's no telling how many people click on that option.
In the real world, you sometimes rely on word-of-mouth reputation, but far more often you think in terms of brand name. Yes, brand is based largely on paid advertising. But what matters in that context is not so much what the companies say about themselves in those ads as the fact that the companies are large enough and prosperous enough to advertise. That means that you should have no problem finding them if you have a question or problem related to your purchase.
At people-to-people auction sites, whether buying or selling, you often deal with individuals you have never met, and never had any dealings with before, and never heard of before. In theory, feedback comments are indications of trustworthiness, like word-of-mouth reputation. And the star labels that eBay gives based on cumulative ratings are a makeshift form of community-based brand.
Both for fear of shame and for practical reasons -- not wanting people's distrust of you to interfere with your ability to make deals -- the community-based ratings system means both buyers and sellers have good reason to deal fairly with everyone, and even to go out of their way to make sure that everyone they encounter has good reason to think well of them.
I find that for low-cost items (under $20), people at eBay tend to be very trustworthy. My policy, (which is counter to what nearly everyone else there seems to do) is to ship the merchandise immediately upon receipt of the buyer's address. I don't wait for payment. Often I receive payment days after the buyer has received the goods. That practice of mine gets me lots of superlative feedback fast, which raises the bids on everything I post, makes the whole selling cycle move much faster, and gets me lots of repeat sales.
There's no quicker way to build someone's trust than to trust them -- immediately, with no strings attached.
The typical eBay seller waits for arrival of a check or money order, or even waits until the check has cleared. Shipping immediately means that the buyer gets the goods far more quickly and is also likely to be pleased by this unexpected sign of trust. The value of the positive feedback you are likely to get from such a policy is far greater than what you are likely to lose from the rare person who will try to cheat you (especially given the feedback system). If I can raise the average final bid for one of my items from $4 to $16 through trust, then even if I lost a few payments, the benefit would still be worth it.
For higher priced items, you need to weigh what you stand to gain with what you risk, and decide what makes sense for you.
Self-policing
The rating system also operates as a self-policing mechanism. People go out of their way to avoid negative feedback, and they are also very reluctant to give negative feedback, even when they believe strongly that it is deserved; because whoever they give that negative feedback might give negative feedback in return.
You could take issue with the eBay practice of lumping together all feedback -- both as seller and as buyer. An individual selling something might have a very impressive star, but may have earned that reputation entirely as a buyer -- never having sold before. And the fear of feedback retaliation seems to lead to a stalemate, with no one really saying what they think.
On the other hand, this stalemate in the formal feedback mechanism means that most misunderstandings and dissatisfaction are dealt with in the privacy of person-to-person email. And the threat -- even without the reality -- of negative feedback encourages everyone to be considerate, reliable, prompt, and accurate in their descriptions of what they have to sell.
In general, unless you have an extremely major gripe against someone, you should immediately enter positive feedback for every buyer, as soon as the transaction is done -- and send the buyer a quick email saying that you've given that feedback, which is a gentle reminder that you would appreciate feedback as well.
Particularly for used items and collectibles, the description of the condition/quality of the item is extremely important. The difference in value between a baseball card in "fair" or "good" or "fine" or "excellent" condition can be enormous. Sellers who have very little feedback will find that most bidders don't take them at their word, and assume that the condition is worse than the description indicates, and will bid cautiously. But sellers who have lots of positive feedback, and who have earned specific comments that praise the accuracy of the descriptions, will command top dollar. In this environment, as a seller, you benefit from being very conservative in your descriptions -- mentioning every little defect. That increases your credibility for that item, and at the same time makes it likely that the buyer will be pleased, helping to build your positive feedback.
For collectibles, what does feedback mean in terms of price? I sold several hundred comic books at eBay. When I started -- and had the "shades" to indicate I was a newcomer -- I only got bidders on about 30-50% of my auctions, and the final price was often the starting price: $3. After a month, the shades went away, and I was well over the 10 positive feedbacks needed for a "star". Soon comparable comics were generating prices of $15 to $30; and one sold for $120. The merchandise was similar. The descriptions and categories were the same. All that had changed was my reputation -- both in the formal feedback system and also in direct dealings with regular buyers, who saw that my descriptions were conservative and accurate and that I shipped immediately, and hence they went out of their way to find and bid on my auctions.
Relationships with buyers
Along with the community-based reputation of feedback, you are building direct relationships with individual buyers. Someone who buys one thing from you may be interested in bidding in other auctions of yours. In the descriptions of your items, tell how you acquired each object. Be chatty and friendly as well as accurate and informative. Then include friendly questions and comments in your correspondence about payment and shipping. By so doing, you can uncover what else they are looking for, and why they collect what they collect. I've made deals for other items offline with eBay customers, based on their interests. You can also get clues as to how to better group, organize, and describe what you have to sell at eBay.
If you have many items that fall into the same general category, over time you develop your own niche -- establishing a reputation in that sub-community at eBay and perfecting your descriptions and email messages, based on what you've learned from your previous auctions and related correspondence.
Another side effect of selling at eBay is the people you meet. For instance, someone who bought a Wild Bill Hickok comic book from me had just sold a script to a TV network for a pilot for a series set in Deadwood. Someone else bought an old copy of Playboy because there was an Elvis Presley poster inside. The buyer is an avid fan, who legally changed her name to "Presley", bought a house next to Graceland, and moved there from New Jersey. She now makes a living selling Elvis-related memorabilia.
eBay allows you to set a "reserve" price in addition to the starting price. This is the minimum price at which you would be willing to actually sell the item, but the bidders do not know what that number is.
In theory, a low starting price will interest bidders, but, with the reserve, you protect yourself from letting the item go for too little. In practice, however, bidders hate auctions with reserve prices. It's frustrating to enter what you think should be the winning bid, only to discover that there was a reserve which is higher than your final bid, which means you don't win at all. Hence many bidders will not participate in auctions that have reserves.
You might want to test the market, by running an auction with a reserve to see how high the bids go. If they go over your reserve and the item sells, fine. But if not, at least you'll get an indication of the level of interest in your item. Then if you relist the item without a reserve and maybe with a low starting price, the bidding will probably go higher than it did with the reserve.
It's a lot easier to deal with prices when you have many similar items, and when you wouldn't mind selling a few for $2 or $3, as long as the average sale comes in at around $20 or $30. Then you can fine-tune your pricing over time, based on experience.
I put my starting prices as low as I can -- just a little more than break-even, given all the time involved in posting the description, communicating with the winner, then preparing, packaging, and shipping the goods. A low start attracts an early first bidder, and activity breeds more activity.
For many people, online auctions are entertainment. They get caught up in the excitement of competition. Hence you want to do whatever you can to attract a second bidder and a third -- to make it a contest. And a low starting price is an excellent way to get that rolling. For instance, one comic I sold for $34.00 had a starting bid of $2. Other similar comics that I posted with a start of $10 or even $6 got no bids at all. In other words, if you have enough items in the same category to build a niche for yourself, low starting prices are likely to bring you higher average final sales prices.
The vast number of participants at eBay makes this possible. It's a bit like brownian motion -- if you have enough bidders banging around and you have enough similar items for sale, the bidding on any individual item will be random, but over time the results for a large number of items will be predictable, and you can, with confidence, sell valuable items with very low starting prices.
But beware of seasonal variations. For many collectibles, activity at eBay drops precipitously over the summer. Keep a close eye out for the seasonal buying patterns associated with the kind of thing that you have to sell.
The market fluctuations for different kinds of goods tend to be different. Experiment to determine the optimum pattern/rhythm for what you have to sell, and adapt your behavior accordingly. Is spring, summer, fall, or winter best for you? Do you do better with auctions that end on weekdays or on weekends? If weekends, is Saturday or Sunday best? And what time of day do you want your auctions to end, to make it more likely that interested buyers will be connected during the final, potentially exciting and hectic moments of your auctions?
Also, what is the optimal length for your auctions? As of now, you only have four choices for the length of your auctions -- 3, 5, 7, and 10 days. Which works best for you?
People buying for hobbies and personal use are likely to connect evenings and weekends, or maybe over lunch break from work. People buying items for use at work, may prefer business hours.
Also, remember time zones. 6 AM on the East Coast of the US, pretty much rules out participation from the West Coast where the time would be 3 AM; but might be convenient for folks in London, where it is 11 AM. If you end auctions at around noon Eastern Time, that will allow Western Europe and California to get involved in last minute auction frenzy for your items.
Also, remember that the audience is global. If you have a potentially large market south of the Equator, the seasons are reversed there (winter there when summer here).
Selling collectibles, I do best with auctions that end on weekends -- Saturday a little better than Sunday. And 9 PM Eastern Time works best for me as an end time. For others who are selling new and refurbished merchandise, like digital cameras and computer gear, week days may be better than weekends.
Having done your calculations, the general setup at eBay makes it difficult to get the ending time you prefer. The time of day that you start is the time of day that you end. If you start your auction at 8 PM, it will end at 8 PM. So you have to plan ahead and post at the right time to get the right setup. And if you have dozens of items you want to post, it will be difficult to get them all in with an end time close to what you want.
You might be reluctant to do so with small (under $10) transactions, because the credit card processing companies take fees out of every transaction. But you are likely to get more bids from people outside the US for whom a credit card transaction is far simpler than getting an international money order or a check made out in dollars on a US bank, and because the credit card company handles the currency exchange. Whether they win or not, those bids drive up the price.
Credit card payments save you time and hassle. The payments go straight to your bank account, whereas a check or money order payment requires you to make and record bank deposits by hand -- which can be time-consuming if you are selling large numbers of low-cost items.
How do people pay you by credit card? In all probability, you do not have a secure encrypted ecommerce system of your own. But it is a simple matter for buyers to email you their credit card information -- number and expiration date. If they break that information up in a series of two or three email messages, that probably makes the transaction far more secure than giving your card to a waiter at a restaurant or telling it to an operator over an 800 number.
As my feedback rating and personal reputation at eBay grew, the percent of buyers who wanted to pay me by credit card climbed from zero to about 15%, with most of those credit card purchases coming from eBay veterans who have bought many items that way and have learned the value and convenience of trust.
We hear that many people are concerned about security in doing credit card transactions over the Internet. I see the opposite at eBay -- far greater levels of trust than you'd normally expect in the "real" world. About 10% of my customers send me cash through the regular postal mail -- including a customer in Germany who has no problem about sending $100-200 at a time that way. Some of these people don't have checking accounts, and don't want to go to the hassle of buying money orders. Others are overseas without credit cards, but with US currency. Rather than jump through hoops to come up with a secure and mutually acceptable payment method, they find it's simpler to just stuff the cash in an envelope.
If you don't have a merchant account, you can use eBay Online Payments. "Endorsed by Visa and backed by Wells Fargo...eBay Online Payments by Billpoint uses encryption technology ... to ensure that transactions are handled with the highest level of security and privacy." This service lets you accept credit card payments from 40 countries, as well as guaranteed electronic check payments (from US buyers). The service fee, however, is high. For their standard service, you pay 39 cents for sales under $10, and 39 cents plus 3.9% of the final sales price for sales $10 up to $500, which is the limit of what they will accept. (Remember that's in addition to eBay's fees). If you have eBay sales of greater than $1,000 per month, a minimum of six months on eBay, 96% or greater positive feedback rating, and good eBay account status, you can qualify for their merchant service, which has slightly lower fees (3.5%) and a higher limit ($2000).
Remember the cost of packaging as well as the postage, and also try to minimize the time that it will take you to package your item and drop it off for shipment.
If you have a choice, sell small items rather than large ones. Sell items that will fit in a standard size box that you could send parcel post, rather than selling furniture or pianos. And better still, in the US, sell items that will fit in a priority mail envelope (that the postal service gives away for free).
You can make special offers in your product description -- for instance, free shipping to anyone buying a certain number of items. Or you might, in follow up email messages to winners of your auctions, offer those individuals a special break on shipping costs on future purchases of theirs from you.
The importance of shipping cost as an incentive or disincentive varies widely. Some people will, without hesitation, pay shipping charges that are equal to the cost of the goods, or even double the cost, perhaps because the item you are selling is difficult to find or perhaps because the buyer lives in an isolated area. Other people will drive many miles to pick up the goods in person and thereby save a few dollars in shipping cost. Be flexible and understanding.
The cost of shipping a package that weighs less than four pounds is less than $10 to most countries, and (if you set your terms that way), the buyer pays shipping.
A picture's value for conveying information is over-rated -- in most cases, it is certainly not worth 1000 words. But the emotion conveyed can be very important when you are selling and especially when you are selling by auction, where price is not fixed, but rather is set by the irrational, emotional decisions of bidders.
Once I was able to take good digital photos of my comics, I found myself falling in love with some of those old comics, with their amazing cover art. It became hard for me to part with them. Fortunately, bidders fell in love with them, too.
Whatever you have to sell will probably sell better if you include a photo in your posting. You could take traditional photos and, when you get the film developed, request them in digital form, on diskette or on CD ROM. Or you could use a low-cost (about $35) webcam you plug into your PC for online two-way video, and save still images. But it's simplest if you use a digital camera.
If you've been itching to get a digital camera, this could be the excuse you've been looking for.
Set up a "studio area" -- with dark non-reflective background and lights set up the way you want them; so you only have to deal with those details once. Remember you are taking these pictures for a business purpose -- not art. You want a clear, sharp, appealing picture, but you can't afford to spend a lot of time getting it, unless your item is going to sell for a lot of money. For something that is likely to sell for under $10, you shouldn't spend more than two minutes taking the picture, and don't waste time editing it.
You can upload and store up to six photos on eBay. Or you can FTP as many photos as you want to your own Web space (for instance at NBCi) and just indicate the URL in your eBay auction insertion form.
There are some people who "shop" at auctions, wanting to get a good price for a quality item, but just wanting to get in and out with a minimum of hassle. Those aren't the folks you want to cater to. You want to appeal to the folks who enjoy the auction experience.
If you sell collectibles, you also want to tap into nostalgia. Many of today's online auction buyers are looking for items that they once possessed as children. In our society, many families move frequently, and parents typically throw out items that they believe are of no value or that they believe their children have grown out of. Years later, when those kids hit middle age, they have an urge to get back in touch with their past, and will go to great lengths to obtain long lost items they associate with their childhood.
Experimenting at eBay, I've discovered that the less the intrinsic value of a mass-produced object, the more likely it will become valuable over time as a collectible. Their lack of intrinsic value means that few people will save these items, which means that they will become rare. And the fact that they were mass-produced will mean that they are imprinted on the consciousness of many, and thus subject to nostalgia by association, and hence will be in demand.
As a result, I can get more money selling a fair-condition bottle cap than selling a 100-year-old book that's in fine condition.
Before eBay, there used to be a large gap between the prices a dealer could get selling to collectors and the prices an ordinary collector could get selling to a dealer. Now anyone who knows how to play the online auction game can sell at dealer prices. In fact, anyone with a little knowledge and ambition and online savvy can become a dealer -- buying and selling in the same online marketplace and serving the irrational but very real needs of those who want to buy a piece of their childhood past.
If you have your own Web pages, you might want to include links from there directly to each of your current auctions. As an alternative, use Search at eBay, to look for yourself as a seller. That brings you to a page with a list of all your auctions. Copy the resulting URL and make a hyperlink from one or more of your Web pages directly to that list -- that way you won't have to change links as auctions of yours end and start.
You might also want to add a line to your email signature file with
a link to eBay's list of your auctions.
I
f there are related newsgroups (check www.deja.com) or email discussion
lists (check www.liszt.com) or forums (check www.forumone.com), consider
posting brief notes about your auctions there (if that is appropriate behavior
for that particular group). Or join in newsgroup discussions on topics
related to the kinds of things that you are selling, and append to your
postings your signature file with its link to your auctions.
If you send out paper communications about your business and your auctions are related to your business, be sure to mention your online auctions. Depending on how important this is to you, you might even include a brief plug in your voicemail message.
Even though the traffic at other person-to-person auction sites like
Yahoo (auctions.yahoo.com) and Amazon.com is far less than at eBay, you
might want to post a few auctions there, and in the descriptions point
people to your similar auctions at eBay. Even if you don't get many sales,
the promotion value might make the postings worth the effort.
The gray zone -- be creative, but watch your step
As you begin to get creative in your promotion, some tactics will occur to you that eBay prohibits. Be sure to read the eBay community rules carefully.
Since eBay provides you with the email addresses of everyone who bids on any auction -- not just yours, you may be strongly tempted to build mailing lists of people interested in the kinds of things that you have to sell. For instance, you can click on "bid history" and get a list of the usernames/"handles" of all the bidders; then click on an individual handle and, after entering your own eBay username and password, see that person's email address. Don't go down that path. Never add anyone to an email list without their explicit permission. Otherwise, many recipients of your promotional messages are liable to consider them as "spam" -- unsolicited and unwanted advertising. Some may be mad enough to send you nasty messages in return, to remember you and not bid on your auctions in the future, perhaps to give you negative feedback at eBay, and perhaps to complain to eBay management, who frown on "misuse of bidder information." They don't want their members subjected to spam, and will take steps to prevent a recurrence.
Going through this mental exercise will help you realize that success in ecommerce comes from careful attention to all the logistical details, no matter how tedious, no matter how boring.
Posing the question another way, what is the lower limit, for you personally, at which you can handle auction sales profitably? An average price per item of $10, $5, $3, even $1? It all depends on how quickly and efficiently you can handle all the steps from posting the item (complete with picture) to shipping it and even depositing the check in your bank account. Don't get stuck working like crazy, selling lots of stuff, and losing money, or losing so much time that it's the same as losing money.
First consider how you organize and group your items at eBay. If you sell them one at a time, the average final price on your auctions will be so low that the 25 cent posting fee will eat up much of it. Also, the time it takes you to post an item and deal with all the details of the transaction are the same whether you sell a single bottle cap or a batch of a hundred. So what is the optimum size of a batch -- to attract bidders, have a reasonable end price, get enough money average per cap, and be able to handle all the logistics in a reasonable time with a minimum of hassle?
The photo will be an important factor in selling. So the batch size, in part, is limited by how many items you can show in reasonable size in a single digital photo taken with your particular camera. With my old Webcam, I could only show a maximum of about six bottle caps. With my new digital camera, I can, if I wish, handle three dozen.
However, you handle your records, be efficient and consistent, and be prepared to backtrack, given all the manifold ways that buyers may respond. For instance, some people won't respond to your email, but rather will send you a check with a postal note and their street address. Some just send the check, and the only indication of their address is on the check. You'll have to match the scanty information provided by postal mail with whatever online notes your have kept. Be prepared for the infinite and unpredictable variety of human response; but at the same time, keep your record keeping as simple and time-efficient as possible. And don't turn to automated techniques until you have had enough experience to determine if you really need them and if they will actually cover the variety you are likely to encounter.
How efficiently you can handle the record keeping will determine how many separate auctions you can maintain at a time. I found that with my home-grown paper-based techniques, I could handle a maximum about 100 simultaneous auctions -- each running for seven days, and with some ending each day of the week. At around that point, the sheer volume and the tedium of all the tasks involved started to become a serious burden, and it was time to consider special software for auction management. I was able to handle that many only because I had many customers who bought more than one auction item from me in the same week, often doing so in order to save on shipping charges. So 100 auctions might translate to less than 30 individual customers, and of those 30 maybe a dozen had done business with me before, and I might even have credit card information on file about several of them. Such repetition cuts down on the recording keeping, as well as the time involved in packing and shipping.
Also, remember your record keeping isn't just for your convenience and efficiency, it is also important for taxes. Keep track of all your expenses and all the money that comes in, and be consistent about how you record information. The IRS knows that people are making serious money through online auctions, and every sale of yours is permanently recorded at eBay, as part of their mechanism for collecting fees. So even though you aren't a dealer and are just selling old junk, it would be wise to report all your auction earnings on your income tax return (using Form C).
Think of eBay as an immense test market, where you can experiment again and again with the variables -- starting price, time frame, messages in description, and use of photos -- to make your auction sales more profitable and to learn lessons that you then apply to offline sales.
Also, the major online auction sites -- eBay, Amazon, and Yahoo -- have tens of millions of visitors. Hence, regardless of whether you actually sell anything there, you can get value by making your goods and services visible to this audience. Basically, for less than a dollar, you can insert your message in a catalog seen by millions.
In that sense, the Internet is not a market. Rather it is a communication vehicle connecting potential buyers to one another and to vendors. It is a means for creating markets.
An online community -- a loyal Internet audience -- is a set of people who will "reference each other when making a buying decision." By building a self-sustaining online community, you can build a new niche market.
For this approach to work, you need to do more than just provide marketing
information at your Web site, and more than have your people interact with
your potential customers and partners. You also need to provide a means
for the members of your audience to interact with one another, otherwise
they won't "reference each other".
You can build a rudimentary community using email discussion,
forums, and scheduled chat sessions, as described in Chapter Seven. In
such an environment, people feel free to speak up not because they feel
they are experts, but rather because they want to understand. They express
their suspicions, inklings, instincts, and guesses, seeking discussion
that will help refine, correct, and validate their thoughts.
Moore's "chasm" is a communication gap. You narrow it by getting people to talk to one another, to treat one another's ideas with respect, and to learn from one another.
Ideally, your community would welcome and involve (in Moore's terminology) technology gurus, visionaries, pragmatists, and conservatives -- all talking about matters of common concern and interest. And community interaction need not be just online, but rather could involve activities in physical stores, face-to-face meetings, and even formal training sessions.
In such a community, communication isn't just "two-way", vendors talking
to and listening to partners and customers. Rather customers, potential
customers, and partners regularly and naturally talk to one another, building
relationships with one another.
I
n other words, when doing business on the Internet, focus on the relationship,
not the transaction. Ease of handling secure online transactions is important
only insofar as it is a convenience to the buyer. Other factors are often
far more important in building and maintaining relationships with customers,
and are probably far less expensive to implement than transaction systems.
Every sale that happens automatically, without human interaction, deprives you of the opportunity of building a closer relationship with the customer and encouraging the impulse purchase of other related items.
MrSwap.com specializes in music, movies, and videogames -- mass market merchandise. That limitation greatly simplifies their business. You know what you are getting, and know what it's worth. For popular items, you see many separate listings for each, meaning that you are likely to find the item you want at the condition and for price you want, quickly.
As a seller, you don't have to waste time describing your items or taking and posting photos, as you do at eBay. MrSwap already has photos on file, together with links to ratings, reviews, and additional information for all common music, movies, and games. You just indicate the condition and the price, and your listing for that item will appear on the same page with everyone else's.
They use an intermediary payment system -- SwapPoints -- to facilitate swaps. Instead of direct payment of cash between the parties, and instead of having to barter directly, where you have something another person wants and that person has something that you want (which could be difficult to work out), everybody deals with MrSwap. When you sell something, you get SwapPoints; and when you buy something, you spend SwapPoints. If you do more buying than selling, you can pay for SwapPoints from MrSwap at $1 a point.
Today, you get $5 in free SwapPoints for joining. You can use those points immediately to get whatever you want.
When you find an item you want, you request it by clicking the "Swap" button. MrSwap sends an email to the member who listed the item. If the seller confirms, MrSwap sends you an email confirming the deal. SwapPoints get transferred when the buyer confirms receipt.
Shipping is another unique aspect of dealing at MrSwap. They only handle limited kinds of merchandise, of known size and weight. When a swap is confirmed, they send a stamped pre-addressed envelope to the seller. The seller just puts the goods in the envelope and drops it in a mail box.
You pay for shipping and handling at the time you make your offer (by debit or credit card or by funds you previously deposited at MrSwap by check or money order). The transaction goes through when the deal is confirmed.
On the one hand, that mechanism simplifies matters. You don't have to concern yourself about getting envelopes that are the right size, and you don't have to go to the post office to get the package weighed and buy postage. But you end up paying MrSwap a small premium (the "handling" charge) on every item you buy. And their sending out the envelope means it takes longer for you to get what you want.
Like at eBay, there's a rating system. But here buyers just rate sellers, not vice versa, because MrSwap acts as the intermediary. The rating seems intended primarily to help keep people honest when they describe the condition of their goods. There's no back and forth between buyer and seller here. It's all simple and automatic.
At Half.com, you are sure that you will get what you want quickly and at a good price -- without the adventure and uncertainty of online auctions. Buying at Half.com is to buying at eBay, like buying a fish in the store is to going fishing.
Half.com is set up like a store, not an auction site. Their catalog contains just about all books, movies, and music produced in the last 20 years. Not everything is in stock, but most items are. (NB -- They recently added new categories -- computers, electronics, sporting goods, and trading cards. It may take them awhile to build their inventory in those areas.) But this isn't just an online secondhand store. Here the inventory is held not by Half.com but by tens of thousands of individuals like yourself. And when you buy, the owner sends the merchandise straight to you.
Their name is based on the typical price -- half or less than retail. All the merchandise is secondhand and is rated/priced based on condition. In many cases you can get "like new" quality, for a very good price. The sellers have agreed to ship within 24 hours of notification/confirmation of a sale, and most seem to do a good job of abiding by that. (Like at an auction site, buyers rate sellers on their performance. So those who sell regularly have incentive to make sure buyers are satisfied.)
You pick the items you want; agree to pay Half.com by credit card; an email goes to the seller who must confirm the sale; then you get confirmation, you credit card is debited, and soon you receive the merchandise. There is no bidding, no delays, no uncertainty. There is no need to exchange email with the seller. Everything goes quickly and smoothly, like with a retail store transaction, and the prices are very tempting. About a month after you buy a book, you'll get an email suggesting that if you've read it already, you might want to resell it now through Half.com.
For the seller too, Half.com is far more convenient to use than an auction. To list an item, all you need to do is enter the ISBN or UPC number (the standard codes found on all recent products of these kinds), and indicate the product's condition. The standard description and photo is already in the database. That means it usually takes just a couple of minutes to add your item at half.com, while it typically takes 15 minutes to 30 minutes to add an item at eBay.
Here pricing too is easy (as opposed to the guesswork and research involved in pricing at eBay). Half.com prompts you with a suggested price (usually half of retail) and tells you the price for other copies of the same item in the same condition currently on sale at Half.com and also at other retail sites. You name your price, and the item is added to their inventory. Someone searching for a particular item will see your copy (condition, price, and brief comments) together with information about all the other copies of that item now on sale at Half.com. And you don't need to collect payment from your customers -- Half.com does that for you and sends you a check once a month (every two weeks if you sell lots).
With this business model, Half.com can offer millions of items for sale without having to pay for or warehouse or even select any of the inventory. They also don't need to deal with fulfillment -- sellers package and ship their own merchandise. Also, Half.com gets paid upfront by credit card by the buyer -- the sales price plus a shipping charge. The seller gets the selling price plus an allowance for shipping costs, minus a commission of 15% of the selling price. The email notifications and confirmations are all automated.
It's a simple and powerful approach.
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