Copyright © 2000 Richard Seltzer All rights reserved. To correspond with the author, send email to seltzer@samizdat.com Comments welcome.
For current related info, check eBay update -- what's changed over the last few years and how you can take advantage as a seller: details that pay (2002)
Auctions have been around probably longer than the pyramids. Now put them online and all of a sudden everyone who can type their own name is buying and selling everything from bottle caps to houses, emptying and filling attics around the world. A way of doing business that cavemen may have experimented with is transforming the global economy, changing forever how goods of all kinds are bought and sold, and becoming a common, legalized, household addiction. Are you kidding? What's going on?
First, don't be confused by the name. Online auctions have very little in common with traditional face-to-face auctions. And that one term "online auctions" is used to label two very different phenomena.
Second, not all addictions are bad. Buying can become 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.
In the final minutes, 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.
At retail auction sites, like OnSale www.onsale.com and FirstAuction www.firstauction.com, the site itself is the seller, and the merchandise is typically new or refurbished -- often the same brand-name goods that you could buy at a store a few minutes from your home. 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. At these sites, the moment that you win, your credit card is debited the amount that you bid, and the goods get shipped to you right away.
At flea-market-style, people-to-people auction sites, like eBay www.ebay.com, Amazon.com www.amazon.com, and Yahoo! www.yahoo.com, the site sells nothing. It just sets the rules and provides the online facility for members to sell to one another. Here, you can be both a buyer and a seller. Here, instead of using automated transaction software, to complete a purchase, you contact the other party by email and snailmail and work out the details of shipment and payment between yourselves, and may get to know one another in the process. This is where you can get hooked on selling: make money selling junk you were ready to throw out, and perhaps become wealthy while having a hell of a good time.
Why sell at eBay?
Millions of people gather at eBay, and millions of items are for sale. In a typical day, people add more than a quarter million new auctions at this site. In number of users and in diversity of content, it is comparable to the entire Internet back in 1993, just before the Web took off. With over 1600 categories, it resembles newsgroups -- linking people with common interests, in an open, anarchic, self-regulating way. You might easily be overwhelmed, get lost, not know how to begin to sell here.
If you haven't sold anything at eBay yet, now is a good time. Check your attic or basement; do some house-cleaning; and instead of throwing stuff out, put it on sale. The odds are that what you don't want, someone else does. You could make some money, and learn a lot about how ecommerce works, while recycling stuff that's just taking up space in your attic.
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, 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 millions of people to see your item. All it takes is two enthusiastic bidders to raise the price beyond rational levels.
First steps for sellers at eBay
First, search at eBay for similar items now on sale and see how they are described and what kinds of prices people are paying for them. Keep in mind that while auctions usually last seven days, most of the bidding takes place in the last hour or so. So the minimum acceptable bid and the bids early in an auction are no indication of what these things sell for. Bookmark the pages describing items that are closest to what you want to sell. Then go back just after that particular auction has ended to see what the final price was.
Then read all the many pages of info that eBay provides explaining the process and what it costs. There is a non-refundable fee for placing an item for sale, which depends on the minimum price you'd be willing to accept. For items with a starting bid under $10, this fee is just 25 cents. And you start with $10 of credit with eBay, so you don't have to send them any money to get started.
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 small percentage of the final sale 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 very 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 very much like the old pre-Web Internet -- self-regulating, with lots of sharing, and lots of 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 conceivably 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 info.). 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.
Watch for seasonal variations. For many kinds of collectibles, demand drops sharply from June to August, as buyers vacation. Only post your prime items when you are confident that bidders are active.
Learn while you earn
Remember, Ebay just links buyers and sellers, who then contact one another by email and snail mail to take care of details and make payment and deliver the goods. And any member can leave feedback -- positive, neutral or negative -- about any other member.
The email helps you build relationships with your customers -- learning what they really want and why. And the 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 experimenting at Ebay, selling old comic books, I was getting an average of $2-3 each. After a month, I'd built up a few dozen positive feedbacks and was getting $10, $20, even $30 for comparable comics.
There's an important lesson here for anyone interested in doing business on the Internet. Successful ecommerce is not about automated transactions. It is about relationships. 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. "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.
Also, consider using Ebay to test market your products and your messages and to establish your pricing. You can tap into a global marketplace with millions of people for an insertion fee of 25 cents.
Retail auctions: shopping for bargains on brand-name merchandise
If you dare to flirt with temptation, go to FirstAuction www.firstauction.com or Shopping.com www.shopping.com/store/auction to get a feel for how retail auctions work. There you'll see a variety of goods for sale in auctions set to end in as short a time from as 30 minutes (called "flash auctions"), and with starting bids of as low as $1. You may have seen some of these same items for sale in stores with sticker prices of hundreds of dollars; so what harm could there be in posting a $1 bid? None at all, if you can stop there. First, consider how good are you at stopping after the first potato chip, the first drink, the first cigarette?
Flea-market, people-to-people auctions: where you can sell as well as buy
eBay has defined this space -- with over two million items for sale and millions of potential buyers as members who come back again and again. Other people-to-people auction sites, like Yahoo have tried to create a niche for themselves by not charging fees. (At eBay and Amazon.com, you sellers pay a posting fee -- 25 cents for items with starting bids under $10 -- and a percentage of the final sales price -- 5% (like sales tax) on items that sell for $25 or less.) But eBay has achieved critical mass: there are so many buyers there with such diverse interests that whatever you want to sell you are likely to find bidders there, and get good prices -- so good that fees are irrelevant. Also, Yahoo doesn't have a feedback mechanism, which is the heart and soul of eBay. Feedback -- where buyers and sellers can post unerasable evaluations and comments about one another -- makes eBay self-policing, encourages everyone to act in good faith, and rewards trustworthiness, because sellers with good reputations get more and higher bids.
Auctions, auctions everywhere: where should a buyer look? where should a seller sell?
With new online auction sites opening almost every day, how can you keep track of what's available and what's going on? First, check the Internet Auction List (www.internetauctionlist.com). They list over 1700 auction sites, by the types of goods sold and also by geography -- in case you'd prefer to buy locally, and save on shipping charges and delays. Or check out SaleHoo, a product sourcing directory that lists wholesalers. For impartial ratings and reviews of auction sites, check Gomez www.gomez.com
This site is Published by B&R Samizdat Express, 33 Gould St., West Roxbury, MA 02132. (617) 469-2269. seltzer@samizdat.com
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