posted on June 3, 2008 12:26:55 PM new
Interesting read: http://news.yahoo.com/s/bw/20080603/bs_bw/jun2008tc2008062112762
Auctions on eBay: A Dying Breed
Bruce Hershenson, who auctions vintage posters online, is hanging up his eBay gavel. For almost a decade, Hershenson's business epitomized the e-commerce that made eBay famous. He sold rare, collectible, sometimes kitschy memorabilia in online auctions that had a starting bid of 99%. But as the business of buying and selling over the Internet has matured, the thrill and novelty of auctions have given way to the convenience of one-click purchases. Hershenson will hold his last eBay auction June 3. "The auctions are nothing like what they once were," he says. "They won't ever come back."
Auctions were once a pillar of e-commerce. People didn't simply shop on eBay. They hunted, they fought, they sweated, they won. These days, consumers are less enamored of the hassle of auctions, preferring to buy stuff quickly at a fixed price. Hershenson is emblematic of the legions of small business people who built their livelihoods on eBay but -- like eBay itself -- are having to rethink their whole approach to online sales.
Sales at Amazon.com (NasdaqGS:AMZN - News), the leader in online sales of fixed-price goods, rose 37% in the first quarter of 2008. At eBay, where auctions make up 58% of the site's sales, revenue rose 14%. "If I really want something I'm not going to goof around (in auctions) for a small savings," says Dave Dribin, a 34-year-old Chicago resident who used to bid on eBay items, but now only buys retail.
E-Commerce Continues to Evolve
Executives at eBay have gotten the message. Since taking the helm in March, eBay Chief Executive John Donahoe has made it clear that fixed-priced items are key to future growth. EBay's "Buy It Now" business, where shoppers can purchase items at a set price even when the merchandise is also listed in an auction, makes up 42% of all goods sold on eBay. It's growing at an annual 22% pace, the fastest among eBay's shopping businesses. "As (Web) search has developed, you can get a great deal in a fixed-price format," Donahoe said in an Apr. 16 interview after his first earnings call as eBay's top executive. "We are going to let our buyers choose." Donahoe did not comment for this story.
At the current pace, this may be the first year that eBay generates more revenue from fixed-price sales than from auctions, analysts say. "The bloom is well off the rose with regard to the online-auction thing," says Tim Boyd, an analyst with American Technology Research. "Auctions are losing a ton of share, and fixed price has been gaining pretty steadily."
To hasten the growth, Donahoe is spearheading changes to make eBay more friendly to users who favor one-click shopping. While former CEO Meg Whitman ended her tenure amid an ad campaign that championed auctions, urging consumers to "Shop Victoriously," Donahoe has taken steps to increase fixed-price inventory. In May, eBay announced a partnership with Buy.com to sell a large swath of the retailer's inventory for set prices. "EBay has significantly de-emphasized dynamic-priced items in favor of fixed-price listings in the last six months," says Cantor Fitzgerald analyst Derek Brown.
EBay Fees Favor Fixed Prices
Perhaps the biggest example of eBay's new fixed-price focus is the new fee structure, announced in January. The changes gave breaks to many large vendors who sell fixed-priced goods on the site, while hiking fees for many eBay users who sell using a traditional auction structure (BusinessWeek.com, 1/29/08).
EBay executives say auctions will always have a place on the site. In the future, the company plans to alter fees so that auction sellers don't feel so pinched, though executives have not provided details. The company also intends to showcase additional features that meld auctions and fixed-price listings during and after the annual eBay Live event, to be held this year in Chicago, June 19-21. One possible new feature is a split screen that shows an auction on one side and the Buy It Now price on the other. "Auction-style listings are what keeps the site unique, but fixed price is growing much faster," says eBay spokesman Usher Lieberman.
What happened to auctions? Not only do shoppers want convenience, they're also looking for value. And the proliferation of pricing information online has made it easier for consumers to bargain-hunt and lessened the need to risk overbidding in an auction. Hershenson recalls when a new $40 toaster could fetch $80 on eBay, thanks to a bidding frenzy. Now, a buyer can figure out the retail price with a few mouse clicks. A study earlier this year by the Pew Internet and American Life Project found that 81% of Internet users research products online before buying. "People have a lot of information at their disposal and that sets a reserve price of what they are willing to pay," says John Horrigan, an associate director at Pew. "It makes sense for eBay to set prices to appeal to that."
Auctioneers Up in Arms
But as eBay aligns its focus with the majority of buyers, sellers like Hershenson lose out. When he first heard of the fee hike, at a seller meeting in Washington with eBay management, Hershenson says he stood up and complained. "I said 'I am exactly the kind of seller who built eBay and brings people to eBay on a daily basis. And it seems to me your changes are hitting me hardest,'" he says, adding that his annual fees would have jumped from $120,000 to nearly $180,000.
Rather than pay the fee hike, Hershenson decided to move his business onto his own Web site, eMoviePoster.com. He auctions 1,000 to 1,500 items on his own site every Tuesday and Thursday. Because Hershenson's merchandise is popular among a specific set of collectors, he feels confident that his customers will follow him and says that most already have. He believes he can attract others with some well-placed ads, purchased with what he saved for not paying the higher fees on eBay.
Not all eBay sellers have the luxury of branching out on their own or moving to a third-party site. When it comes to auctions, eBay is one of the few games in town. Even though growth is slowing in eBay's auction business, the site has nearly 90 million active users. Other auction sites such as Ubid.com (ubhi.ob.OB) have far fewer visitors. Ten-year-old Ubid had 181,000 active bidders in the first quarter, according to its quarterly report.
EBay sellers organized a weeklong sales boycott in February protesting the changes announced in January. "Everybody is mad because they feel that this company got built on them, and when eBay felt that they no longer needed them, they tried to get rid of them," says Maggie Dressler, an eBay seller who has auctioned antique trains and toys on the site since 2001. "It is deplorable."
Many auctioneers may have no choice but to close shop, says Hershenson, adding, "Their latest changes will have the result of ending auctions as we know it on eBay."
posted on June 3, 2008 12:38:35 PM new
"The company also intends to showcase additional features that meld auctions and fixed-price listings ...One possible new feature is a split screen that shows an auction on one side and the Buy It Now price on the other."
Bascially this is why the number of auctions in the vintage ad area dropped significantly over the past few years. The guy that sets up the auction for his 1929 Lincoln ad is just highlighting that there are 30 more similar items starting at $3.99 that you can buy right now.
posted on June 3, 2008 01:16:28 PM new
But will ebay sellers set realistic fixed price on their vintage/antque or just plain old merchandise?
It is an art and a science to know how to set the price so people will buy and seller turns a profit,and there are so many amateur sellers on Ebay who dont have a clue and the professional sellers who do this as a livig cannot afford to give their stuff away.
Internet is littered with shops after shops which set their price too high ,take a look at the shops On Rubylane,most of their items sold are sold on Ebay foR LESS.
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Google does not hire stupid people.
[ edited by hwahwa on Jun 3, 2008 01:31 PM ]
posted on June 3, 2008 03:43:39 PM new
concerning Ruby Lane. I sell on both sites have sold on ebay for 11 years,RL for 1. I have been VERY happy with my sales on Ruby Lane. The more stuff I list, the better my sales have become.I set my price and most of the time it is a few dollars more than I would list the same item for on ebay as a BIN.I have the opportunity to let clients make me an offer to offer them a deal when they write to me to treat myself as a professional.I have shipped 12 packages this week,2 from sales on ebay 10 from Ruby Lane. Works for me!
EQUALLY IMPORTANT!! Not one time this past year have I been bummed because RL has changed the rules,raised the costs and so on and so forth... I am,as we all are sick to death of ebay's every changing ball field.You never know with them... with RL there seems to be a real continuity and hassle free enviroment on which to sell.Boy has that been refreshing!
posted on June 3, 2008 04:14:47 PM new
Well,good for you ,sounds like you are doing well on Rubylane.
But you are realistic in setting your price,a few dollars above your Ebay price.
This is important if you are driving traffic from Ebay to Rubylane.
Years ago when one of the founders of Rubylane was manning the site,he sat on the chat forum like Caesar and slam anyone who does not agree with him.
Now he is back doing IT work,so he is happy earning professional wage and not dreaming how to make millions going public with the site.
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Google does not hire stupid people.
posted on June 3, 2008 09:12:48 PM new
This may just mean the end of eBay selling of collectibles and other items that do appeal to auction buyers. I look at some of the collectibles (and older books) I sell and could not for the life of me put a BIN on them. Heck, they could go for little, they could go for a large amount. Oh well.
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posted on June 3, 2008 10:46:34 PM new
I don't think the auction format is dead, it has been around before ebay, and will be around long after ebay. What is dead is the retail aspect of it - someone looking for a common product (say a Harry Potter Book) and going to ebay to bid on it. That was cool and fun in 1998, but today that isn't a reasonable way to sell this item. I've been pretty successful lately with my ebay auctions, but doing it differently, with a different audience, and different stock than I've handled in the past.
posted on June 4, 2008 07:00:32 AM new
I agree ebayvet. The auction format is still the most viable format for many items. If I have several identical items I can do a BIN or fixed price or list in my store.
If I have a vintage item, HTF, etc, no way am I going to put a set price on it. I let the market determine the price.Some days the market is very, very kind other days it is not so generous, but at least I am not second guessing myself and wondering what the item would have sold for in an auction. (And seeing another seller list my item for double or triple a few weeks later).
posted on June 4, 2008 07:48:10 AM new
www.seekingalpha.com today has a good followup to this, drawing the same earth shattering conclusion: auction format is not appropriate for all items. Well articulated, but duh!
posted on June 4, 2008 07:51:51 AM new
So you don't price your items because you are unsure of your ability to do it.
I think that's why a lot of people use the auction format.
It's true that selling an object for an inordinately low amount of money because you didn't know any better tends to sting and makes one fearful of a repeat episode. I recall a five piece set of Margot de Taxco silver jewelry I sold for $50. I used to cringe when I walked by the guy's showcase at the Antique Trove because I was afraid I'd see it there.
But here's where some people go wrong: Their fear turns into paralysis. Now they can't price anything. Some even have housefuls stuff they can't/won't sell because, what if they price it wrong? What if they end up "taking a loss"? (It never occurs to them that if you've had something for, say, a year, you've already sustained a loss on it.)
If you analyze your business logically and determine what profit you need to get from each item, it doesn't matter if one of your customers then goes on to double or triple his money. You got what you needed out of the object. You've got control of the most important aspect of your business: cash flow.
Let people have their finds and their moments of joy. They'll come back to you to try to find more.
posted on June 4, 2008 08:48:26 AM new
People do not realise retailers have overhead and cant pay retail price for their merchandise,they must buy wholesale and sell retail.
So many sobbing stories of heirs who sold their parent's collection for less and cry their eyes out when they found out the retail stores sell them for more,a lot more.
Back years ago I befriended an Ebay seller who came into town (New Orleans) for a convention and we ventured into the side streets of French Quarter to visit small shops,some of them supplied the big shops on Royal street where rent is like 120k a month and figure how much they have to mark up the items!
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Google does not hire stupid people.
posted on June 4, 2008 10:43:48 AM new
I have a few business rules I try to always remember and follow:
#1 when buying out of someones home and they want me to tell them what I will pay,I say "I can't be the buyer & the seller, what do you want for YOUR things"
#2 fast nickel - slow dime
#3 this is business not romance
#4 fast nickel - slow dime
I have made my mistakes in 30 years and will no doubt make more. I do my homework and try to know enough not to loose too much, too often. I sell ALOT of stuff to fellow dealers and decorators. I want them to make money on me and come back for more!
posted on June 4, 2008 11:19:34 AM new
Years ago I came to grips with the fact that I'm more of a wholesaler than a retailer on eBay and Amazon. If I can make what I consider a decent profit on an item (and that does not always happen!), I'm aware that many of my buyers are sellers and may make more. I don't obsess over that (but did years ago).
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posted on June 4, 2008 12:13:40 PM new
I have found out some of my buyers/bidders cant sell my items once they mark them up to cover shipping and ebay fees.
Buying on internet and selling on internet is not that easy,especially if it is the same internet site,say EBAY!
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Google does not hire stupid people.
posted on June 4, 2008 01:44:59 PM new
Years ago, when I first entered the antiques/collectable business, I used to figure that for every dollar I spent, I wanted a 5X return. It worked out that way for several years, till eBay became popular.
That started the demise of the antique mall.
Today, using knowledge of values that date back 15 years, I sometimes break even on the same items that once sold for 5X.
I have to admit that I'm getting more gun shy about offering prices.
posted on June 4, 2008 02:22:36 PM new
The terms retail and wholesale aren't useful in today's markets. If you think of a supply channel as a straight line with the factory at the left end and the consumer at the right, you will see there is plenty of room in between.
We don't always know all the links in the chain or even how many there are. But as most of us know, an object is marked up every step of the way until it is sold to someone who cannot turn a profit reselling it.
posted on June 5, 2008 05:46:59 AM new
It is hard to make a finial decision on your asking price but when you have a retail store or you sell at a flea market's as I did then you know that's exactly what you have to do.
When I bought an item for my store I would already know what I was going to charge retail and what I was going to charge another dealer, so knowing that helped me to decide what I was going to pay for this collectible item.
If you don't know before you buy you will loss money.
It took a lot of learning/reading/checking prices and seeing is the item really selling or is the seller asking a realistic price so it needs to sit till the right retail buyer comes along
My motto is, make your profit as quickly as you can even if the profit is a little less than you wanted for it. By doing this you have made more money on your investment then if you held on to it for a few weeks, or months.
I believe quick turnover is the key to making a decent profit and your able to keep changing your merchandise every few weeks.
In our Store's if anything stayed a month then we made a truck load and sent it to a no reserve auction. Only the special items stayed behind waiting for the right customer.
But as we all know mistakes are made along the way so you need to eat your mistake and move along and try not to make that mistake again.
This also applies to Auction listings/BIN listings and anything you buy even if your buying for your personal use, because one day you will want to sell that item and if you over paid you will have a hard time.
Sorry if it's long, guess I had too much coffee this morning....smiling
Caroline 