May 1, 2002
In this issue:
Announcements
* Happy Birthday to Auction Gold!
* This Issue's Feature Article
* Saving Women's Lives
* A Thinking-Outside-The-Box Puzzle
* Editorial: We Can't Have It Both Ways!
* Taking A Second Look At Reserve Auctions
* Making Money On Half.com
* Reader Comment: Multiple IDs
* Reader Comment: Money-Making Tools
* Reader Comment: Power Listings
* News From PayPal
1. Protecting Sellers, As Well As Buyers
2. Master Card Or Not?
* News From Ebay
1. Profits And More
2. More Money, Less Customer Support? Huh???
3. ActiveX For Active Pix
* What About An "Experience" Auction?
* Comparing The Giants
* Three Cheers For Amazon Auctions!!!
* Winning Answer To The Thinking-Out-Of-The-Box Puzzle
Announcements
1. Happy Birthday to Auction Gold!
It's amazing, but our first issue was exactly one year ago. We had about 30 subscribers – today we have 9381. I've learned a lot, made a lot of new friends and have some really cool experiences. So, thanks a lot for such a great time, and I'm off to bake a birthday cake! :-)
2. This Issue's Feature Article
Usually I write a feature article, but not this issue. Instead, I am spouting off in an editorial, plus I have included an insightful article by my buddy Gary Hendrickson, and some great emails from some wonderful auction sellers, Christine, Charlene and James.
Enjoy!
3. A Thinking-Outside-The-Box Puzzle
I have often talked about the power of not thinking like everybody else. Meaning: don't try to do exactly what others doing, but put your own particular slant on your auctions (and everything else).
Here is a genuine question on an employment exam. There were over 200 applicants and one gave a really good out-of-the-box answer and won the job. Here is the question and I have put the "winning" answer at the very bottom of this newsletter, just to give you a chance to ponder and cogitate. What would your answer be?
"You are driving along in your car on a wild, stormy night. You pass by a bus stop, and you see three people waiting for the bus:
1. An old lady who looks as if she is about to die
2. An old friend who once saved your life
3. The perfect man or woman for you
Which one would you choose to offer a ride to, knowing that there could only be one passenger in your car? Think before you continue reading.
You could pick up the old lady, because she is going to die, and thus you should save her first; or you could take the old friend because he once saved your life, and this would be the perfect chance to pay him back.
However, you may never be able to find your perfect dream lover again.
WHAT CHOICE WOULD YOU MAKE?
Editorial: We Can't Have It Both Ways!
I have gotten lots of email over the past few months that focus on two different complaints:
First: there is so much competition on eBay (and other sites)
Second: it is so hard to find something to sell
Since the last issue, I have had three different readers write and ask if it would be OK to contact successful sellers in particular categories and ask them where they were getting their merchandise.
Let me ask you a question: if YOU were making lots of money selling certain widgets, would YOU tell someone (you don't even know) the name of your supplier?
We all have heard the statistics: only about 3-5% in an group ever make it really, really BIG! Then there is another group that is moderately successful. Everybody else just drops away and drifts on to the next opportunity to get rich.
I suppose that auctions are no different. Most people give up before they really become successful.
Can it be done? Can you really make a living in online auctions?
There are three contributors to this issue who are doing just that! I am one, Gary Hendrickson is another and reader James Scott is included below.
Here's the bottom line: the easier it is to find goodies to sell, the more competition there will be! We simply can't have it both ways. So the next time you feel frustrated about not being able to find something – be grateful. If it were easy, the competition would be so overwhelming that no one would sell anything. If you are the persistent type – you WILL reach whatever level of success you want. Isn't that great???
Taking A Second Look At Reserve Auctions
We have discussed this question many times and it can be a toughie. If you start your price too high, no one will bid. And, if it's too low, you might be selling at a loss. What to do?
In this article, Gary Hendrickson answers the question based on his valuable experiences.
- - -
I occasionally drop by a small discussion forum which focuses on selling books on eBay. A little over a week ago there was a post there by one of the members in which he described a short test he had run using reserve auctions.
He had acquired two copies of a fairly desirable book by Zane Gray. Both were 1st editions and both were in excellent condition.
Here's what he did.
He listed both books at the same time for three day auctions. The first one was listed with a starting bid of $49.99 (the lowest price he felt he should take for each book) with no reserve. The second one was listed with a starting bid of $9.99 with a reserve of $50.
At the end of three days the book with the starting bid of $49.99 ended with a single bid and final price of $49.99 and had 67 views. The book with the opening bid of $9.99 and $50 reserve closed with 9 different bidders and a final price of $70 and had 83 views.
This evoked several posts for other book sellers, all relating very similar results when using reserve/no reserve auctions.
One poster indicated he had been running experiments similar to this for some time and had found that his auctions with a low opening bid and a reserve regularly got 15% more views and normally sold for $8-$14 more.
Another indicated that he had been playing with reserves for his last three auction cycles. He had discovered that while he was successfully closing 33% less of his auctions, the actual price of the books that did sell had risen 35%.
At the time he had made this post he had 54 items listed on eBay. 10 of these didn't have reserves, but had higher opening bids. 4 of them had bids.
The other 44 had reserves with low starting bids. Of these 11 had bids that met their reserve and 9 others had bids which had not met the reserves yet.
The general concensus was that while using low opening bids in conjuction with a reserve price of at least 4x to 6x that opening bid the number of items that successfully closed went down, the total income from the sales went up.
As an example, if you normally listed 30 items a week and 20 of these sold with total sales of $400, by using reserves while our sales might drop from 20 to 15, your income from these sales might increase from $400 to $500.
I can think of at least one other possible advantage to using a reserve for better items you are selling if they are somewhat hard to find - It exposes the availability of your item to the market without running the risk of it being "stolen" by a low bid.
Admittedly, this is a grey area with eBay, but reserves could be used as an effective marketing tool for higher priced items.
If you're listing a hard to find item for the first time, you might consider placing a fairly high reserve on it. If the item sells, that's fine. However, if it doesn't sell, you have still exposed it to potential buyers who want the item.
At this point, because once a buyer knows the item is available, negotiations behind the scenes can begin. Obviously, this would only work with items that are in high demand and short supply, but there is more of this going on than eBay cares to admit.
Should we start using reserves on more of our auctions? The answer to that question depends a lot on the type of item you normally sell.
I sell a lot of antique and collectible advertising items on eBay. This past weekend I was at one of the two largest antique flea market/sales in Minnesota and came home with lots of harder to find goodies. A few of these items I was lucky enough to be able to purchase duplicates of.
Normally I would have put one on eBay and kept the duplicates and listed them one at a time over the next 3-4 months. However, I'm going to run a few tests myself and see if the results these book sellers got hold true for other areas as well.
The test will consist of three different advertising items that I have two of in similar condition. One of each will be listed with a high starting bid and no reserve. The other will have a $9.99 starting bid, but with a reserve near what I think it should bring.
Stay tuned for my results.
Making Money On Half.com
I have enthusiastically recommended Gary's new book about selling books on half.com, "How To Sell Common Everyday Books On Half.Com Like Crazy!", and got this interesting email from a long-time reader of Auction Gold:
"Sydney, wanted to share with you my experience with half.com today. Late last night I posted 2 books, which I had bought for 50 cents each at a thrift store, and some old cd's I had lying around on half.com. This morning I had emails to confirm the sell of one of the books for around $5.00 and a cd for around $7.00 - not bad for such little effort!
Christine
caprine@tco.net
You can find Gary's great book here:
http://sellonhalf.auctionknowhow.com
Reader Comment: Multiple IDs
In the last issue, I commented that I use different IDs for different products. For example, "computerwhiz" is a confidence-inspiring ID for that category, but isn't great if you are selling needlepoint materials.
This reader question about IDs is important, though as favorite reader Charlene points out:
Sydney:
Thanks again for a wonderful issue of your newsletter. There is always so much good information in it, I have to print it out at home and also send it to my office and read it again at work(!!) :)
I have found all of your recommendations to be useful....I have purchased MYNAS, Gary's e-book on half.com book sales and plan on purchasing Deep Analysis. Great stuff! I only have one user ID right now on e-bay and was wondering this....if I create another user name for a particular product, as suggested in the newsletter, how do you handle the zero feedback that you start out with? Or should you mention in your ad somewhere "please check my feedback under user name " "??
Charlene's e-bay seller ID is "cmacias" and she sells vintage postcards, books and other collectibles.
- - -
This is a great question. The zero feedback is definitely the downside of different IDs. What I do is emphasize my credentials for selling (whatever) in other ways. For example, one Auction Gold reader sells fancy party dresses. She has also worked in a dress shop and sews fancy clothing for extra income. I suggested that she emphasize those qualifications. She might even show a couple of her creations on an "About Me" page.
One thing I always do is let buyers know that I have my own merchant account, complete with a Secured Server. I can refer them to my site with complete contact information and this lets them see that I am not a fly-by-night operator.
And, I have a new ID I am working on right now. I wanted to do some Featured Plus auctions, and eBay insists that we have 10 feedback points before we can do features. I only had 5 on this account and I wanted to start doing featured right away. So, here's what I did:
I have tons of books that I have grown tired of, so I found 8 that were for sale on eBay. Their prices ranged from around $5-$10. I put up 8 auctions, lasting 5 days each. The price was for my books was only 49 cents, and I added this to the bottom of my listings:
"I am selling this book so cheaply because I need five feedback points to start doing featured auctions. I will even pay for shipping if you live in the US and will give positive eedback. This offer ends, though, when I get the points that I need."
I got those five point quickly!
I'm not sure how important feedback really is in terms of sales. I think if our offer is good people will buy anyway. Of course, there is no way to tell how many people didn't buy because of low feedback when we are new.
Another option, of course, is if you are selling something new, but are tired of handling another product, you can always change your ID name to one that is more appropriate. In our example above, you could change "computerwhiz" to "needlepointstitcher".
Like everything else in life, there are pros and cons to either sides. If you have tons of passionate fans, and don't want to give them up, then use one ID for all your auctions. As always, there are no hard rules that are always appropriate for every situation.
Reader Comment: Money-Making Tools
Anyone who is interested in auctions will be encouraged by these
comments from Auction Gold reader James Scott, who has changed his life dramatically with online auctions:
"Ebay is what allowed me to quit my job almost 2 years ago and I've been living comfortably working only 2 hours a day on Ebay."
So, having a tool like this (Deep Analysis) is invaluable and at the price they are selling it for... IT WAS A STEAL!!
Thank you very much for recommending it.
James
P.S. - I already found a category that only has about 2 pages of Featured Auctions (which is very low). And one of the sellers in that category sold 56 items of his product and has absolutely no competition. I'm going to have a product created for this niche and sell it for $29. Even if I only sell 20 per week, I'll still pull down an easy $500 per week (after all Ebay fees and merchant account fees) with maybe an hour or two per week of work. That's not too bad ;)"
James Scott
scottjhsd@earthlink.net
I received a second email from James, on this same subject:
"That's one of my major gripes with people. They are afraid to invest a little money into their education and tools. I spend $100, $200, $300 even a few thousand for good education through seminars, books and tapes all of the time.
"Getting this software for only $129 is absolutely amazing in my mind. When I was reading your write up about it in the short message you sent, the only thing that was going through my mind was that I hope it was under $1000 so that I could get it immediately. When I saw the price, I felt like I won the lottery!! :) This is going to do a world of wonders for my business. Which is why I want to thank you for always putting out an excellent newsletter. It's easily one of the best around out of all the newsletters I receive."
James is doing exactly what I do – RESEARCH first, SELL second. Way to go, James. $500/week for an hour or two of work suits me just fine. How about you?
I mentioned that I found a new "hole" myself on eBay. Last week I made $2738.19, which resulted in $2137.72 in profits, after expenses. Not too bad! :-) And I owe it all to Deep Analysis.
http://analyze.auctionknowhow.com
Reader Comment: Power Listings
Here is an interesting email from Auction Gold reader Brooke Folk:
"Wanted to share a recent listing for my 10+year old BMW Motorcycle Helmet. Bidding ended last evening. Another similar style was listed earlier in the week and had one photo with little verbage and brought $82. My helmet brought 202.50...PICTURES AND JIBBERISH, or I should say calculated small talk description made the difference. Also the words "Mint as it gets" in the title didn't hurt either. I purchased the helmet 10 years ago for $225. Over 800 views is by far a record for my listings to date. There are zillions of helmets listed, many are new and I'm not planning to enter that market on ebay, but should a source be found, who knows."
Look at Brooke's comparison: he made $120.50 more than a competitor, simply by using good pictures and lots of description. And 800+ views is really amazing. Attention to detail really does pay off.
Brooke has a radio show every Saturday morning, and its focus is success and living a positive and productive life. He has a very famous guest this Saturday, May 4: me! We'll talk about auctions and whatever else. I've been on before and it't really fun. You can listen over the internet – you can even participate if you want to.
Phone-in and email-in during the show. See and hear the show.
www.wlux.com
then click on the see and hear icon!
www.itsyourshow.net
brooke@itsyourshow.net
News From PayPal
1. Protecting Sellers, As Well As Buyers
PayPal has a Seller Protection Policy, which supposedly protects the both buyers and sellers from any fraudulent auctions. Recently, they increased requirements that protect sellers:
April 19: if the item in question is valued at $250 and up, there must be a proof-of-shipment that can be tracked online and the buyer must have signed a receipt showing that he received the item.
May 11: sellers are required to ship items within 7 days of receiving money for the auction. Otherwise, they aren't protected.
2. Master Card Or Not?
MasterCard has announced that beginning today, May 1, they
will no longer allow " 3rd party credit card processors" to process MC transactions. This includes such companies as PayPal. There are lots of folks who use Visa and Master Card for auction deals.
The rule change would require merchants to set up their own deals with banks to accept MasterCard. The cost of such a process is often prohibitive for small merchants and is one of the lures of signing on with PayPal.
Visa and American Express transactions on PayPal would not be affected by the new rule.
PayPal says they are working out a deal with MasterCard: ""The association has adopted a new regulation that may require PayPal to make some changes to the way it processes MasterCard transactions on behalf of its merchants. The scope and timing of those changes are under active discussion by PayPal and MasterCard, and PayPal anticipates being able to continue to process MC transactions for our customers."
Let's hope they work it out. PayPal is the #1 most popular way for buyers to pay on the auction sites.
News From Ebay
1. Profits And More
eBay announced that it sold $3.11 billion worth of goodies in the first quarter of 2002, with auction listings reaching 138 million. That's a lot of "stuff" and is more than 55% higher than the same time in 2001.
Not only that, but actual profits were up 65% from the year before: $129.7 million - $213.7 million.
Ebay also announced it's top 10 categories during this period:
* eBay Motors
* Computers
* Consumer Electronics
* Book/Movies/Music
* Collectibles
* Sports
* Toys
* Clothing & Accessories
* Jewelry & Gemstones
* Antiques & Art.
2. More Money, Less Customer Support? Huh???
Considering those kinds of profits, it is especially ironic that eBay is eliminating several email addresses that offer customer help. Beginning May 15th, these email addresses will no longer work:
support@ebay.com
timesensitive@ebay.com
storeshelp@ebay.com
safeharbor@ebay.com
reports@ebay.com
ctywatch@ebay.com
eBay will then require members to submit their questions on the Customer Support Webform:
http://pages.ebay.com/help/index.html
http://webhelp.ebay.com/cgi-bin/eHNC/query-ebay.tcl
This isn't a great move. It's often pretty tough to get a straight answer from eBay. Contrast this with Amazon's 16 hour day/toll free number, and make your own conclusions. We do the best we can to keep some current information available to readers of Auction Gold in our Resource section:
http://auctionknowhow.com/resource
Check there if you need to find something. We do our best to keep up with changes, but can't guarantee the contact information. They make some very fast shifts.
3. ActiveX For Active Pix
If you have recently been loading listings on eBay, you may have had an irritating screen appearing and re-appearing in your face. That's because eBay is now requiring sellers who use their picture services to download ActiveX. I have never used eBay's picture services, and I never will, because of the charges involved. And this latest development is just another reason to encourage you to do likewise. For a short while I had ActiveX on my hard drive (I can't remember why). I use Norton software for virus protection and to locate Windows problems. Every time I ran Norton there was a problem with ActiveX. Every single time. I tried uninstalling it, but that didn't work. It remained on my hard drive until the last time it was re-formatted. Perhaps you might have better luck, but I avoid ActiveX like the plague.
Some web authorities say that ActiveX allows others to access information on your hard drive. eBay claims that won't be a problem. I'm not tech-savvy enough to be a judge.
What About An "Experience" Auction?
Recently an eBay buyer paid $425,000!!! to play golf with Tiger Woods. In a past issue, we reported over $100,000 to sit next to Spike Lee during Michael Jackson's come back game.
This is a new trend on auction sites: auctioning experiences with sports figures, movie stars and other celebrities.
Comparing The Giants
marketingexperiments.com recently ran an interesting story comparing eBay, Amazon,Yahoo and Ubid using over four million auction listings during March 2002.
While eBay generates almost 8 times as much traffic per auction listing than the next largest auction (Yahoo Auctions) it generates the least amount of revenue per buyer view. Amazon, renowned for their merchandising expertise, generated a whopping $1.54 in product sales every time an auction listing was viewed.
Auction Revenue Per Page View
--------------------------------------------
eBay Auctions $0.29
uBid Auctions $0.34
Amazon Auctions $1.54
Yahoo! Auctions $0.40
:::::::::::::::::::::::::::::::::::::::::::::::::::::
Which online auctions are the most cost effective?
::::::::::::::::::::::::::::::::::::::::::::::::::::::
Of course eBay, Yahoo, Ubid and Amazon all charge fees to
sell through their sites.
Any retailer knows that there is a cost associated with generating a transaction and thus gaining a new customer. Here is a breakdown of what the average transaction actually cost merchants during the month of March.
Here is how the average customer acquisition costs stack up across the auctions:
Auction Customer Acquisition Cost
----------------------------------------------
eBay Auctions $5.78
uBid Auctions $4.33
Amazon Auctions $6.71
Yahoo! Auctions $10.39
Current Industry Standard**** $20.00
Each auction site generated distinctly different transaction sizes. Although this data is in no way definitive, it does suggest that the typical Amazon buyer is out to spend more than the average eBay shopper.
Auction Average Sale
------------------------------------------
eBay Auctions $32.67
uBid Auctions $86.84
Amazon Auctions $163.87
Yahoo! Auctions $64.15
We can also look at this auction traffic in terms of standard advertising rates, or in Cost Per Thousand Impressions (CPM). If you were to purchase ad space to generate the same traffic, this is what it would be costing you:
Auction CPM
--------------------------------------------
eBay Auctions $32.67
uBid Auctions $86.84
Amazon Auctions $163.87
Yahoo! Auctions $64.15
Current Industry
Standard (CPM)*** $30.00
Three Cheers For Amazon Auctions!!!
If you buy books on Amazon, they will put your order in a shopping cart, so that you may by multiple items at one time, thus saving on shipping. There are sellers right now who mention that buyers can ship several items together, but it's an individual choice, and isn't common. With Amazon's new feature, it will be much simpler.
What if only one item is defective or unsatisfactory? Amazon is allowing sellers to issue PARTIAL refunds to take care of this problem.
Check here for complete information:
http://www.amazon.com/exec/obidos/tg/browse/-/537880/
104-0481775-9599903
Winning Answer To The Thinking-Out-Of-The-Box Puzzle
He simply answered: "I would give the car keys to my old friend, and let him take the lady to the hospital. I would stay behind and wait for the bus with the woman of my dreams."
Sometimes, we gain more if we are able to give up our stubborn thought limitations.
Never forget to think outside of the box.