Place Your Bids

If you're one of the millions of consumers who've caught the online auction bug, you already know that you can save — or make — some serious coin on the Web, simply by knowing your way around the online auction community.

“I made my first major grounds maintenance purchase — a tractor — about a year ago. The sale went so smoothly, I decided I should be doing this myself: selling online by auction,” says Rizwan Ahmad, vice president of Speedway.com, based in Waluwatosa, Wis., an online seller of grounds maintenance and related equipment.

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Doug Young, a Reston, La.-based entrepreneur who sells fertilizer spreaders and salt spreaders online, agrees: “We've been at this about five years now. We made about $70,000 in sales on eBay last year, moving about 30 to 40 units during the winter months, and about five-to-10 units during the summer.”

COMPUTER-SIDE CONVENIENCE

Both Ahmad and Young — along with millions of other Web cruisers — say eBay (www.eBay.com) is where the action is in online auctioning right now, whether you're looking for a killer price on some new or used grounds maintenance equipment, or you'd like to unload some of the older stuff around your shop. “I've tried bunches of other auction sites, but they just can't match the traffic that eBay gets,” Young says.

No wonder. On any given day, there are more than 12 million items, in more than 18,000 categories, listed on eBay, according to Kevin Pursglove, an eBay spokesperson. And all told, that works out to $14.87 billion in gross merchandise sales for 2002.

Other than being pure fun — few things beat the rush of besting competing bidders on a popular item just before the online clock runs out — eBay and others continue to attract droves of buyers simply because there are so many great deals to be had. “Online auctions now offer millions of items. So many, in fact, that it's common to find overlooked (and therefore underpriced) items,” says Dennis L. Prince, author of Official Guide to Online Buying and Selling. A well-established analyst of online auctioning, Prince also says buyers often find incredible deals because the sellers do not always know the full value of the items they're offering up.

Plus, you'll often find sellers are more eager-to-please in the online auction world, since many auction sites keep an easily accessible record of buyer comments for all to see. “We have no negative feedback on eBay, and we strive to keep it that way,” says Speedway.com's Ahmad. “There's a lot more at stake when a buyer logs a written complaint at an online auction site like eBay. Immediately, that complaint is broadcast for the entire online world to see,” he says.

“Some buyers actually feel safer buying at an online auction, because they can pick out sellers who have extraordinary records for customer service,” Ahmad adds. Indeed, some “power sellers” on eBay have written endorsements from hundreds of satisfied sellers — records that sellers in the brick-and-mortar world would be hard-pressed to replicate.

Moreover, the attraction for sellers, including grounds maintenance supervisors who are looking to unload older equipment, is equally sunny. With nearly every item, the potential population of bidders usually dwarfs what a seller would expect at a local auction — or the response he or she may receive by placing a classified ad.

Plus, the concept of online auctions is still so new, the novelty alone brings in traffic that otherwise would be nonexistent. “Online auctions are the hottest emerging trend in dynamic pricing,” Prince says. “People drop by to see what's happening, and bid, bid, bid.”

Of course, as with most business transactions, things can get ugly fairly quickly if you happen to run into an unscrupulous buyer or seller. Ditto for buyers and sellers who don't understand the game or don't communicate well in an online environment.

STARTING SMALL

As a buyer, probably the easiest way to introduce yourself to the concept is to engage in a few inconsequential auctions on eBay. With 12 million items on any given day, you'll be able to find, bid on and win merchandise that will run you as little as a few dollars. Participating is a snap, really: You enter the amount you want to pay, monitor the auction and wait for an e-mail alert from the auction site informing you if you've won or lost the auction.

Once you're ready to move into higher ticket items — commercial lawn mowers, trucks, vans and the like — you'll of course want to focus a little more closely on the purchase. Prince suggests that you ask the seller for additional images of higher-end products, taken from varying angles. You'll also want a guarantee of a documented history of ownership with the sale.

Plus, if there's any negative feedback posted against the seller on the site, you have every right to ask for an explanation, Prince says. Inevitably, high-volume sellers will most likely encounter a tiny percentage of negative feedback — a crank or two who cannot be pleased, no matter what — and probably should be given the benefit of the doubt in those circumstances. But you'll want to be wary of any seller that generates a pattern of negative feedback over time.

SPOTTING A SCAM

Meanwhile, you'll also want to stay on the lookout for “bid shilling,” or the placement of bogus bids by the seller in an effort to drive up an item's price. “With this scam, a dishonest seller will make use of multiple user IDs, or will enlist associates to place bogus bids.”

You can minimize you're exposure to such ne'er-do-wells by watching for recurring user IDs that are used to place bids on several auctions run by the same seller, Prince says. Also monitor recurring patterns, in which the same bidder or bidders place last-minute bids with auctions run by the same seller. “You should also watch for bidders and sellers who regularly bid on one another's auctions, especially if they never appear to win,” he says.

TAKING CUSTOMER SERVICE ONLINE

If you're looking to sell online, Prince suggests that you adopt the same best practices that any seller cultivates in the brick-and-mortar world, while taking advantage of some additional customer-pleasing tools that are only available to online merchants.

First and foremost: be sure to turn around a response to every e-mail within 24 hours. “Remember, sometimes bidders who ask questions are testing the water,” Prince says. “Your responses beckon, ‘Come on in, the water's fine.’”

If you're offering a high-ticket item, you may want to include a direct link to the item's product page on the original manufacturer's Web site. Such links save you from having to reinvent the wheel, and creating your own advertising copy to sell your merchandise.

You'll also want to clearly state the terms of the sale, including your policy regarding return of the item, and the rate you'll charge for shipping. Hint: you can save yourself a number of superfluous e-mails about shipping costs by posting the shipping dimensions and weight of your item, and then offering links to the shippers available, such as United Parcel Service (www.ups.com) and the U.S. Postal Service (www.usps.com). Potential buyers can calculate the exact shipping costs these and other carriers' sites by entering in your zip code and theirs.

Finally, you'll want to offer as many payment options as possible. Fortunately, even if you don't possess a credit card merchant account, a buyer can still pay for your item using PayPal (www.paypal.com). It's an online billing service that will transfer funds offered via credit card to any bank account of your choosing, in exchange for a small fee.

If you'd rather not sweat any of the cyber-details (hey, not everyone can wear a propeller), some online auction sites — including eBay — offer the services of independent agents who will handle all the particulars for you. For a model of such services, check out eBay.com's Trading Assistants Program at: http://pages.ebay.com/tradingassistants.html.

Joe Dysart is an Internet speaker and business consultant based in Thousand Oaks, Calif. You can reach him by calling (805) 379-3673, e-mail him at joe@joedysart.com or find him on the Web at www.joedysart.com.

ADDITIONAL RESOURCES:

  • “Official Guide to Online Buying and Selling,” by Dennis L. Prince, published by Course Technology (www.course.com).

  • “Making Markets: How Firms Can Design and Profit From Online Auctions and Exchanges,” by Ajit Kambil et al, Harvard Business School Press (www.hbsp.harvard.edu).

  • BigLion.com Auction Directory (www.biglion.com/directory/Auction): Directory offering links to top auctions on the Web, including ebay.com, uBid.com and Bidz.com.

  • Online Auctions Network (www.online-auctions.net): An online auctions directory and meta-search engine. Performs searches for auction sites based on product category; offers special tracking of auction sites featuring computer equipment.

  • Auction Reviews Directory (http://www.ftpplanet.com/cgi/_listreview/catagory_view.pl?cat=Auction): An extensive database of auction site reviews posted by the users of those sites.

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