by Steve Bennett
Amid all the media frenzy over doomed dot-coms and their limitations, a sales revolution has been taking place on the Internet. More and more small businesses are selling excess inventory through Web auction sites.
But that doesn’t mean it’s easy. Using Web auctions to move inventory can be far more complex than cleaning out your garage and putting it all on eBay.
For one thing, selling through auctions is an art and science unto itself. Most small businesses don’t have the expertise needed to sell inventories through online venues. Placing goods on multiple sites can aid in moving inventories but is also time consuming.
Now, however, you can take advantage of a number of new Web auction sites and services designed for volume business transactions. They enable you to post multiple Web auctions and manage all the messy details.
A Page Of Your Own
ChannelFusion, a business division of the search engine company GoTo.com, offers a comprehensive, outsourced solution for selling excess inventory. Among other features, it integrates directly with many common accounting and inventory systems. It suits companies that want a no-hassles approach to selling via auctions, as well as companies seeking in-depth consultative services for selling hard-to-move items.
ChannelFusion’s services attracted Phone Things, an Austin, Tex.-based distributor of telephone products and related business systems. “In the past, if we had a special promotion, we’d e-mail some of our larger customers and hope for some interest,” says Phone Things general manager Melanie Schaubhut. “We’d also turn to the major auction sites and set up separate auctions on each one, a process that would take about an hour per auction. If we wanted to change anything about a particular item on a particular site, we’d have to put in another half-hour of work. On top of that, we’d have to keep track of what we did on which site. It was a nightmare.”
Now with just a few clicks of the mouse, Schaubhut enters the information and graphics on a special page and she’s in business on all the major auction sites. Credit-card sales transfer directly into Phone Things’ bank account. Once a month, Phone Things gets a statement indicating what has been sold and what it owes in commissions to GoTo. Because GoTo handles all the bookkeeping, Schaubhut and her staff can concentrate on fulfillment and sourcing new items.
ChannelFusion also offers consultative and auction placement services for customers with larger quantities or more esoteric products. For example, ChannelAdvisors may suggest placing different quantities of inventory on different sites, based on the nature of the goods and the pricing. A variety of commission and fee structures are available, depending on volume and how frequently a client company uses the auction tools.
High Volume Spoken Here
If auctions are a way of life at your small business, you might look at Auctiva.com, a one-stop shop designed for high-volume sellers (those conducting as many as 500 to 10,000 auctions a month). Sellers can use Auctiva’s Web-based service and desktop software package to upload auction data in bulk to the major auction sites. The software includes templates that capture the key information categories of each auction site on which a selling company wants to post (such as eBay, Amazon Z shops, and Yahoo).
Businesses that use Auctiva pay a subscription fee of $70 per year plus various fees for placing listings and hosting images. The annual fee also includes access to Auctiva’s “console,” which enables sellers to monitor auctions in real time and automatically generate e-mails announcing auction winners. The software also takes care of subsequent electronic correspondence regarding payments, shipping, terms, and other items. “A typical auction transaction might involve six or more e-mails and span days or weeks,” says Mark Schwartz, president of Auctiva Corporation. “If you’re doing 10,000 auctions, that’s a pretty daunting task.”
One Auctiva customer, Monument Services, of Yucca Valley, Calif., has found that auctions create a powerful “normal” distribution channel for its gift and collectibles lines. Monument Services discovered Auctiva after purchasing a NASCAR-licensed memorabilia and gift store.
Monument’s president Jeff Jones first turned to eBay as a means for moving the NASCAR inventory. He quickly realized that he would have greater success if he sold through a variety of auction sites. “Auctiva provides the exact tool set we need to incorporate auctions into our sales strategy,” says Jones.
In the future, he expects to be selling increasingly large lot sizes, and he believes that auctions will provide both a tactical and long-term competitive advantage. “We couldn’t do what we do without Auctiva — it saves us over 40 hours a week. That’s one full-time position just to handle auction-related matters.”
From Inventory To Profits
“An auction solution provider should be viewed as more than a one-time means of facilitating transactions,” says Dan Wise, president and CEO of LiquidXS. “It should be a long-term partner that helps bring together a fragmented marketplace of deep discount buyers: Wholesalers, retailers, and distributors outside your regular channels of distribution.”
To that end, LiquidXS.com offers a variety of auction options. With its standard auction, the manufacturer or the seller sets a starting bid price. Then buyers compete until they’ve hit a hidden reserve price. If the actual value of the inventory you’re trying to sell is low, you might consider LiquidXS.com’s “Sealed Auction,” in which buyers not only can’t see the reserve price, but they don’t see the bid prices or quantities either.
LiquidXS.com also offers two other interesting options. With its First-Come, First Served auction, the first person to hit the desired price wins the inventory. Then there’s the “traditional sale” option, which is the reverse of a standard auction; instead of setting a price floor, the seller sets a price ceiling.
Like ChannelFusion, LiquidXS handles all the paper work, and will even purchase selected inventory lots outright. It uses a proprietary technology called Targeted Viewing Restrictions (TVR), which restricts certain types of buyers from seeing the inventory. Conversely, a private auction, in which customers are invited to bid, allows appropriate buyers to view and bid on the inventory.
Napa, Calif.-based OddzOn Toys, a division of Hasbro, has been using LiquidXS.com to get the return it’s seeking through the traditional sales model. Says Gary Evans, OddzOn’s national sales director, “This is not really about making money, it’s about losing less money. We can now recover standard production costs for the inventory we sell through auction or traditional sale. And that makes a big difference, because it goes right to the bottom line.”
As appealing as the increased money and time savings may be, remember that with any auction service you still have work to do if you’re going to realize maximum revenues from your posts.
“Just because you’re listing excess inventory products on an auction site doesn’t change the rules you’d apply to selling new retail goods,” warns Auctiva’s Mark Schwartz. You need to make your auction posts as appealing as you would for any item in your regular catalog. After all, excess inventory is still merchandise. And online auctions are just another means of making effective merchandising work for you.
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