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Before the Auction: Listing Presale Items

by Dennis Prince

Sellers who have been doing business in the auction space long enough know the value of careful inventory management. In fact, the less they have invested in inventory that might (or might not) sell, the more effectively they can control their operating overhead. But, without inventory on hand, there's nothing that can be auctioned--or is there?

Whether selling items yet to be released or managing sales through a partnership with a third-party supplier, some sellers have learned that preselling items at auction can be a smart move. It's not easy, though, and it requires special attention to ensuring that the item the high bidder wins actually will be available to successfully complete the sale. Here are some things to consider if you're interested in managing your auction inventory in this more dynamic way.

Getting Ahead or Getting a Headache?
The dynamic management of goods for sale (often referred to as "just-in-time" inventory--you receive just the inventory you need just as you've sold it) can put you ahead of the curve in the marketplace. By establishing strong relationships with reputable suppliers (wholesalers, importers, drop-shippers, and manufacturers), it's possible to leave inventory management to your source. This enables the seller to order and presell hot, unreleased items, maintain a source of goods without having to purchase what they haven't yet sold, and even drop ship sold items directly to buyers without the need to ever control the merchandise. It's a method of supply-chain management that big business executes every day.

The key, of course, is to be certain that, when selling items you don't physically own, you can be sure your suppliers can and will deliver the goods quickly and consistently whenever a sale is made. This requires that you keep in constant communication with your suppliers to ensure their inventory is on hand, is as described, and is always ready to ship. If the supplier is subject to constantly changing inventory (such as liquidators) or prone to frequent out-of-stock situations (back orders), then you'll be faced with informing your buyers that the goods they just won aren't readily available, if at all. Therefore, if not managed and monitored closely, your source of presell supply might also become a supply management nightmare that will frustrate both you and your customers.

Site Rules
Understanding the potential (and possible pitfalls) of managing auction sales and inventory in this manner, most auction sites have addressed preselling in their policies. While Yahoo Auctions explicitly prohibits such sales, eBay has a more accommodating policy that allows presales provided the seller can deliver the goods within 30 days of an auction's close. The seller needs to be absolutely clear whether a site allows presales and what restrictions, if any, apply. Without proper compliance, it's possible that presale listings will be unceremoniously canceled.

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