I did a little homework on the various costs associated with using credit cards now that Amazon has joined AU in offering an easy buy/easy sell credit card collection service for sellers.
The chart below is based on the typical cash costs of an auction.
It includes:
-- initial listing fee (where applicable)
-- final sale commission (No extra eBay reserve fees are not calculated.)
-- delivery of the package via USPS Priority mail and the credit card costs charged when the seller lists it at "cost",
-- insuring the package for at least $50 (Insurance is already included in Bid$afe and iescrow but is an extra service that must be purchased if using 1-click on Amazon.)
-- using either BidSafe, 1-Click Bid or iescrow to accomplish the task of credit card acceptance and paying all associated fees for that service.
Pay particular attention to the costs of selling items under $50 as more than half of all online auction sales occur in this price range.
Also not included in the chart is the $19.95 annual fee for Bid$afe. (With 50 BidSafe items listed a month on AU the cost per item is 3.3 cents each amortized over the year but the total $20 spent was recovered in USPS insurance fees not spent on the first 24 items.)
posted on October 3, 1999 06:28:06 PM new
Hey Pat - This is the first time I'm throwing a comment into the AU realm.
Nice lil piece of analysis. However, you seem to miss the crux of the issue when it comes to price comparisons. Free is great.... but not if the bids and sales don't follow.
"Sorry, Charlie" - saving a little bit of money here and there would make a huge difference, if you were actually comparing equivalent selling environments. But as it currently stands, AU simply does not offer the same conversion rates, bid-to-item ratio, or average sales price that you see on eBay and/or Amazon. If it did, I think the "buzz" you mentioned with disdain would probably shift over to AU, since you seem to think that you have the better toolset available.
My advice to you and your company is to focus on bringing in a lot more buyers and bids... successful and consistent sales will do a much better job at growing your business than great tools.... sorry but true.
Have you guys thought about selling out to eBay? With their recent regional play about to go full throttle, it seems to me that AU and it's local affiliates would be well-situated to merge with them. Otherwise, watch your behind!!!
Thanks for the post, particularly the advice that eBay buy all the newspapers We'll decline.
We have taken your advice that we should focus on bringing in bidders and buyers. You'll see that beginning this month.
I would also consider our effort to build a better tool set and pricing it so sellers can make a profit on the $40 average sale item (all auctions) part of a generally appropriate strategy.
And, yes, Monch, we do have this absurd idea that if you build a better mousetrap, the world will beat a path to your door.
Speaking of mousetraps. What every bidder and every seller on both eBay and Amazon need know is that we are but one mouseclick away.
posted on October 4, 1999 02:31:25 PM new
Hey Pat-
Thanks for the response.
Hmmm... interesting. I stopped by AU today ("one click away", and lo and behold... something's afoot. Better Mousetrap v. 3.0? I am intrigued. How long will your functionality be impacted with this? I always love changes, so this will be cool to watch unfold.
Is this going to be a replay of your $10 M marketing campaign from last year... lots of money, but no growth?
Full respect to you for standing your ground (old media dinosaurs going extinct again)... but don't let your principles distort good business sense.
I can tell already that I like you... only a small reference to the tech problems we encountered today.
Regarding last year ... well that was last year.
RE: V3.0 ... it actually is an improvement ... not perfect but certainly an improvement.
I think that maybe you mischaracterize the newspaper industry as "dinasours" slated for the scrap-heap of evolution. I first oohed and aaahed at a "college computer" in 1970 (a small 4kb memory job with no screen and a card-reader) so you can imagine my amazement when I was introduced to the "digital world" ... not by Altair or even Apple, but by Compugraphic who marketed a digital typesetter in 1976. It was so useful that it had migrated to a small (circulation 10,000) daily newspaper in the wilds of western Oklahoma a good two years before the Apple I began making history.
Regarding where we stand today, I got to go with Scarlet O'Hara who said, "Tomorrow is another day."
posted on October 4, 1999 09:11:27 PM new
Sounds good, but in reviewing sales - the problem is you can't save if there aren't any buyers to sell to - great system - but no buyers. I'm afraid I don't have the solution, and actually don't understand the cause, I have posted to no end on AU, and nothing is what I get. You have a good system but apparently, for whatever reason the buyers just don't like it. Perhaps AU is too hung up on their "programs" like above and don't seem to realize that without buyers, there is no savings. Sorry best wishes for a new beginning.
I understand your criticism and I thank you for your positive words about the system.
The buyer delimma is one that faces most sites ... particularly in the off "summer" season. I saw posts all summer regarding "where did the buyers go" etc. even on the largest of sites. The impact of the summer doldrums was further magnified by the overall competitiveness of the market.
So what is the answer?
To succeed every auction site needs good product presented by good sellers at attractive prices supported by advertising to bring people ... an increasing number of people ... to their site.
JW, about the only thing I can really say with absolute certainty is that the marketplace is better for all because we're still pitching. Competition works ... we just wished that it worked better
Thanks for the well wishes and I'm betting you're not "done" with AU yet.
posted on October 5, 1999 07:11:12 AM new
Pat - since I like the format of AU, no I'm not finished with it yet, but I'm not posting either - I've moved back in the wings to wait - it is just too time consuming to post and post and NEVER even a bid - since I am experienced on other auctions and selling similar items on other sites, I know it isn't the products, so now it is a wait and see what is going to happen with AU. I wish the best, but with all the ads, etc., I just don't understand the why.
I do know that AU doesn't get the CNN media play that eBay and Amazon get - I guess the print promotion just isn't getting it and it seems neither is the online ads -
I would have thought with your newspaper reader base AU would have been stronger, but, not so......I think that is the reason for the strength of Amazon, their original customer base....same with Yahoo...I'm even seeing some action on Lycos - I just don't understand what the problem is with AU - obviously, you all don't either.
[quote]I would have thought with your newspaper reader base AU would have been stronger, but, not so......I think that is the reason for the strength of Amazon, their original customer base....same with Yahoo...I'm even seeing some action on Lycos - I just don't understand what the problem is with AU - obviously, you all don't either.[/quote]
I do hate to disagree but we aren't clueless. There are a variety of reasons, some obvious and others not so obvious.
We are addressing these as we proceed. As Monch points out, change is interesting Stay tuned is my only advice.
posted on October 5, 1999 10:15:34 AM new
Pat: "we are not clueless, we are addressing these as we go along."
You know that "sounds" good, but once a reputation is developed, undoing the damage is much harder than quickly correcting the problem.
I keep hearing about "wait a few weeks - or you'll see changes soon," I have heard this for endless months, but see no change in the amount or activity of buyers.
I am sure you have seen let's say a restaurant go in, and in time flop, then another one buys it out and again a flop, till the location itself is almost the "kiss of death." That is what seems to be happening to AU - to few adjustments (to what you say you know the problems are) too slowly, so that when they finally come they are always too little to late, and the reputation continues down hill.
I am not trying to institute an argument, but analyze what I see has and is happening with AU......lots of promises - mostly for the future, too little major change, and always a day late and a dollar short.
I am sure you realize when a seller tries the "free" AU, and posts and then posts again, and nothing, that they aren't dedicated enough to continue with such useless activity - Gold's is a good example - big opening, great idea, beautiful site, but they couldn't produce the buyers, and the bottom has fallen out of their market - to me basically because they had no user/customer base to begin with; they couldn't technically handle the influx of eBay sellers; and there wasn't enough media advertising to attract the buyers.
All this is to say "if those at AU have a clue, as you say" - it sure is time to act on it, as most sellers I know have already tried, failed with AU and it would take a great deal to get them back. Bells & whistles won't do it - only buyers will.
All these programs to "protect the buyer" are pointless unless there are buyers - the bells and whistles of BidFirst and such is okay, but realize most sellers & bidders did just fine in the early days of eBay without any such programs...today these programs are overshadowing the people....not only on AU but other sites as well. Most of us are tired of having "auction site programs" touted, and in many instances pushed down our throats - as sellers we want only to see good buyers - as buyers, we only want to see good product.
I must say I do take issue with you feeling that AU's creating competition in the auction market has effected the whole market in general - I don't see that. That is like saying a Bicycle Maker greatly effects the Race Car market.
Being realistic about one's situation and position, is half way to solving the problems with it.
posted on October 5, 1999 10:50:21 AM new
It's been fun chatting with you, Pat. I'll pop in now-and-then to see how things are going, and maybe offer some constructive criticism (I'll try not to be too harsh).
I like your feistiness and willingness to keep an active presence on this board.... more than I can say for the other sites.
Lots of luck with playing catch-up... and I DO think there is some interesting potential in the market AU is trying to pursue/develop.
Much of what you say is true and I'll not dispute or argue with it. Fact is, I find it helpful.
I do take a little exception regarding competition. Most of the functions such as setting your auction start date and time, transactional feedback ratings, editing of feedback, going-going-gone auction closing, fixed price sales, insured auction processes, the taking of credit cards by the auction on behalf of the user have all been pioneered by AU.
Would the other auctions have even considered doing them without there being an example? Maybe, maybe not.
Would there have been a need to persue them if someone else weren't actually making those enhancements?
Being ahead of one's time is both a blessing and a curse. Take the Chrysler "Airflow" from the mid 1930's or Ford's "Safety" emphasis in 1956. Both commercial blunders at the time yet they are now considered simply "ideas" that were just "ahead of their time."
Regardless, those efforts were competitive in nature and did impact the automobile industry.
Still, I can't and won't argue with your contention that the proof is in the pudding.
But I've got news for you. There are buyers on AU and also some good sellers who sell 90+ percent of their goods.
There are also a ton of timid sellers who place higher opening bids on AU -- the practice is called parking an auction I think -- than they do the same merchandise elsewhere. A buyer comes, sees a seller asking stupid prices and they are gone. Where did they go? To play the "auction game" at a place where they can win.
Unfortunately, getting AU in that "game" requires that risk averse people take a risk. We've got buyers coming by and those buyers have money (our average item sale is the same as eBay) but I'd say -- from them passing up many of the offers -- that they aren't stupid.
The challenge is how to get from here to "there."
So let me thank you again for your post because I believe there is a way to get there... but it takes doing things a bit differently.
posted on October 5, 1999 11:20:07 AM new
Neomax said: "Unfortunately, getting AU in that "game" requires that risk averse people take a risk. We've got buyers coming buy and those buyers have money money (our average item sale is the same as eBay) but I'd say, from them passing up many of the offers, that they aren't stupid.
The challenge is how to get from here to "there.""
Okay, Pat, I've been following this with interest. As a friend told me recently, frogs gotta jump before their view of the world changes. How's the water in your pond? I'm comin' in.
posted on October 7, 1999 07:03:10 AM new
OKAY, Pat, You said "I do take a little exception regarding competition. Most of the functions such as setting your auction start date and time, transactional feedback ratings, editing of feedback, going-going-gone auction closing, fixed price sales, insured auction processes, the taking of credit cards by the auction on behalf of the user have all been pioneered by AU.
Would the other auctions have even considered doing them without there being an example? Maybe, maybe not. "
I'll concede on these points, perhaps making these innovations did force much of the market to update, to produce similar plans - unfortunately it didn't effect either of the "big two", but you are right here AND THIS IS ONE OF THE MOST ATTRACTIVE POINTS OF AU....it is WONDERFUL....
Now, regarding your scenario of high end, over prices items - the many things I have tried on AU in the last few months, NONE were "high end over priced." These were items that were selling, not just very well, but extremely well on other auctions, no reserve, etc., but on AU, some recently which closed with no bids, were half of retail, and under $15!
Regarding "Parking an auction," being a vet from the "reserve wars" on eBay, I certainly have never involved myself in too high opening price - that is exactly what we were fighting eBay about their proposed, "opening at 25% of the reserve." No one in their right mind who actually wants to sell an item would go for such a program OR would list in that fashion.
Regarding your automotive innovations analogy, you are correct - they were ahead of their time - SO was the Tucker, and the Ford Edsel - but these all failed in the market place.
Your "winners never quit and quitters never win." is fine philosophy, but I prefer Lombardi's "Winning isn't everything, it is the only thing." I don't hold to playing to "for the fun of it" or learning how to be a "good looser" - there is no reason to keep score if winning isn't the objective. So much for philosophy.
I talk to a number of people, see the on line ads, see the ads for on line auctions in the antique magazines, and listen to CNN all the time, and I have concluded that the auctions which get CNN/TV media attention; auctions which get National News attention, seem to be the ones getting the action - eBay obviously knows how to use the Media - Amazon to a point, and definitely Ole Yahoo too.
Unfortunately, I don't have the answer for AU, since I can't understand the problem except lack of buyers...it is a great system - the Bid-Safe & Escrow programs are pushed too much to suit me, but beyond that I can't imagine why the buyers don't come.....perhaps you need someone to auction off a kidney! Stupid, sure - but it gets media attention - P. T. Barnum knew the secret to this.
That is a pretty astute analysis of the situation. Again, I appreciate the post.
The one aspect that I think is most misuderstood -- particularly by those on "both sides" -- is that the game everyone is trying to win is both "The Internet" and, an even greater context, "business."
Our owners -- major newspapers -- as a business have never been doing as well financially as they are today.
Indeed, if you're looking at who's making money, I wouldn't be too far wrong if I said that just about any one of our partner owners generated more profit in 1998 or 1999 than did all the sites you mentioned plus about all the remaining half-dozen (maybe?) profitable Internet sites. (I'm talking real profits, not stock market valuations.)
Indeed, taking the big view and translating it into one of Vince's football games, we're maybe 10 minutes into the first quarter.
A key player could fumble, stumble or have a knee crumble.
The point being, as long as you're on the field and playing to win, you are still in the game.
We'll decline.
, and lo and behold... something's afoot. Better Mousetrap v. 3.0? I am intrigued. How long will your functionality be impacted with this? I always love changes, so this will be cool to watch unfold.