Monday, July 25, 2011

The Truth About Online Auctions

The buzz about how much you can make with online auctions is hard to ignore. Many people have set out to create entirely new careers by becoming online auction merchants. It is good to sort out the truth about online auctions before you set out to build an empire. Not only should you dig in and learn all you can before believing the big sales pitches, but so should anyone who has a loved one who is entertaining the idea of launching an online auction business.  Here are a few tips you should know:
  1. Be wary of expensive programs that promote the idea of you becoming an online auction tycoon. In most cases, the programs that paint such a rosy picture of huge profits to be made using online auctions really only generate big profits to the people who sell the program. For every one or two people who do make enough money using online auctions to call it a career, there are hundreds who do not. These online-auction, get-rich-quick scams give the impression that you can go from zero to 60 in terms of raking in the big money in a matter of days or weeks.  Be mindful that it is hard work, there are risks, and it will take time, just like you would go through building a business in any other marketplace.  If you do opt to purchase one of these programs, but sure to check the business out at the Better Business Bureau first.
  1. Use an online auction that is reliable and has a solid reputation and customer base. The better online auction sites, such as eBay, became big for good reason. They provide protection for both buyers and sellers and have clear, concise codes of conduct. While using a reputable site does not guarantee success nor does it eliminate all problems with customer service, the ratings and reporting system gives you some recourse.
  1. Start out slowly and learn the ropes as you go. Begin by offering small items for sale that have lower dollar amounts.  This will allow you to build your business without putting up a lot of money and taking up too much space in your house.  Be prepared, because from time to time you are going to have items that either do not sell or shipping problems.  Having a backup plan can help tremendously.
  1. Price it right.  The most important part of ensuring profitability is to price your items appropriately.  Setting a reserve price will ensure that you make money off an item.  Set your reserve price to at least cover your expenses (cost of item, listing cost, etc) plus whatever mark-up you deem appropriate.  It also helps to check the value of items using PriceAdvice.  Having a gauge for the fair market value will also help you maximize profits while still moving product quickly.   
  1. Address customer concerns promptly.  If there is a problem, a good online auction service has a methodology in place so that problems with shipping can be addressed, payment issues fixed, and returns organized.  Look at those sales that do have problems as learning opportunities, because when you begin to sell on a larger scale, that knowledge will serve you well.
  1.  Be honest. It sounds simple, but it is the most crucial element to building your online business.  If you sell a product online, deliver that product promptly and within the time frame you specify in the auction. If you buy items online, pay for them promptly with a payment media that will process the payment well.  Doing an honest business when conducting online auction transactions pays you three ways. First, it builds a good relationship with the buyer. Repeat business is important in any market and the online auction marketplace is no different. Second, when you prove to be one of the good online auction merchants, you will see customers find you because of referrals. Third, you will build a history and a résumé with the online auction service and new buyers will review that background.

Whether you drive online auctions through eBay or another service, pick one that supports your transactions every step of the way, allows you to build a reputation online and has recourse for solving customer service problems. Following the steps we’ve outlined will help you to enjoy success in the world of online-auction Internet commerce.

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