E-Commerce and the Great Online Auction Rip-off

For those that may have thought this blog died with my rant on the banning of imported clove cigarettes, you’re wrong. The cloves didn’t die, they just morphed into “little cigars”; cigarettes with a cigar-paper type outer wrapping. The govt will probably try and find a way to ban them too, further torpedoing the Indonesian small business export economy, but that’s another topic for another time.

The main reason I haven’t been posting is that I’ve been busy, very busy with business. If you’ve read previous posts here from awhile back, you know that my business is online selling. At the time, a site called Bonanzle (rechristened Bonanza) was poised to be my major outlet, replacing the top dog,- eBay. Now I can no longer consider it to be the major outlet for my purposes. For the type of merchandise I deal in – scarce and often rare, antiquarian books, vintage magazines, ephemera, stamps, comics, uncommon vinyl and 78s, photographs, postcards, etc., the auction environment is the best choice for getting top dollar, and not have your stuff sit around doing nothing but look good on display in an e-Store. There are hundreds of sites that do this with fixed price listings. Bonanza is one of them. Now I’m not saying that’s bad; for some, this works out very well. Bonanza has some very positive things going for it- lots of items on display on their front page, no commercial ads, a Google and Bing tie-ins, the ability to import your listings from eBay and Etsy, no listing fees, low final value fees for sellers and no fees to buyers, free picture hosting for up to 4 photos, the list goes on and on. However, as the site has grown, with nearly 3.5 million items listed and over 300,000 users currently ( including buyer members and sellers), there is a greater likelihood for sellers and their items to get “lost in the sauce,” especially if they don’t have the metrics in place for optimization in Google and Bing searches. Also, outside promotion (a lot of work, often accompanied by spending money) and networking is a requirement if a seller is looking to do well on this site.

Most sellers on Bonanza have what I would call a handful of items in their booth- 500 or less. (Even my booth, Windhamearl’s Black Lodge, falls into this category.) These are part-time dilettantes for the most part; people who sell for a little bit of extra cash now and then. I imagine that few of them put in the self-promotion effort required to sustain a business operation on a day to day basis. They may have tried this ‘n that in spurts, but have resigned themselves to occasional sales. The site also tends to have a proliferation of “garage-sale merchandise”. In randomly visiting a booth, I found 6 Danielle Steele HC novels for 4 bucks, a set of 8 vintage animal salt and pepper shakers for $4.76, and an 1893 Harper’s Bazaar magazine in poor condition for $4.76. Seems like a garage sale to me. That’s not to say that there aren’t sellers who have rare and valuable items. There certainly are. I would hazard a guess though that these sellers are not using Bonanza as their primary outlet, and have their fingers in a number of other sales pies. Overall, for a site whose motto is “Everything but the Ordinary,” there sure is a lot of ordinary merchandise there.

So the major thing that Bonanza lacks (for me) is an online auction environment. If there ever were any aspirations of Bonanza entering the online auction trade, I think that ship has sailed now that they are very comfortable with their business model. If you don’t like it, go sell somewhere else. But where? eBay? From a “been there, done that” seller’s standpoint, you probably know that eBay ain’t what it used to be. Not only has eBay’s new policies driven sellers away in droves by de-fanging the feedback system and cowing sellers with their DSR ratings, but now they have also employed new tactics to “fee to death” the small to medium seller. True, for insertion fees, one gets 50 free listings per month (that’s not much except for the merely casual seller), but after that, it’s full charge. eBay keeps this money whether you sell or not. But that’s not where the real money is anyway. eBay makes money on the “add-ons” to insertion fees, listing upgrades (subtitle, bold, listing designer, etc.), picture hosting fees (anything after the first one will cost you), and reserves (the optional price you set that your item can’t be sold under). This is all before “Final Value” fees, or what you have to pay eBay when your item sells. For auctions, it is a flat 9% with an upper limit of $100. In order to decrease eBay’s percentage, your item needs to sell for a good deal more than $1112.00. The average seller isn’t selling high ticket items in the $1200 - $12,000 range. But wait, it gets better!! (For them, not you).

eBay now also charges you a 9% fee on your shipping charge. eBay’s rationale for this according to eBay Selling Experience VP Todd Lutwak (now there’s a name for ya) is "The key takeaway here is, buyers tell us they love free shipping. And we wanted to put a system in place that rewards sellers who offer free and low-cost shipping, and we think that this change aligns the incentives among the selling community." So Todd, what you are saying in essence is, that you’re now going to penalize sellers who charge for shipping by tasking a cut of said shipping charge across the board because your market research shows that buyers luuuvvv free shipping. Do you have any fucking clue that shipping costs sellers money? Wasn’t free the last time I went to the post office. Do you think that by taking a % of the shipping cost you’re going to encourage sellers to hand out free shipping to engender more sales? I seriously doubt it. Where is a seller going to make up that money, in the cost of the item? That’s money back to eBay again. In this same article, Lutwak also said “eBay research suggests that sellers who move from a model of charging shipping & handling to a free-shipping model will find it easier to qualify for eBay Top Rated Seller, making them eligible for a 20% discount on their fees.”

What Toddy-boy isn’t mentioning is that in order to qualify as a Top Rated Seller on eBay, one has to be a PowerSeller with a minimum of 100 transactions and $3,000 in sales from U. S. buyers over a 12 month period, PLUS meet their convoluted DSR standards. So now, a seller has to eat the shipping cost to jump through the eBay system hoops in order to qualify for your blue-ribbon “Top Rated Seller” logo and a fee discount? If this isn’t elitism I don’t know what is. Look, I’ve been a “Top Rated Seller” and a Powerseller on eBay, and that didn’t do jack-squat for my sales, nor for a number of other eBay sellers I’ve spoken with over the course of the last few years. If a buyer cares about anything, it’s your feedback. Most buyers aren’t so stupid as to think they’re getting something for nothing with free shipping. What buyers want is “fair shipping”; a reasonable cost with items shipped in a reasonable amount of time, and packaged well enough so whatever you buy isn’t damaged. Charging $25 for shipping a small item is not reasonable (unless it’s overnight express), any idiot knows that, and who would fool enough to buy from someone who charged that? What you’re doing here my friend is double-dipping. You’re gouging the seller on a cost she has little control over. Then, you’re doing it again with your financial arm, Pay Pal. Pay Pal doesn’t deduct shipping cost, or even sales tax from the fees they charge to receive money. That’s quadruple-dipping. eBay keeps saying that they’re listening to their buyers, but it is obvious they don’t give a flying fuck about their sellers, and that’s why sellers keep leaving in droves. The quality of buyers too has severely depreciated in the categories of merchandise that I sell. Selling on eBay now is a cutthroat business, and the throat that is getting cut is likely your own.

Let’s look at another “Big Dog” for online auctions – Heritage Auctions. This site specializes in Art, Antiques, Rare Books, Comics, Coins, Entertainment Memorabilia, Fine Wines, Jewelry, etc., etc. These guys sell a lot of stuff for a lot of money. They’re the world’s largest collectibles auctioneer and the third largest auction house with over $700 million in annual sales and well over half a billion online bidder members. They are both a Live and Internet auction house; have been around since 1976 and online since 1999 or so. WOW! Right up my alley! With that kind of presence, who would want to buy or sell collectible stuff anywhere else? Well, there is a catch- their fees. A Buyer’s Premium is 15% to 19.5% of the items you win in their actions. Yes, on top of the money you spend on buying stuff there you’re paying Heritage a kickback for the privilege of bidding and winning. Zowza! Plowing through Heritage’s Terms and Condition of Auction agreement might be best done with the aid of a lawyer, but the impression I got is that their Sellers fee is 10%. So Heritage makes at least 25% on everything they sell. Unless you’ve got some really, really valuable stuff to sell, it just isn’t worth it. And if it is that valuable, you might need it appraised in order to get top dollar. Heritage does that too, for a fee of course. They don’t tell you exactly how much that is upfront but they will give you an estimate if you contact them with the information on what you want appraised. Actually, I did see their Standard Appraisal Fee Schedule. Minimum Appraisal Fee on a written appraisal is $500, or $350 per hour per appraiser, plus travel expenses (if necessary) to the tune of $175 an hour after the first hour of travel, plus airfare, hotel, car rental, etc. You really need something or somethings that are very, very valuable in order to afford this. Grandma’s silverware isn’t going to cut it. On the plus side, they will rebate some of your dough if you choose to list items they appraise through Heritage, and informal appraisals (verbal, with no documentation) are free but limited to three items, and you might have to bring it to them in Dallas where they’re located.

Compared to the eBay format, navigating Heritage is awful. It is a pain in the ass to find anything, description information is minimal in most cases and so is the pictorial content- for most items, only one photo. There are also additional complexities. In the Coin category for example, Buy (It) Now items are mixed in with ongoing auctions and Sold items. You have to look closely. Plus, there are current and future Live auctions to consider. This is no casual buyer or seller site. You really need to know what the hell you’re doing before you get involved with Heritage. For most people this is just out of their league. Still, like on eBay, people do a lot of buying and selling there because they are very well-known (high web presence) and attract a lot of people.

After that come a slew of sites that are eBay wannabes – WebStore, eBid, OnlineAuction, bidStart, WeBidz, etc. Most of these are free to list on for basic listings, and charge low (or even no) Final Value fees. On the downside, what they’re not making in fees they make up for in ad revenue, a sure killer of site aesthetics. When auction sites like the aforementioned don’t charge fees and don’t limit what can be listed (within the bounds of standard legality, of course), there ends up being an awful lot of junk listed on them. You might get lucky if you spent enough time there, but who’s got time to spend browsing categories of mostly crap? Yes, there are some dealers putting up rarities and valuables mostly at high starting bid prices because they have nothing to lose if it’s free or uber-cheap to list. Trouble is, very few items on these sites seem to be getting any bids. Searching on some of these sites can be problematic. Also, the majority of them look like eBay clones without the eBay traffic. “Without the eBay traffic,” that’s the key. They are trying to do too much instead of concentrating on certain niches they can build a reputation and following with. It’s like a Dollar Store trying to go head-to-head with Wal-Mart. What is the point of wasting time listing at large general merchandise auction sites that don’t get a whole lot of traffic? None really, except that it’s just another outlet. Remember that you will be tying up merchandise that more than likely won’t get any bids, and if you’re selling unique items, listing them on multiple sites at the same time can be risky business.

So what IS the answer? For my money (or yours, if you’re buying from me), the obvious choice is a small niche-market auction site that caters to the type of merchandise I deal in - antiquarian and scarce books, vintage magazines, ephemera, stamps, comics, pictures, postcards, etc., So what site is that? Well, stay tuned, I’ll tell you in the next post. (Note: as I was composing this post four new bids just came in on items I have listed there.

That Which Must Not Be Named...Yet

Man, it's been a long time since I've done a blog post. Too long, I guess. Truth be told, I have been busy, and I guess that's the point of this post- what I've been busy with. But to explain that, I have to explain the post title. "That Which Must Not Be Named.." has nothing to do with a Harry Potter adversary, nor a story by H.P. Lovecraft, but rather an online auction site which isn't online yet that I've been sworn to secrecy about. In order to explain that, I guess we have to take it back a little further.

I had been selling on eBay for about five years by 2005 when I was contacted by someone who asked me if I'd be interested in peddling some of their merchandise. To make a long story short, I agreed and over the years have sold some very interesting and lucrative stuff for them. In fact, as time went by, I was selling A LOT of their stuff, even more than my own. Things seemed to be tooling along fine, until eBay turned to shit about a year or more ago. Even the really good stuff wasn't selling like it used to. To make matters worse, eBay turned into FEEBAY, and every listing was becoming a losing proposition in some way or other. I became discouraged and disgusted listing anything with eBay. Yeah, it might sell quickly better than elsewhere but I was getting garage sale prices on things that were way beyond any garage sales.

I told the guy I was selling for that I was becoming disenchanted with eBay, and I was thinking of throwing in the towel there. (That's about the time I discovered Bonanzle.) He told me to hang on, he was working on something. Meanwhile, I opened up a Bonanzle store, and since it didn't cost me anything to list my stuff there I really had nothing to loose but the time. I decided to get back into selling merchandise I really liked (CDs & records) with the Bonanzle setup, and with a somewhat dark theme to the booth. But selling on Bonanzle is a whole different deal than eBay auctions- much easier to list but harder to sell. Even with the promotional tools they have in place, you really need to work your butt off promotion-wise to make any money there. In the beginning, I did. I really did, and some of my efforts paid off. But in the long run, it's not enough to live on, at least for me.

So let's get back to the guy I had been selling for, who I'll call "Mr. X" in the spirit of his desire for anonymity and secrecy, at least for now. Mr. X decides that he's going to build an online auction site, something that although small-scale, will be better than eBay in numerous ways. Mr. X has some GREAT collectible merchandise in the antiquarian book, vintage magazine, ephemera, photographic and art print categories. Mr. X also has good business savvy, and even though I still don't know a whole lot about him even after our nearly four year business relationship, but I don't think he'd be "sinking it all" into this auction site if he wasn't confident that it was going to make a LOT of money.

Yeah, I have to admit I was skeptical when I first heard about it. Compete with eBay? NO WAY DUDE! That's a recipe for disaster...or at least for a lot of wasted time and money. But, as Mr. X pointed out to me, the big mistake that wannabe eBay competitors make is trying to cover a lot of categories of merchandise and trying to be too big. It's the niche markets that are the key. Smaller is better. Still, with this economic downturn (who am I kidding? It's not a downturn, it;'s a mudslide) I personally don't think that it's a good time to be sinking your life savings into a new online enterprise. But hey, it ain't MY money. It IS however, my time, and that's where I get back to what I've been doing lately, and why I haven't been much with the tweeting, message- boarding, music-making, or even blog posts.

SOooooo...for lack of better option, I've decided to trust that Mr. X's auction site will become a fruitful enterprise (soon I hope) and have been doing merchandise pre-listings so that the site will have some great stuff when it opens. Just some of the things I've been working with - Mark Twain First Editions; 1853 Mississippi- Pacific Railroad Surveys; George Cruikshank 'Comic Almanacs from the mid 1800's; 1864 Travel to the Holy Land; 1829 Edgar Allen Poe Poetry & Reviews; Etchings of Rembrandt; 1798 Duties of the Female Sex; A. A. Milne (Winnie the Pooh author) First Editions; 1885 Elizabeth Custer's 'Boots & Saddles'; 'The Jazz Singer' Al Jolson Photoplay edition 1927; 'Wind In the Willows' 1st Tasha Tudor Illustrated; 1930's Havana Cuba Travel Brochures; 1969 Avant-Garde Art Magazine with Picasso Erotic Gravures; 1854 Patent Report with Smith & Wesson Volcanic Pistol and Isaac Singer's Sewing Machine in it; a Stereoview from the 1920's with 4 guys in a vintage Cadillac who would years later become top General Motors executives; a 1949 French art magazine with Victor Vasarely "OP Art" lithographs in it; signed rare David Levine caricature book; 1793 History of King Charles by Voltaire; 1916 Witchcraft in Salem Village; 1799 Settlement of Genesee Country w/ engravings; 1832 Six Months in the West Indies by Coleridge; 1836 Last of the Mohicans by James Fenimore Cooper; 1810 Life & Actions of Napoleon Bonaparte, and so many, many more. Some of these are worth a LOT of money.

So here I am with all this great stuff just waiting for this auction site to open (and yeah, I can't even hint at the name of it, under pain of betrayal) , adding more all the time, yet not making any money in the meanwhile. Maybe I'm an idiot to put my hope and trust in the designs and machinations of someone I don't know all that well but have done alright by in the past. Maybe I'm just too skeptical for my own good. It's hard to have faith in a new (somewhat risky) business enterprise after all I've been through with the Wall Street debacles and the stock market casino where Goldman Sachs and J. P. Morgan, et al. fix the tables with their derivative-loaded dice, their rigged roulette wheels of rewardless risk, and credit default swap card games of wealth destruction.

Still, Mr. X assures me has a method for driving the right kind of traffic to this auction site quickly, and hasn't told me that I'll have to be doing any promotion on it. Whenever the subject is broached, the response is, "Don't worry. I've got it covered." Well, I hope so. I really do. I hope that it isn't long that I can come back here and post that the site is open for business and we're doing fabulous. In the meanwhile, all I can do is keep a positive attitude, work on doing constructive things and hope I get some good news from somewhere. Maybe when the weather gets warmer. Maybe when I finally get inspired enough to get back into my music studio again...

Bonanzle- Heir-Apparent to the eBay Throne?

Today, a friend forwarded me post from The Digital Daily by John Paczkowski titled "eBay Q4: Letting Go of a Very Successful Past" that prompted me to the topic of why I believe Bonanzle is the "Heir Apparent" to eBay. World-wide household name that it is, eBay's crown as the king of online auctions and a global community marketplace has tarnished considerably over the last year, creating a mass-exodus of sellers, powersellers, and buyers. The spurious new policies of the colossus are plethoric- increased seller's fees; censorship of seller feedback on buyers; weak fraud protection; impossibly stringent regulation of seller ratings; arbitrary enforcement of certain listing policies; unfair limitations on shipping charges in certain categories; preferential treatment for large business entities and corporations; strictly limited payment options; an numerous other changes that have spawned nicknames including Feebay, Greedbay and Fleabay.

This disenchantment with eBay prompted a seller's revolt of sorts, beginning with the boycott of 2005 leading to the creation of 'Powersellers Unite', a site dedicated to eBay alternatives. While there is no clear major victor in the crusade to wrest the mantle and scepter of the Auction Titan, Bonanzle is poised to become the 'Next Big Thing' in the small to medium seller online marketplace, and it isn't even an auction site!

Why Bonanzle?, you may ask. It has a kind of funny name, a similar front page look to eBay, and a site motto that might allude to 'mostly weird stuff' ("FIND EVERYTHING BUT THE ORDINARY"). Well, to quote Bonanzle founder Bill Harding's Mission statement: "Bonanzle's goal is to be the simplest marketplace online, with an upbeat community that makes buying and selling fun again." That simple statement, along with Feebay's blatant disregard for those who have made them so much money has been the reason why so many ex-sellers of the titan have migrated over to Bonanzle.

I first heard of Bonanzle after reading the response to an article by investment mavens The Motley Fool titled "5 Stocks You May Be Thankful For" where they foolishly touted eBay as a good buy back on November 6, 2008. (Later on toward the end of December, the Motley ones reversed course with a much gloomier outlook for eBay in "The Fall and Fall of eBay".) It wasn't the article but the response to the article that piqued my interest; it was the very first time I heard of this Bonanzle place (with a direct link to the site no less), but certainly not the last. I decided to check it out myself, and after reviewing the site's policies, and scouring their community forums (where many ex-eBayers held sway), I decided that Bonanzle had a lot of potential and I had nothing to lose. My eBay sales had been steadily declining and their policies were putting a stranglehold on my financial future. With the economic downturn being such as it is, to go down with a sinking ship seemed the least prudent of all my options.

Bonanzle bases their marketplace concept on on 'stores', or 'booths' as they call it, where individual sellers set up shop for the items they sell. Booths can be merchandise-uniform (similarly themed and /or typed merchandise) or as varied as stuff you might find in an eclectic garage sale. Some booths have only a handful of items, while others have thousands. Bonanzle has some significant advantages for both buyers and sellers- no listing fees; payment options that include the acceptance of Google Checkout, money order, Paypal, or cash; the ability for a seller to import their items to offers a Bonanzle from eBay or Craigs List; simple 'One Page' item listing; a built-in realtime chat feature where you can talk to sellers live in their stores; the ability to display four separate pictures for each item listing for free (with a cropping tool included); the ability for buyers to haggle over prices by process of offer and counter-offer; a simple structure of final value fees far less than eBay; GREAT, EFFICIENT and TIMELY technical support, and a community of welcoming and caring people who aren't too self-absorbed with their own enterprises to offer assistance, praise and encouragement.

Bonanzle has only been in existence since June, 2008, a relatively short period of time for any major online enterprise. (How long did it take eBay and Craigs List to reach any degree of popularity ?) When I first came aboard in November 2008, Bonanzle had in the vicinity of 10,000 registered members. As of this writing, Bonanzle has over 20,000 registered member and is poised this week to break the million mark in the amount of items listed. These listings are NOT of "test' or bogus origins either, a practice that eBay was notorious for in order to inflate their listing statistics. Granted, some of the Bonanzle items may be "freebies' (some item you can get from a seller if you buy something from them for a price), but this accounts for a very small percentage of items overall, and is still real.

One unique concept Bonanzle has implemented is the use of a short-term sale event called a BONANZA. Kind of like a 'Blue Light Special', Bonanzle booth owners schedule a sale where many of their items are marked way down for only a few hours. If done correctly, this can generate a lot of excitement and a huge buying frenzy. Since Bonanzas are scheduled well in advance, you can always peruse the Bonanza list and time your visit to the booth of your choice appropriately. You can also be assured that a seller will actually be present in the booth to answer any questions you have in real time during a Bonanza.

Some Bonanzle sellers have also begun to experiment with holding their own auctions. Unlike the eBay auction, an impromptu Bonanzle auction doesn't last a week, and is usually a fast and furious affair. Depending on attendance and preparation, a Bonanzle auction can either be a riot or a dud. It is unclear whether Bonanzle will ever incorporate any permanent auction feature on the site. Right now, the trend seems to be geared towards downward pricing rather than upward pricing, and a number of members are opposed to the auction format taking over, fearing another 'Greedbay'.

To its credit, Bonanzle's marketing plan does not involve throwing huge sums of moolah into conventional advertising channels. Rather, they use a grassroots, word-of-mouth growth strategy. Bonanzle reward incentive for the top six or so members who invite the most users. (I was the recipient of one of those awards last month, and I'm still deciding how I'm going to spend my gift certificate.) Also, the Bonanzle team has been very effective at getting media coverage in such places as CNN and the like. Members are encouraged to do their own promotion, and Bonanzle's advice and assistance in this helps facilitate a seller's booth being listed with Google Products Search, and other promotional ideas involving social network sites and blogs that are investments of time as opposed to money. The Bonanzle community also offers promotional advice in their forums, and the forums can also be used as a way to promote one's business within the site.
Still, Bonanzle is not quite 'there' yet. In the uncertaintity of the economic climate, sellers struggle to sell, and buyers are hesitant to buy. No new enterprises have any assured sustainabilty and growth (except for maybe repo services, storage facilities and pawn shops) and the ability to 'hold on' while a new enterprise grows will put many to the test.

In the long run, nobody really knows what the future holds for Bonanzle, or other online marketplaces. As long as eBay continues their trend of seller alienation and buyer confustication as promoted by the current regime, their future remains dubious. While Bonanzle continues to experience exponential growth with a shopping environment that's really pretty cool, there is a lot of potential as long as it stays fun and a good, no hassle place to buy and sell. Granted, it won't satisfy everyone's needs, but then again, what ever does?