Have you really sat down and figured out the cost for actual BUYING customers? What goes into this calculation? Advertising, inventory, time, equipment, staff, research, and much more goes into calculating the cost. And trust me, when this series of posts is done, I believe you will be amazed at the true numbers.

Advertising

I chose advertising first because many business owners really don’t know what is all included in advertising. It is more than the ads you may place in newspapers, telephone books or flyers and postcards. If you sell online, using venues such as Amazon or eBay you are paying for advertising. You are paying for these venues to bring POTENTIAL paying customers to your products. You are paying for these sites to promote your products via SEO and SEM on search engines. If the sites you HIRE to promote your items via SEO don’t send your products to search engines YOU must do it yourself. The ecommerce market has changed and the vast majority of buyers use SEO or comparison shopping engines to find the producst they want.

While the costs associated with listing on these ecommerce sites have shifted more towards success based fees, meaning if your products don’t sell you don’t pay a large fee, these costs must be spread over those items that do sell, because this a TRUE cost of aquiring a paying customer. In the case of Amazon and soon (in my opinion) eBay, you will not really own these customers!

Advertising also includes buying Adwords or keywords. If you do this for your own website, these costs must be spread over those customers that are actually converted to BUYERS. So, in reality those that buy pay for those that don’t. This is sort of like buying something at Wal-Mart. The price you pay for an item includes the cost of all those newspaper inserts they put out even though a very small percentage, usually about 1% or less of actual shoppers buy that item on sale.  

Advertising to the correct audience is important. Using ecommerce venues helps to achieve this. So does self promotion, directing your products or services to those most likely to purchase them. Advertising is not an expense but rather an investment in the success of your business, but you as a business owner must realize what EXACTLY your are getting for this investment!

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I believe the answer is very simple. There will never be another meteoric single marketplace like eBay or Amazon, however I feel that there is an opportunity for several ecomerce sites to band together and create a mega site that could incorporate the best each site has to offer to bring buyers storming to this site. What Wal-Mart and Sears have discovered is that they don’t have to carry everything their customers make be looking for, but rather let other third party sellers provide these things while still shopping the Wal-Mart or Sears sites.

Sites such as Etsy.com, Bonanzle.com, Dealitlive.com, and Onlineauction.com each have something special and unique to offer buyers. Each brings their own set of buyers and sellers to the table. What if, sites like this worked together to create the aforementioned megasite as a joint venture? Could they work together utilizing their infastructures to build a site that could cater to a wide variety of users? I think so, if they are willing to put aside their differences and work together to create something that has never been done before.

Such a site could offer the creativity of Etsy, the community of fixed price sellers of Bonanzle, the thrill of live auctions on DealItLive and the online auction experience of Onlineauction. 

While I realize this may be a pipe dream, because heaven forbid several entities work together for the benefit of all rather than individual success, which by the way will never happen to the extent that it did with eBay or Amazon, it is my pipe and I will continue to light it every once in a while!

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As individuals and small businesses found the internet as a sales tool, so to did the Big Box B/M businesses. The Big Box sellers realized that the internet was the new discount isle and they moved to get their piece of the pie. In the past 3-4 years there has been an explosion in the number of ecommerce sites catering to these large volume sellers, providing them the opportunity to market across multiple venues with the ease and efficency required to be profitable.

Diluting The MarketPlace

This evolution has diluted the marketplace as it pertains to the “Little Guy”. No longer can they compete on price in many of the product lines that consumers are seeking. This is evidenced by Amazon buying products to sell on their site in direct competition to their 3P (3rd party) sellers, and eBay giving preferential exposure to large volume sellers. There are other examples from other sites, but you get the picture.

As the giants in ecommerce focus in on volume vs uniqueness (regardless of what eBay says) niche marketing is becoming the focus of a lot of internet marketers. These sellers who sell unique or one of items are looking for ways to once again be visible on a site and not relegated to the sub basement. This I believe is the largest reason for the slumping numbers on eBay and why other niche sites have seen significant growth.

In my next chapter I will look deeper into the niche marketplaces and how they benefit their sellers!

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With the economy suffering these days, those people that once thought they had it all are finding out just how fast it all can vanish. Brick and mortar resale shops and auction houses across the United States are reporting significant growth in business for the first half of 2009. People that once bought jewelery, art, and other collectibles are now selling these to generate liquid cash. Why are online auctions not growing at the same rate as the B/M businesses?

On Purpose

While eBay was once known as the leader in online auctions, that image has faltered mainly because of their own efforts. eBay’s data shows that buyers do not want to wait 7 days for an auction to end, that buyers want to see items, and buy them immediately. This according to previous statements by the online marketplace. So, eBay has intentionally diminished the exposure auction items receive in their default search engine settings know as Best Match which often favors fixed price listings (not always).

Onlineauction.com believes in the auction process and with a domain name especially favorable in search engines users still suffer from diminished exposure by the big search engines such as Google and Bing. Part of this is due to limited funding needed to buy key words on the search engines, some of it is due to lack of quality items in large numbers. If sites like Onlineauction can attract the quality auction sellers and buyers I think they may have a chance.

Fixed Price Niche Sites

Several sites like Bonanzle.com, Netspray.com Etsy.com, and others have shown good growth in the last several months, but these are not auction sites. These sites offer the fixed price or Best Offer sales model. Still a very good selection is available, and usually at very good prices. As I stated earlier these sites have seen good growth, yet still are lagging behind B/M resale shops.

Why Is This Happening?

One of the big issues online sites face is fear. eBay has suffers from a a few bad apples, fraudsters that only want to rip buyers off. eBay has worked very hard to combat fraud, but being the original flag bearer of online auctions makes it a huge target for both fraud and the news media. We all know that bad news sells so these are the stories we see on the news networks. This unfairly represents eBay’s sales as being riddled with bad transactions. I believe eBay still sees better than 99% of it’s sales ending in satisfied buyers and sellers. This is a phenomial number and I challenge any B/M store to see this level of satisfaction.

I also believe that a return to a more historic way of shopping is in play here. I feel that buyers are moving back to the days when they actually hold and feel the items they want to purchase. Antique malls are seeing a resurgance in sellers returning, consignment stores, auction galleries and pawn shops also are seeing this regrowth.

Bottom line, whether by design or by association, concerns over fraud must and are being addressed, and I feel that as the economy starts to rebound and reputations are rebuilt, we will again see growth in online auctions.

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As an internet marketer, your customers create a perception of you by many means. The way you offer your items for sale, whether it’s using an online venue such as Amazon, Bonanzle, eBay, Etsy, Onlineauction, etc. and or your own website is one way. What these offerings actually say is another. How you handle communications before during and after the transaction is still another. You get the idea. But, does it matter what your customers percieve, or is it your intent that matters?

If you choose perception, you are exactly right!

It does not matter what your intent was!

Perception is EVERYTHING! If you have to explain what you meant in your product offering from the item itself to the terms and conditions of the sale, you have FAILED your customers. This failure will at some point cause you significant problems. This is not a guess but pure fact.

Where you sell also creates a perception. Whether you use an online marketplace or your own website, it creates a perception for your potential buyers. This is what concerns me about the recent remarks by John Donahoe regarding eBay wanting to create a Costco type buyers experience. Do you as an online marketer want to be perceived as a Costco type product offering? Does your product or service fit the ”Bargain Price” model that wholesale clubs promote?

How can we as internet marketers hope or expect our potential buyers to pay fair prices for products or services if the venue itself wants to be “Perceived” as a discount marketplace?

Now before you get all up in arms, there is nothing wrong with wholesale clubs! I have been known to shop them from time to time, but the products I seek in these venues are very specific. I shop on eBay when I want the product at the best possible price. However when quality matters I shop elsewhere, and that is what I see many other buyers doing as well.

My point in this blog is simple. Just ask David Letterman what perception vs intent can do!

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Small Business Trends Radio Top 100

Sometimes when you least expect it, life throws you a very special moment. When I began this adventure of radio broadcasts for ecommerce sellers, my hope was to bring honesty and transparency to those interested in doing business on the internet. I felt the need to tell the individuals and businesses the real truths and pitfalls of doing business online. 

My target audience was and is those interested in using new or established venues such as Amazon, Bonanzle, eBay,  Etsy, Onlineauction or even their own website to start or grow their businesses. No hype, just the real truths, good and bad.

While checking my email yesterday, I opened one of the many Google Alerts I get on a daily basis and what a surprise! Anita  Campbell host of Small Business Trends Radio had chosen ebay & Beyond: Basics To Business as one of the Top 100 Podcasts for Small Business owners in 2009! What an honor!

With the growing number of podcasters today, to be grouped among the best of the best with the likes of CNN Money, The WSJ, Businessweek, eBay Radio, Marlene Gavens, Tips From The Top, Walt Kolenda of  The Auction Wally Show is such an honor.

Thank you!

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