Tag : adaptation

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167: 4 Marketing Trends Driving eBay’s Auction Decline

In my 16 years in the auction industry, there’s been a healthy debate as to whether or not eBay has been a positive force in the auction community—and even whether it should be considered part of the auction industry. The company that now sells more than $2 billion in assets per year has also led to multiple discussions as to what the definition of an auction marketer actually is.

ebay Revenue

Those on both sides of the debate, though, have noted that the eBay marketplace isn’t as focused on auctions as it once was. The National Bureau of Economic Research released a white paper that studied the trend of eBay sellers moving away from the auction method, while still leveraging the site’s marketplace. They found that over a span of a decade, auctions fell from 95% to just 15% of eBay’s share of active listings.

eBay Shift Chart

The authors of the study concluded that:

  1. The auction method of price discovery was losing importance because of the robust search capabilities available on the Internet.
  2. Seller margins were dropping significantly, as auction prices had fallen dramatically compared to posted-price sales for similar assets.
  3. Auctions “are favored for used and idiosyncratic items, and by less experienced sellers.”

It’s important to note that eBay wasn’t pushing these trends. They make money on the transaction regardless of method of sale, and they want items to sell for the highest price possible. These trends are adaptations of sellers to the marketplace’s buyers. That’s why these trends should be instructive to all of us who sell things for other people—no matter what method of marketing we use.

We have the most educated buyers of all time.

Buyers can research more about the asset you’re selling than at any time in history. So, it’s important to disclose as much information on our website as possible—and not force buyers to on-site inspections or phone conversations. We need to publish lots of pictures or even videos—and all the documentation and description possible.

We need to give buyers options.

eBay offers four ways to buy: fixed price, reserve auction, absolute auction, and Buy It Now. We need to know what method works best for our various asset categories and their respective marketplaces—and be able to articulate the pros and cons of each to our sellers. Some real estate auctioneers I serve already advertise a Buy It Now-style option on their auctions; and I know of at least one equipment auction company researching that feature on their online bidding platform. Regardless of the method we use, we need to compliment it with robust, targeted, efficient advertising that adds value to that method (something eBay doesn’t do).

We need to retire “Auction is fastest way to get cash for your asset.”

One of the reasons for eBay’s auction decline that wasn’t mentioned in the white paper is the instancy of purchase available on the Internet. Culture has blown past even one-click ordering to the new Dash buttons for buying items. While these obviously wouldn’t serve the asset categories we typically market at auction, we need to understand that auctions aren’t always the fastest way to buy—and thus not always the fastest way to sell.

The marketplace should drive our marketing decisions.

If eBay had determined to remain an online auction company rather than an online marketplace, it would be generating a fraction of the revenue it does each year. Instead, it adapted to buyer trends to benefit its sellers. That wasn’t an altruistic decision, and I’m sure that cost them a lot of time and resources to accomplish. If our companies are to continue and grow in their success, we must adapt to the culture. We have to ask questions like:

  1. What media do our buyers and sellers most consume?
  2. How do they consume that media and each medium’s advertisements?
  3. What do the terms and purchase processes look like where people most often purchase the asset in question?

None of our companies will ever be eBay. (I would guess that most of us don’t even aspire to that.) What works for eBay may not work for most of our firms, but we can learn from the trends that their scale and ubiquity illustrate. If their sellers are adapting to cultural changes, we need to help our sellers do the same.

Stock image purchased from iStockPhoto.com

eBay revenue charted linked to its source.

eBay auction chart acquired from the referenced study“Sales Mechanisms in Online Markets: What Happened to Internet Auctions?” by Liran Einav, Chiara Farronato, Jonathan D. Levin, Neel Sundaresan

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144: Relearning How to Fish for Auction Buyers (and Sellers)

H-E-B is the largest privately-held grocery chain in the United States. Last year, Forbes ranked the company as the fifteenth largest privately held company of any kind in America. If you talk to someone who has emigrated from Texas, H-E-B is one of the things they miss most about the Lone Star State.

I spent some time with a former vice president of the company, while he was working as a consultant where I live. On a weekend road trip with him, he told me about his unique and impressive career path and what he learned from his time at the company. (He has since moved onto Fortune 500 consulting, media ownership, and other successful entrepreneurial ventures.)

One of the things he attributes to H-E-B’s growth and success was how it decided what to put on the shelves and where. Apparently, the grocery industry used to include a lot of supplier lobbying. Food companies would wine, dine, and all but bribe grocery chains to put their items on the shelves, especially on end caps and other prominent positions. Early into the barcode era, H-E-B started tracking what customers actually purchased. They learned what varieties and brands sold more than others, what size packaging outperformed other configurations, and what price points created the most transactions.

Then, they adjusted their store layouts and product lineups accordingly.

Store and chain managers may not have enjoyed the same gifts and junkets, but they soon benefitted from higher sales volumes. Joe said a little store named Walmart adhered early to the same track-and-adjust strategy. It seems to have worked out well for them, too.

I would imagine that sales analytics are standard practice now for major retailers—and far more comprehensive than what H-E-B and Walmart first used. They got to those trends early, if not first; and it has led to market share domination.

The auction industry is at a similar place as the grocery industry was in the 1980’s. Most auction companies keep marketing the way they have for decades, just with more media expenditures. As a graphic designer, I like it, because it means more work for me. As a consultant, it scares me, because there’s only so much I can help a company without analytical data.

Relatively few auction companies are leveraging the tools available for actionable data. Not even the free tools, let alone the $10-per-year ones. I know this because I ask. As the industry evolves and transitions online, we have the potential for even more data points that will offer even better strategic intelligence.

Like a 1980’s food supplier, I currently benefit in the short term from my clients’ ignorance. It frees me from adapting, from changing my skill sets and value propositions. If I want to sell more volume with more longevity, though, I’ll need to adapt to my clients’ customer’s patterns.

Here’s the rub: I can’t get that knowledge for them, and I can’t get it without them. That’s why I’m educating myself with instructional videos, online seminars, and offline courses like the Auction Marketing Management curriculum. I’m hoping that soon I’ll be able to teach my clients how to fish, even if that might mean fewer fish heading my way.

In the current marketplace, there’s no excuse for relying on instinct. Our marketing mix should include more experimentation but less guesswork. Our customers on the aggregate are telling us how and where and when to advertise and conduct transactions. The buying public is always right, whether we like it or not; and they’re generating the data to prove it.

American statistician and author, W. Edward Demings, said it best: “In God we trust. All others must bring data.”

 Image from this source.

102: Competing For (And Against?) Potential Clients

Image purchase from iStockPhoto.comWhen someone added me to a private Facebook group for auctioneers, I didn’t expect the conversations there to look much different than the rest of my relatively-peaceful Facebook stream. So, it came as quite a surprise when it turned into the most acrimonious auctioneer environment I’ve ever encountered.

Proxibid, a longstanding vendor for third-party online bidding, had announced a change in their structure. From what I gather, Proxibid was now going to allow non-auctioneers to sell their wares through the Proxibid system—a system that had been assumed as an auctioneer-only environment. Some viewed this expansion as a deceptive change of plans; others defended Proxibid for attempting to grow the potential buyer base.

I don’t have a dog in the fight. Some of my clients use Proxibid; some use one of several Proxibid competitors; others use proprietary systems for their online bidding. My job is the same no matter where the bidders bid—whether onsite or online: find as many prospective buyers as possible and entice them to bid.

When I joined the National Auctioneers Association in 2003, there were thousands more members in the association than we have now. While the auction industry’s collective revenues are holding—if not growing—the number of full-time auction practitioners in the country seems to be shrinking. I’ve heard anecdotal evidence to confirm this rapid constriction in the profession at large. That leads me to believe that there’s a lot of competition for work. In this Proxibid shift, it’s apparent that some auctioneers are worried about the pool of professional auctioneers shrinking further due to sellers being able to help themselves to online bidding and the buyers that gather at Proxibid.com.

As a sole proprietor who depends on family-sized businesses to hire me instead of helping themselves to online vendors, I understand that worry.  It’s real and deserved concern that fewer and fewer auctioneers will deem Biplane Productions worth its fees, that they’ll keep the work in-house instead of outsourcing—or that they’ll outsource to a hungrier freelancer.

I’ve had stout competition since my first day in business in 2002.  There are far more graphic designers in the country than auctioneers, and that ratio grows every graduation season. As of 2008, there were almost 300,000 designers in the country. As just one of the trade groups in my industry, the American Institute of Graphic Artists alone has multiple times the membership of the National Auctioneers Association.

I’ve been outnumbered by my competition for a long time. So has every auctioneer for whom I’ve worked and every auctioneer I’ve ever met. Auction marketers have competed with sellers and non-auctioneers since before we had a national association. That won’t change, and Proxibid won’t be the last Internet market place to help sellers help themselves.

The challenge, then, for all of us marketers is to create and prove value to potential clients—value they can’t achieve by doing the work themselves or by posting their wares on a website, even one built on the backs of innovative and successful auctioneers.

For me, that value proving included a transition into selling and delivering on my auction advertising knowledge base as much or more than my reputation for graphic design speed. My revenue efficiency has fluctuated, as I’ve contributed to more complicated campaigns. I’m serving auction companies that regularly now combine 10, 20, even 40-some properties in single auction campaigns. I’m accepting job orders in late afternoons that require overnight designs.

It’s not martyrdom. It’s most definitely not exclusive to Biplane Productions. It’s adapting. The Darwinian nature of capitalism requires it, and technology is accelerating the need for it.

I’ll let other people debate whether Proxibid’s move was harmful or advantageous to the auction industry and whether or not their expansion happened in good faith. That’s not my fight.

What is my fight is making auction advertising so attractive and effective that people keep hiring auctioneers to sell their assets.
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At church, I’ve been on a team exploring the book of Ecclesiastes in which the wise Hebrew king, Solomon, pronounces no value to accomplishment in terms of wealth, power, or pleasure. Over and over, the sage proclaims the meaninglessness of chasing success—probably because it’s a moving target that doesn’t move with us into our next lives.

On my recent vacation, one of my pastors and I were chatting about my record workload over the past eight months. He asked a simple pair of questions that keeps reverberating inside my head: “Can you just get rid of some clients? Is it as easy as that?”

I told him that after I finish eradicating the rest of our non-mortgage debt, I’ll be considering strategies for sifting my client list. I told him that, right now, I just brace for the seasonal and unpredictable nature of my work, taking my career’s lumps with its advantages.

At some point, though, there will be an intersection with my faith and my insecurities. At some point, I’ll stop worrying about losing business or losing a career to my next stage of life. At some point, I won’t care if you consider me an expert instead of a freelancer in a basement.

Each time I read Ecclesiastes or close InDesign at 2:00 A.M., I’m getting closer to that point.

 

[footer]Stock image purchased from iStockPhoto.com[/footer]

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