How To Start An Auction Site

How To Start An Auction Site - Background Info:

E-commerce is taking on a different spin with sites such as Swoopo and GoBid that appeal to the bargain hunter with a competitive drive. The giveaway prices on name-brand products, the limited and timed offerings, strategy play and fast pace attract shoppers willing to bid money for the chance to buy something at a fraction of its retail cost.

Auctions have appeared to become an online norm due to the success of eBay.com. Consumers can find new and used items at a deeper discount than going to the local department stores. Starting your own low bid auction website extends the opportunity for consumers to further purchase goods and services at any reasonable rates. Proper marketing and business structure can generate a steady income for business.

To be frank, eBay is probably the only general purpose auction site most people are willing to visit, but if you sell something that eBay doesn't, or if you simply specialize in something, you may have the edge you need to put your own auction site ahead of the pack.

However, this doesn't mean there is not room for one more auction site, or several more auction sites, in fact. If you cater to a certain niche, there is certainly potential in an online auction site.

Online auction sites are an increasingly popular medium for purchasing everything from used pots and pans to valuable fine art. Virtually anyone with some time and start-up money can start an online auction business. Depending on how much work you put into your site and the level of demand for your products, your online auction business can ultimately provide a nice supplemental income or can become a profitable,

As for developing your niche in the auction site market, that's entirely up to you. Try something that interests you or something for which there is a large, untapped market. Just for example, eBay doesn't allow adult movies or publications to be sold through their site, and there are a lot of internet based subcultures you could tap into.

One of the most popular uses of niche auction sites is for specialty fashion. Look into different aesthetics such as steampunk clothing, leatherwork, etcetera, and see if any would interest you.

You can also offer a different business model. For example, are there any auction sites that allow trading, or which allow the users to rent properties from one another? What about an auction site for people looking to rent vacation homes for a week or so?

The general purpose auction site market may be cornered by the big names, but there is a vast wealth of untapped market out there.

A lot of people are looking for not only an auction site, but something like an auction site mixed with a tight knit community forum.

Really, it comes down to what you can dream up. If you want to compete with the big auction site companies, your auction site need to do something they don't do or can't do.

How To Start An Auction Site - Tasks And Skills Needed:

Business Specific Tasks:

If you are planning to do all the business tasks or hiring or subcontracting tasks, here's a list of tasks that need to be attended to when it comes to the business side of running an online auction business:

Bookkeeping/recordkeeping

Email correspondence

Advertising/Marketing

General office

Industry Specific Tasks:

Same as above if you plan to do everything yourself or get help, here are some of the tasks necessary to operate an online auction business:

List items for sale (with digital photos optional)

Create forum/blog and maintain as a moderator

Join networking groups online and offline to advertise for items needed to list for sale

Maintain good records of sales for tax purposes

How To Start An Auction Site - Approximate Daily Hours Needed:

General Hours of Operation: - When your business is open - Because this business is web-based, it is open 24/7 year around.

Hours Needed to Prepare - Before Opening and After Hours Activities - Check email, answer inquiries, make sure site is operating correctly, list items for sale/end items sold (take them off the listings unless it's automatic once an item is won), keep track of all sales for tax purposes.

Number of Employees Needed To Run This Business:

Minimum Number of Employees -During the Start Up Phase: You can start this business yourself on a full-time basis.

Number of Employees - Once Your Business is Up and Running Successfully:

Website maintenance

Record/Bookkeeping

General office

Customer Service

Scheduling of listings

Skill Requirements for This Business:

Great organizational skills

Digital photography skills

Computer literacy

e-Commerce knowledge and know-how

Website design and maintenance

Licenses:

Some states are attempting to require eBay sellers to become licensed "auctioneers." Some states require up to $1000 in annual licensing fees and time-consuming auctioneering schools, where you will learn important online skills such as "voice modulation." Without a license you could be subject to thousands of dollars in fines for selling on eBay.

States have sought for years to make out-of-state sellers collect sales taxes on their distant sales. The states have proposed a new scheme that will be debated in Congress to require eBay (for example) sellers to collect and pay these taxes to the states (with thousands of local jurisdictions) where your customers are located. Without your help, you could be required to file and pay a monthly tax bill in each state and be subject to yearly audits in each state.

Insofar as your own state or country is concerned, you will need to check with your local business licensing authorities when setting up your business license, tax i. d. regarding the reporting of income for taxes----just like any other business.

The bigger problem comes when determining not-for-profit sales for charitable organization or other entity where profits are not retained. In this case, it is best to consult with a business attorney.

Approximate Minimum Start up Cost:

Bare essential: - $500-$3,000. The good thing about the low start up costs involved in a new auction site is that you can always scrap an idea for an auction site and start a whole new auction site if interest turns out to be lower than you'd expected.

When your auction site startup costs are relatively low, there's no need to put all your eggs in one basket as it were. If your first auction site doesn't gain steam, try another auction site, and another auction site. If running an auction site is what you really want to do, there's never an excuse not to keep trying.

Minimal exposure - There are several ways to advertise for free but if you're developing a niche auction site, do try to appeal to businesses in the industry or like interests by advertising through a service ad in the newspaper, as well as distribution of flyers to local businesses. Tip: Consider contacting businesses for consignment items for sale and get media coverage through their advertising methods already in place.

Necessary Equipment to Run this Business:

Necessary Start-Up Equipment & Supplies:

Computer with high-speed internet access

Good domain name and website hosting.

Printer

Cell phone

Website design and maintenance

Auction software

Supplementary Equipment: - Equipment or helpful products that you can acquire to once your business is off and running:

Merchant account and/or credit card processor

Fax machine

Scanner

Digital camera

Graphics software

Digital postal scale

Packaging for shipping

Monthly Expenses To Consider:

Wages
Phone/cell phone
Internet access
Website hosting
Advertising/Marketing
Electricity
Web site maintenance

Special Requirements and Considerations For This Business:

auction hammer on a scale

Find out all you can about the trends in the industry. Know your competition, in particular, their strengths and weaknesses. This will help you identify your competitive advantage. In other words, this will help you figure out what you can give your customers that they're not getting from the other businesses. And keep from emulating the competition's strategy. Instead, make the most of your own advantage points.
An auction site has rules. Some sites will even offer online tutorials to help you become familiar with the rules and how to buy or sell on that particular auction site.
Auction sites operate a little differently when it comes to honesty and credibility. They use a feedback system (which simply means that after every transaction the seller and the buyer rate each other on the entire deal: Great, Good, Excellent, bad, etc...).
Your terms of service are your policies for doing business. This will include: shipping and handling, how soon you want receive payment and of course the different payment types you will accept. Please ponder these decisions carefully, this is the terms under which you will do business. Keep your terms as simple as you can, if they are too long and wordy you may drive customers away.
Learn about the online auction systems. Most popular online auction sites offer detailed tutorials for those interested in using the system as buyers or sellers.
Decide what to sell. Choose items that you find interesting and that have broader appeal.
Research the competition. Determine who else is selling similar items on the auction site and their level of success. If the products you want to sell aren't moving, perhaps they have little appeal or maybe current sellers set reserve prices to high, poorly present goods or have problematic payment or return policies. If others are doing well, study their listings and implement their best practices. If there's no market for your goods or if the market is saturated, consider filling a related niche that's underrepresented.
Create listings that appeal to customers. Include high quality images of your items, categorize items appropriately, provide detailed and accurate descriptions, and clearly explain payment methods, shipping options and return policies. Most popular sellers charge a flat rate for shipping and accept numerous forms of payment including major credit cards and PayPal which is, by far, the most popular.
Be patient. Very few online auction business take off overnight. It may take a while to attract buyers and build a customer base. Evaluate your business regularly and make improvements based on customer feedback and personal observation.
Check the amount of bandwidth you will be able to use on your hosting site. Even though you may want to create a free auction website, it's important to have around 5,000 to 5,500 megabytes of space to start.
If you don't want to outsource the job you can use software that is included with your hosting to make a WordPress site. Many hosting packages include Fantastico which will instantly install WordPress onto your domain. Once that happens you can grab WPAuctions for $30 and you'll be able to run an auction site using WordPress.
If you're undecided about what kind of auction site you could run, you'll want to go with a niche auction site. That way you can attract motivated buyers and sellers that don't want to use eBay because eBay caters to everything. They would rather use an auction site that is geared towards their interest. For example, you could start a Star Wars collectibles auction site, call it StarAuctionWars.com and let people that love the Star Wars movies buy and sell their prized collectibles.

Pros And Cons of Opening an Online Auction Business:

The Pros of Running an Online Auction Business:

It can be very lucrative

The business runs more or less on "automatic"

You do not have to carry inventory

You can grow offshoots, such as an eBay consignment business or set up an online auction site for offline auction houses.

Your times is your own, and you can operate this business at your own pace.

Easy to set up with a niche market

The Cons of Running an Online Auction Business:

The setup and maintenance of an online auction site can be costly

Stiff competition

Can be difficult to find quality items to sell

You may have to deal with many customer complaints with other sellers

You may be liable for high taxes, depending on your location

Advertising and marketing to set yourself from the crowd can be expensive

It can take quite a bit of time to develop consumer trust and a following

Type of Customers You Need to Attract:

To build the marketplace you will not only need the platform technology but the community - buyers and sellers. You may be able to find an existing marketplace for sale that has both. If you just want the technology building your own framework may be best suited to fit the needs of your particular marketplace design. That is how you want your marketplace to work.

Think outside the box if you don't have a niche market, such as churches and schools as customers.

Online Auction Business Statistics:

Powersellers Unite has a unique tracker of eBay seller statistics. This will help you determine what trends with what is selling and for how much.

IBISWorld Industry Reports has current statistics for online auctions world-wide.

Revenue:

The way you'll be making your money is through listing fees. If you can tap into a large enough market, you can make plenty by charging minimal fees to list on your auction site.

As for the kind of money you can make on an auction site, that depends entirely on you. Remember that for every good idea, there are, honestly, about a billion bad ones. Browse the internet, think of things that interest you and that would interest several others who eBay doesn't cater to very strongly, and see how many results a google search turns up.

Online Auction Business Resources:

auction hammer

Industry-Specific Websites:

Creating an Auction Website

Site Build It!

BiddingForGood

School Auctions Made Easy!

Courses:

Start an Auction Website

Online Auction Guide/Course

Equipment and Supplies:

Listing Factory

Forums:

Powersellers Unite

Books:

Amazon (listings for eBay and online auction books)

Software:

Auction Pro

SoftMedia

Ultimate Auction

PHP Pro

xcAuction

Create Auction

YourBusinessPal

PHP ProBid

Other:

Online auction business model

Online Auction Sellers (article: IRS concerns)

Times are tough and every penny counts (article)

Auction Templates

Creating Online: Website Templates

Auction Sellers Resource

Hammertap

Businesses To Related to an Online Auction Business:

Auction sales/Auctioneer
Retail sales
Fund-raising
e-Commerce
Marketing