2) Buyer
3) Payment
4) Shipping
5) Customer Relationships
If you really get involved with auctions as a major player, you will need to master a 6th critical area which involves profitability. This, however, isn’t necessary when you are first beginning.
Know your merchandise. You may be thinking, “Well, duhhhh! Of course I know what I’m selling!” Perhaps you do. But to point out how confusing it gets, think about some of my sales. I have sold briefcases... dozens of times. Not only that, I have sold five different versions on four different auction sites! Perhaps you will do the same, and you get a message from a buyer that begins “The briefcase I bought from you...” Yikes! Which one?
Here is what you must record about your merchandise...• A description of the item
• The site where you listed it
• The auction dates -- both when you submitted it and the day it sold
• The auction number given to you by your auction site -- you can always track an item if you have the number!
Know your buyer. Recently I received a message that said, “Sorry -- (an address).” No name, no explanation, no item description, no nothing. Clearly I had sent this buyer an address request, and he expected me to remember. But, I didn’t. And if you are selling hundreds of items a week, you won’t remember, either. If you get messages like this, what will you do?...
Choice one ... you click “reply” on your e-mail, grit your teeth, and ask (as politely as possible) who this person is and what this message is about. Not the greatest customer relationship strategy.
Choice two -- you spend a lot of time looking through all your buyers trying to figure out who this belongs to because at least you have their e-mail address! (Unless they’ve sent the e-mail from a different address. Horrors!)
Before I got organized, I would spend as much time as it took to plow through all my information, looking for the correct address. What an expensive way to operate! Always place a monetary amount on your time, based on the income you want to make and the hours you are willing to spend.
You need the following information on your buyer ...• Name
• E-mail address
• Auction site user name
• Home address
I also suggest that you create a folder in your e-mail program and save messages from your buyers. How long do you save this stuff? I usually save it for about four months but there is no hard and fast rule. I get aggravated with that stuff cluttering up my computer but it’s a prudent practice.
Know the payment method. Were you paid with a credit card, a money order, a check, PayPal or some other way? For example, you might assume that big companies like PayPal or Visa never make mistakes so you don’t have to know this stuff. Wrong! They do make errors and you may lose money if you aren’t paying attention.
• Record how you were paid
• Keep track of the payment date. This is especially critical if you hold checks until they clear. It is very easy to forget to mail when the 10 days are up! I have solved this problem with an calendar and daily reminder. I set my calendar so that on the appropriate day I am reminded to send mail to the customer.
• It isn’t absolutely necessary but you might want to record the number of the check or money order, if any.
Know shipping details. Customers want their merchandise promptly. And you need to be able to answer questions if Joe sends you an e-mail asking about his package.
• Who was your carrier?• What date did you mail?
• If your buyer is paying the exact shipping costs, rather than a set amount, or if they are paying extra for insurance, record the cost once you figure it out Several times I have received e-mails from customers that tell me that they have accidentally deleted or lost the shipping costs or insurance charges. You definitely don’t want to have to re-weigh and re-figure. Once is enough!
A real time saver... since I use almost always use the Post Office, and the fees are set, I have typed them up and keep a copy handy.
• Record any tracking or insurance numbers -- then choose a particular spot in your office and save those receipts! You want to be able to prove you mailed the item. Later, you will want to move those receipts to your tax file. If you receive a check for $50, and $9 is for shipping, you don’t want to have to pay taxes on the $9.
Provide good customer service. If you study e-commerce, you will quickly learn that poor customer service is a very costly mistake that many Internet merchants make. And, if you are an auction seller, you are indeed a Net merchant. So it is in your best interests to provide great service. We talk about customer acquisition and retention later on.
Send personalized customer e-mails to..• contact your buyer after your auction ends.
• notify when you ship an item.
• follow-up
Record feedback . Remember... to get it, you have to give it. So include a reminder to give feedback. I make a habit of giving all my appropriate feedback once a week, usually on Friday afternoon. Doing this every time you receive a payment, or every day, is not necessary. Of course, giving doesn’t necessarily mean that you will receive.
Record profits, losses and taxes. Suppose you hold a Dutch auction of 25 calculators. If you don’t know all your costs, plus the amount of time you spent on the auction, then how will you know whether you should repeat it? Or whether you should change some of the terms of the auction to make it more profitable?
For example, you might make more money by selling 50 calculators at a time, rather than 75. Or perhaps you need to raise your opening bid. Maybe you’d do better if your auction ended on Monday night rather than Saturday afternoon.
The variables are many but you can’t get an accurate picture without quality feedback. That is why careful records are a powerful money-making tool. Here’s how I tackle this...
• A monthly tracking feature -- This enables me to track and view my items by month. I need to see when specific items are the most profitable because some auction months are better than others. eBay states that profits are down between Thanksgiving and Christmas and highest in the the first quarter of the year.
• Opening price -- this is a great arena for testing. Experiment with different opening prices and see which are most profitable. Great market research information! If you study opening prices, over time you will get a better feel for how to open your bidding, about whether to use reserve auctions and become skilled in setting a minimum price.
• Quantity -- this really matters when you are using the Dutch auction strategy. You need accurate feedback so that you will know to only auction 50 at a time, rather than 500. There is no need to waste money on insertion fees!
• Closing date -- You can learn all kinds of information from this. For example, you will learn how long your auctions should be. After all, if you make as much money on a three day auction as a 10 day one, why not receive your profits faster? You will also learn how to make your buyer contact procedures as efficient as possible. If your auction closed on January 10, and you didn’t receive all your money until February 27, you need to re-evaluate what you are doing.
• End price -- there is absolutely no way to figure profit unless you know what you received for your merchandise. I have deposited as many as 23 checks in one day. My checkbook will only list the total. Then I have no idea what each individual item sold for -- unless I keep good records.
• Item cost -- This is one of the most critical parts of your record keeping! It is crucial to profit and tax records. To figure profits, you need the following information...
1) What is the auction fee, if any?2) What did the item cost you?
3) What did you receive for the final sale price?
For example, you paid $20 for an item, it sold for $65.30 and you paid $3.90 to the auction. Your profit on this item was 276%! Not bad at all. And your actual profit on this item was $41.40, which is your taxable amount.
The best advice on this subject is... don’t rely on your memory for any auction information! Memory may -- or may not -- be reliable if you are only selling two items. Don’t waste many precious (and expensive) hours. Ask me
how I know!
Your record keeping is vitally important to your success so get organized as soon as you begin trading. Don’t try and do extensive record keeping at once, however. Follow the same process as you do with the rest of your auction business -- start small and experiment. Let your knowledge and experience grow.
Now you have to somehow get the sold treasure to your buyer. If you don’t do it right, it will cost you a lot of time and money. Here’s the smart way... 