MARKETING CLINIC: Auction Auction Auction, oi oi oi

The Olympics has provided some of the greatest displays of sporting ability the world has seen. But it has also shown the world a great way to efficiently use the Internet as a means of making money. I'm not talking about online ticket sales, but the use of an online auction to drive up prices of Olympic memorabilia. Olympic Aid, the company behind this concept, has asked athletes to donate something unique such as an item of clothing or a piece of competition gear in the name of charity. This memorabilia is then auctioned through eBay to achieve the highest market price and proceeds go to needy children. Just to give you an example of how well the auction manages to increase prices, gold medallist Misty Hyman's signed swimming cap started at $US50 and sold for $2050.

For businesses that hold inventory, auctions are a great way to get rid of surplus stock at market prices. They can also reduce your costs by increasing product turnover, lowering inventory holding costs.

The most common types of auction are the forward auction and the reverse auction. A forward auction allows a single seller to auction off their goods to many potential buyers. A reverse auction is the opposite, where one buyer interacts with many potential sellers.

Forward auctions can be further broken down into commercial and person-to-person. At a commercial auction venue, such as sold.com.au or WebAuction, buyers compete with one another to buy goods owned by the house that are stocked in clearance warehouses. These items might be unused but aging products, or they may be discontinued, refurbished, used, overstocks or customer returns. At a person-to-person auction site such as eBay or Yahoo Auction, sellers and bidders meet on middle ground. Sellers pay a fee to list items for sale. After the bidding, the auctioneer notifies the winning bidder and the seller, who make arrangements to complete the transaction privately.

There are a couple of models that you can use for your business. The first is to buy the software and do it yourself. Several companies provide the software to set-up your own auction site. Ariba (www.ariba.com) provides an auction module as part of their Dynamic Trade(tm) B2B system. Commerce One (www.commerceone. com) also provides software to create your own branded online auction. There is greater flexibility and customisation when doing it in-house, however you will have to support the site yourself. This will include buying servers and doing the technical integration.

Use an ASP that specialises in creating, hosting and distributing online auction services.

Some companies work on an ASP model where they provide you with an auction service that can be branded to your company's look and feel. This removes the need to support the auction site yourself. Companies such as Fairmarket (www.fairmarket.com) and iDeal (www.dealnetwork.com) can provide hosted auction services that are supported 24 x 7.

The second model is to use a third-party auction house. If you don't want the hassle of setting up your own online auction, you can always list your products on a third-party auction site. You might think this is just for small companies, but Sun Microsystems recently put five new Sun Blade workstations signed by CEO Scott McNealy on eBay. For a description of some of the most popular commercial and person-to-person online auction sites visit coverage.cnet.com/Content/Reports/Tips/Auctions/ss03.htmlFor those of you that are interested in the buying side, there is a great piece of software called Auction Central that allows you to search over 200 auction sites simultaneously. Auction Central can be downloaded free from www.download.com.

Amanda Mason is the PR & Marketing manager for Pure Commerce. Contact her at amanda@pure-commerce.com

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