December 14, 2001, 12:00 AM

Online auction users are a prime audience, says Forrester

Auction buyers have higher incomes and buy three times as many items online as the average online shopper.

The demographics of online auction customers could be an eye-opener for retailers clinging to the notion that auction buffs are the economic dregs of online users, according to a new report on auctions by Forrester Reseach Inc. With an average income of $54,700, they earn $5,000 more than the average online consumer and make three times as many purchases per year. And most of them say they don’t frequent auctions to get lowest price -- just 36% of those polled, says Forrester. They go to online auctions for the thrill of the hunt and the opportunity to find unique items.

Forrester also blasts two other myths still keeping some retailers from using auctions as a sales outlet. Contrary to some retailers` perceptions, their investment in using auction sites is low; typically, from 20 cents to $1.50 in listing fees per item. Higher volumes justify the cost of technology to automate the inventory and order management system, at a typical investment of $50,000 and more per year, says Forrester analyst Carrie Johnson. Forrester also points out that auctions don’t only sell cheap or used goods. Auctions contributed 22% of all online electronics sales among 10,000 consumers polled, for example, and at selling prices that were in some cases higher than in retail stores.

“Auction sales will reach $45 billion, or 25% of online retail sales by 2006,” Johnson says. “Retailers can’t afford to ignore auctions and their attractive shopping audience, low entry costs and sales potential.”

 

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