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Retailers are learning: Auctions work for some excess goods, but not all
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“We don’t use the word ‘auction’ so much anymore, because the line between auctions and other marketplaces is blurring,” says Scot Wingo, CEO of auction software and services provider ChannelAdvisor. “If you think of auctions, eBay is it. They have virtually 100% of the marketplace. Analysts are starting to think about what is the next level, and a lot are saying it’s online marketplaces. And in those marketplaces, there are a lot of things going on-fixed pricing, auction format, different products and different categories that sell well to different audiences.”
For example, the eBay marketplace does well with liquidation product, and not as well with retail product, while the reverse is true for Amazon, Wingo says. That makes the biggest divider between these two online marketplaces not so much whether the auction format is used, but the nature of their audiences, says Wingo, who estimates an overlap of only 10% between the two.
“The eBay buyer is looking for 20% to 80% off retail. That’s why they like auctions; they draw them in,” he says. “The Amazon audience is the flip side. They don’t want the 2-year-old camera; they want the camera that just came out-they are most interested in new products, the latest and greatest, convenience and then price.”
Retailers with product to move across life cycle stages look for access to both marketplaces at different times. That’s why ChannelAdvisor is gearing up to offer online sales management that goes beyond auctions to provide clients with integrated access to auctions and fixed-price sales. In June, it expects to launch support for Merchants@Amazon, serving retailers with storefronts on the Amazon site. “It’s similar to what we do for retailers on eBay,” Wingo says. “We do an integration that ties eBay into their database and fulfillment systems. We’ll be able to do one integration and get our clients Amazon and eBay support.”
As retailers and their supply chain partners gain in knowledge and improve their ability to match different products at various lifecycle stages with the right online opportunity, auctions stand to become an increasingly effective means of liquidation, where they are used selectively. And the same goes for the selective use of other pricing formats and online marketplaces. “We will use all of the tools at our disposal to get the highest recovery the market will pay,” Lhormer says.