August 15, 2013, 5:21 PM

Online auction site TopHatter finds its niche in mobile commerce

The e-marketplace today launched an iPad app, following heavy sales growth from iPhones.

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Online auction site TopHatter, which holds limited-time sales on items that go to the highest bidder, today launched an iPad app. While the company has had a web site since early last year, today about 70% of its traffic is mobile, mainly coming through its iPhone app, says CEO Ashvin Kumar. In the last few weeks, that traffic has helped spur TopHatter to hit sales milestones, including generating more than $100,000 per day on several days, he says.

“The reason why it’s really a mobile product is everything happens really fast,” he says. “Going to a TopHatter auction is almost like an auction in real life—items are sold within minutes—so if you’re really interested in buying something, it’s important to be available.”

TopHatter allows retailers to hold special events to sell their products, say for five hours on a Saturday afternoon. During that time, the retailer can chat with customers online, promoting its wares and answering questions. Kumar says shoppers typically ask questions along the lines of: “Does this ship to Canada?” “Does it come in a size 6?” or “Does it go well with this other item I have?” When sellers are available to answer customer questions, they sell significantly more than those who don’t engage with customers during an auction, he says, without giving the exact sales lift.

Mobile shoppers pay for items within the app via eBay Inc.’s PayPal payments service. Kumar says he’s noticed that mobile shoppers tend to buy products that cost between $20 and $25, versus desktop shoppers who on average buy products in the $70-$80 range. “In general, when people are buying on the phone, they like to make purchases they can make a quick decision on,” he says. The iPhone shoppers so far also prefer fashion-related categories—though they’ve been buying more items in new categories like beauty and cosmetics as the marketplace adds them, he says. 

Online retailer NatureBox, which sells a box of gourmet snacks in monthly subscriptions, has been selling through TopHatter auctions every week since the beginning of the summer, says special projects director Andrew Knez. “It's a great way for us to show new and existing customers our snack selection, as well as interact directly with potential customers and even individuals interested in maintaining healthier lifestyles,” he says. “As more and more TopHatter members try our snacks, we've continued to see growth in auction sizes and in sales.”

The app also provides a seller dashboard for NatureBox to track its progress in auctions over time, Knez says.

TopHatter builds its apps in-house, Kumar says. Each of the iPhone and iPad versions took about three months to develop.

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