Sales Conversion Rates Question

[cb-boards]

We are in the process of trying to increase our sales conversion rates;  taking the ultimate end price that an item goes for in an auction out of the equation, does it make a difference ONLY with respect to the sales conversion rate whether there were 10 bidders or 1?

For example, if I list an item with a starting price of $9.89 and it gets 1 bid,  hypothetically might it be ultimately better if I were to set a lower price of $0.99 and get 10 bidders who bid the item to $9.88 as getting 10 bidders for an item has a more positive effect on my sales conversion rate then the $0.01 I would have made otherwise?  Or does the number of bidders in an an auction NOT make a difference towards the sales conversion rate & it is immaterial towards the rate regardless of whether you had 1 bidder or 100?       

[mr_lincoln]

@cb-boards  Good post & question.  For myself and collectibles I generate the Auction starting price this way, understanding somethings you may own and are selling and others are a buy and re-sell propostition.

1. Item Cost (if any)

2. Add 13% to cover eBay & PayPal Fees

3. Add 15% estimate for year end tax reporting (sales are earned income)

4. Add Profit you want to make

5. Use Calculated shipping, Buyer pays

Add all that stuff together and what you get is the starting Auction price so if you get 1 bid you are happy.  If you get more bids ... well, you are happier!  Happy is good.

Now the other important thing in re-sell situations is to research a purchase to determine what the max amount is you can buy it for and still sell it for a profit with the above costing structure.  Most of my re-sale items I buy online from local estate auctions ... I put up my max bid and then let it ride.  Just had one close last night ... I won 5 out of 9 items.  With about a year of experimenting with this approach I am basically doubling my money, which is better interest than any bank can offer.  Most money takes 10 years at about 7.2% interest to double with compounded interest.

The other thing I recently started to do is taking items that have sat unsold here for about a year to a local live auction house (2.7 miles away) and letting them sell it on consignment.  These are items that were from lots that already turned a profit so ANY $$ I get just increases the original lot profit by a couple bucks.

Good luck to you.

[tellmemama]

Fundamentally I really don''t think it makes a difference how many bidders you get.  Granted those extra eyes could very well check out your other items which would generate additional sales.  But what would you do if instead of receiving the one bid of $9.89, you get one bid of $.99?

Always do what's best for your business and not what eBay suggests.

[cb-boards]

I appreciate the response but I'm looking for more info on how the bidding process effects the sales conversion rates which ultimately effects the visibility of my products rather then what is the best pricing strategy.

We are in the process of changing around the product lines we sell.  We still have a fair amount of product that we are not going to focus on going forward but too much stuff to just throw away.  I am less concerned about generating a return on my investment with that product line but would just like to get a return OF my investment so I can use that revenue to buy more of what we want to focus on.  I also really want to focus on obtaining optimal visibility of my products hence the question about sales conversion rates.   So we are using auctions to sell off our inventory we don't want to focus on.

Ultimately my question comes down to this; if my ONLY concern were the impact an auction has on sales conversion rates, does it make a difference whether there are 1000 bidders or 1?  If the more bidders an auction has yields a positive implication on the sales conversion rates then I'm happy to use very low starting prices.  If the number of bidders is irrelevant ONLY with respect to the sales conversion rate, then I will use higher prices.         

[cb-boards]

I would take the loss. 

[cb-boards]

I would probably only start an auction at .99 on items I am highly confident would generate more interest but it selling for .99 at the time the auction ens is not an impossible scenarion to envision, just a highly improbable one.

[scstool]

OP,

Auctions do not get the traffic they used to so it can be a dangerous game with .99 auctions. I knew a very large machinery dealer in LA years ago that would start all auctions at $.99 because he knew everything would sell. It's just not like that anymore except for very high in demand items which also attract the scammers.

Of course when there are a lot of bidders you see "auction fever". But that is no longer a reliable sales model. But it very much depends on the type of items you are selling.

[bubbleman2010]

It all depends on the merchandise being sold. Low to no demand in auction is one bid one kill stuff with the bulk of that being overpriced right out of the chute and just dead in the water for 7 days...

[cb-boards]

Thanks for the reply; I'm really less concerned about price at the moment and more concerned about the impact (if any) the number of bidders in an auction has on a sellers' sales conversion rates.

[bubbleman2010]

Impossible question to answer without knowing what the merchandise is...

[scstool]

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@cb-boards wrote:

Thanks for the reply; I'm really less concerned about price at the moment and more concerned about the impact (if any) the number of bidders in an auction has on a sellers' sales conversion rates.

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 A little confused why you are less concerned with price. Selling price is the stake in the ground for profit although others argue acquisition cost is everything. It doesn't matter if someone paid you to take their product if you can't make a profit.

Basic math would tell you that more bidders gives you a higher selling price. But that selling price can still represent a loss.

I am fairly confident you will have a higher "conversion rate" with $.99 starting prices.

But conversion rate by itself is meaningless. Only profit matters. Otherwise it's dumpster time.

I think the true answer with "dead inventory" is what is the shelf cost of keeping it, versus the profit (if any) of selling it vs. the write-off? Part of deciding this is how much would you make off of your shelf space with a better performing product.

[cb-boards]

My question is whether or not the number of bidders in an auction impacts the sales conversion rates.  I don't see as to how it could possibly matter whether or not the auction is for a TV set, a set of tires, or a dress.

[18704d]

Well, I have seen auctions, where one bidder has continually bumped up their bid,

with no competition

So that anyone scanning the page will see 10 Bids, and not bother opening the listing

because they believe it's in a bidding war.

Is this what you're wondering about, too?

Lynn

[cb-boards]

For the sake of this question I am only concerned with the impact the number of bidders has on a sales conversion rate. Ultimately of course profit is what matters. This is self-evident.

If I can drive my sales conversion rates higher then this will enhance my visibility of the stuff I want to focus on and ultimately generate more sales and more profits. This is my end goal. I simply want to know if having an auction that attracts a lot of bidders has a more positive impact on my sales conversion rates then an auction with 1 bidder.

[18704d]

"For example, if I list an item with a starting price of $9.89 and it gets 1 bid,  hypothetically might it be ultimately better if I were to set a lower price of $0.99 and get 10 bidders who bid the item to $9.88 as getting 10 bidders for an item has a more positive effect on my sales conversion rate then the $0.01 I would have made otherwise? "

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And of course, you can run your own tests.

List a dozen or so, each way, and study the results.

Lynn