An Online Auctions & Ebay Business Model - By Stephen S Alison

Since they began in 1995 Online Auctions have changed and are changing the way we shop and already are having a huge impact on consumer shopping habits and the work at home opportunity, by effectively creating a massive virtual marketplace where millions of people gather to buy, sell and trade the hot items of the day.

As a business, Online Auctions are probably the only opportunity that allows everyone the chance to play on a level playing field. Everyone involved in online auctions and eBay has the same opportunity to reach and sell to literally millions of people – whether they are just looking to make a few extra bucks a week as pocket money; hope to develop a thriving and profitable work at home business and earn valuable part-time or full-time income; whether they are a working Mom making a modest income; or a big Company with lots of inventory to sell.

A Conventional Business needs a fair amount of both Capital and Time to be established and organised before you can really start trading profitably. And if you were planning to manufacture your own product - then depending on your product design and manufacturing cycle - there can be a big time lag before your products are delivered to the buyers and consumers and turned into sales and revenues.

In order to start-up and run any conventional business, there are certain minimum requirements which must be met before you can open shop and start trading including but not limited to:

• Capital or Equity;
• You – including your managerial and organisational skills;
• Time – weeks or months or even years of advance preparation;
• Business Strategy and Plan;
• Financial Plan and Short-term to Mid-term Budget;
• Marketing Strategy;
• Business Premises including Location and Layout;
• Manufacturing Premises if you plan to manufacture your own products;
• Equipment – Office and Manufacturing;
• Personnel;
• An Inventory of Products to sell – either manufactured by you or purchased from a supplier;
• A Reasonable Advertising Budget;
• Banking Facilities;
• Trading Licences and Certificate of Incorporation;
• Customers;
• Other Requirements depending on your country and place of business;

But as an Online Auction Seller or Auctioneer there are really only 6 easy to meet requirements:

1. Registration with the online auction house or eBay. It’s Free!
2. A Little Computer Knowledge;
3. A Computer or Access to a Computer;
4. A Good AD;
5. A Valid Credit Card – for setting up your seller’s account;
6. A Valid eMail Address;

Once you have registered with the online auctions site or sites of your choice, you can begin to sell any product you want at a profit. Registration and the beginning of a successful business can normally be accomplished within 24/48 hours with:

• No Need for Capital – it costs about $0.30 to list an auction and the listing fee is normally billed monthly;
• No overhead or upfront costs;
• No Need for Sales Staff or Distributors;
• No Need for a Website;
• No Need for Business Premises;
• No initial investment required;
• No need to ship products yourself if you use established, professional drop-shippers;
• Millions of captive online auctions buying customers;

The Strategic Advantages of this business model are clear and beyond dispute:

1. No Time Constraint – Bids can be placed at any time, 24/7, seven days a week and l65 days a year. Items can be listed for up to 10 days at the discretion of the seller, thus giving purchasers adequate time to search, decide and bid. This convenience increases the number of bidders;

2. No Geographical Constraints – Buyers and Sellers can participate from anywhere in the world that has access to the Internet. This makes the auctions more accessible, reduces the cost of “attending” an auction, increases the number of listed items/sellers and the number of bids/bidders for each item. Also there is no need to ship items to a central location, reducing costs and the seller’s minimum acceptable price;

3. No Language Barriers – Buyers and Sellers can participate from anywhere in the world that has access to the Internet and in their own language.

4. Intensity of Social Interactions – The social interactions involved in the bidding process are very high as the bidders wait in anticipation hoping to “win” and many bidders bid primarily to “play the game” rather than to obtain the and product;

5. Large Number of Bidders – Online auction sites attract a large amount of traffic making them an ideal place to capitalise on readily available, widespread exposure for your product and/or company. Because of the potential for obtaining highly valued items at a relatively low price, the broad range of products and services available, the ease of access and the social benefits of the auction process, there are usually a large number of bidders;

6. Large Number of Sellers – Because of the large number of bidders, the potential for a relatively high price, reduced selling costs and ease of access, there are usually a large number of sellers;

7. Network Economies of Scale – The larger number of bidders encourages more sellers which, in turn, will encourage more bidders, which will encourage more sellers etc. in a virtual spiral. The more the spiral operates, the larger the system becomes and the more valuable the business model becomes for all participants;

Stephen S Alison is a retired "bean counter" who spent 26 years in middle management positions for major US financial institutions in Europe and a further 10 years as an adviser/consultant to a number of European financial institutions. He has traded successfully on eBay for over 2 years using the same strategies and tactics published in his websites:
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