The short answer is “Yes”, and in this blog posting I’ll explain why. A few years ago, I remember eBay’s CEO, John Donahoe, saying something in an interview that caught my attention. He said that 70% of eBay’s revenue came from fixed-price sales; but that 70% of listings were still auction listings. I’m not from Missouri, but I wanted to see for myself, being the data-driven guy that I am. I did some research, in several categories, and I found this statement to be pretty accurate, at least as far as the number of listings that were auction listings. This is information that you, as a professional, results-oriented, profit-seeking eBay store owner/manager, can put to good use.
I retested this data today, which you can see the table accompanying this post. I tested listings in four product categories: tanzanite gemstone rings, digital cameras, “dog lover products”, and auto performance parts. In each case, “Buy It Now” (fixed price) listings greatly outnumbered the auction listings. For example, in digital cameras, there were 69,931 total listings, of which only 10,132 (14.5%) were auctions. So, being the astute observer that you are, you might expect that 14.5% of the listings you see on page 1 of search (or navigation) results would be auctions, right? Wrong!
In fact, of the 50 results on page 1, 35 of them were auction listings, and of the 50 results on page 2, 35 more were auction listings – exactly 70%, the same 70% that I discovered about three years ago, and the same 70% mentioned by eBay’s CEO.
Now, in retail, just like in real estate, location is everything. It’s difficult to have a successful retail store if it’s hidden in an industrial park. In e-retail, location is pretty important too, which is why we, as sellers, do everything we can to improve our listings’ positioning in search and navigation results (or SERPs as I call them, which is short for Search Engine Results Page). We want our customers to see us and our products. We need to be found to be profitable.
At this point it’s important to understand two things about eBay buyers (and this is true of Amazon buyers, and online buyers in general). First, eBay returns 50 items on a SERP. This can be adjusted by the buyer, but most consumers never change this setting; so they’ll see the first 50 “best matches” in eBay’s opinion. Second, “Best Match” is the default sort order, and again, most people never change this. Some people may change it to “lowest price first” or something else, but most people don’t. Another thing to remember is that, in ecommerce, many people never even scroll down on the first page, much less look at the second page of results. How often do you Google something, and go as far as page three? Most people would rather just enter a slightly different search query.
In eBay’s search algorithm, there is one more nugget of information that’s really, really important to understand. Auction listings and fixed-price listings are ranked and sorted differently. Like Google, they have their own “Quality Score”. Auctions use some different data points that fixed-price listings don’t: Time Remaining in the auction, and number of bids. One thing that we definitely do know about auction listings is that as they get closer to their ending time, they start rising in search results. An auction item will get more visibility just before it closes than at any other time.
In contrast, fixed-price listings will be most visible when they’re just listed, and have no history. If they get clicked on and convert, they’ll remain high in results; but if they perform poorly, they’ll start dropping in search results (remember, eBay doesn’t get paid unless the product is actually sold).
So, imagine that you have two items – two identical sapphire gemstone rings. If you listed one as an auction, and one as a fixed-price listing, the fixed price listing will appear higher in search initially, but as time goes by, the auction will eventually appear higher than the fixed price listing, not to mention that you now have twice the chance of being seen by potential buyers. And, if you have an actual “store” on eBay, if they click on one of your auction listings, you now have a chance to promote your store to them, where they will then see all of your listings – fixed-price and auction alike.
Here’s the really juicy information. If e-retail is about location, location, location, and being found, and 70% of a SERP page consists of auction items, then it really makes sense to have some auctions. Remember, as a fixed-price listing, you’re fighting the other sellers and their listings for about 15 spots on the page, not 50. That’s tough competition. On the other hand, if you have some auctions that are nearing their closing date/time, there’s a very good chance you’ll show up on page one, as one of those 35 listings, and you’re competing with far fewer listings overall. Going back to the digital camera data, there were only 10,132 auctions, versus 62,781 for fixed price.
So, you have a better chance of getting one of the 35 auction spots when competing against 10,132 other listings, than you do of getting one of the 15 fixed-price spots when competing against 62,781 other fixed-price listings. You always get some free auction listings each month on eBay anyway; you might as well use them. And even if you do substantially more, and it costs you more and it looks like you’re losing money on auctions, remember this: these auction listings are driving traffic to YOUR eBay store, creating awareness, and hopefully generating interest and sales from your fixed-price offerings. Think of your store as your focal point, or nexus, on eBay.
Going back to Donahoe’s 70/30, 30/70 point from a few years ago: When I did my research back then, I found that 70% of the page 1 and page 2 listings were auction listings, regardless of category. Digital cameras were exactly that, as we close out 2013, but there was variability in the other categories. In the tanzanite gemstone rings category, 76% of the listings on the first two pages were auctions; in “Dog Lover Products”, it was only 62%; and in eBay Motor’s Auto Performance Parts category, auctions were only 26% of listings. In each case, the auction listings on the first two pages were substantially greater than the proportion you might expect, based on the proportion of total auction listings to total listings in the category.
So my advice is this: Go to your category and duplicate my tests, so you know what you’re up against. Then, establish a routine of adding some auction listings. The actual number will depend on your resources, your SKU count, you category and competition. But your goal should be to have enough auctions that many more customers will be exposed to your brand, your eBay store, and your other listings, on a daily basis.