26 January 2009
Local e-commerce comparison site Jump Shopping chose bidorbuy as the best South African online auction site for the third year running in 2008. Bidorbuy attributes its success to a simple business model: make a website and allow other people to trade on it among themselves.
Established in 1999 for individuals to buy and sell their wares online, bidorbuy’s registered users passed the 300 000 mark by November, a growth of 40%, while average sales have risen from about R9-million a month a year ago to about R20-million a month currently.
About 80% of transactions are concluded in the auction format, the remainder being fixed-price sales. In line with perceived international trends, the company expects an increase in fixed-price listings.
“The move towards fixed-price items seems the logical next step,” says bidorbuy director Andy Higgins.
“After all, some people prefer to come to the site, browse, and buy. They don’t want to waste time on a lengthy bidding process at the end of which they may have nothing to show for it, because someone else might outbid them and walk away with the item they wanted to buy.”
Crazy Wednesday, Snap Friday
However, according to bidorbuy, their sellers do not quite see it that way: many maintain that they have a better chance of selling their merchandise, and at a higher profit, when they list them in auction format.
The buyers, meanwhile, favour the auctions starting from R1 with no reserve, which have become so popular that the company has dedicated two days of the week to such auctions: Crazy Wednesday and Snap Friday.
Most of the R1, no-reserve, items on bidorbuy are in the low to medium value category, though every now and then a seller will stage a surprise and raise everything: a two-bedroom apartment in Helderkruin, in Gauteng’s West Rand, closed at R390 000, having opened at R1 without reserve, while a second-hand Mercedes Benz CLK320 has also appeared on a R1 no-reserve auction.
“It must be emphasised that auctions are not an efficient way of selling all goods – they do not always work well for items whose price can be anticipated in advance,” Higgins says. “But auctions do excel when they are called to set the price for items of indeterminable value, for example collectibles or used items. In those cases, the auctions provide a very good dynamic pricing mechanism.”
All in all, the bidorbuy business model boils down to a very simple formula: make a website and allow other people to trade on it among themselves, the company says.
“As a company, bidorbuy has no contact with the goods traded on its site. It does not need to worry about warehouses and shipping and other complicated details.”
Bidorbuy also points out that its business model has shown unusual vitality in these times of the economic gloom.
“Up to a point, consumer-to-consumer online sites like bidorbuy.co.za thrive on recession, because that is when people come to the site to sell in order to improve their finances and to buy bargains in order to save on their expenses.”
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