04 April 2013
In a previous article we discussed several pitfalls many failed penny auction sites have fallen into. After a few months of penny auction watching, a few more things have come clearer as to what else can be problematic for a site.
In the end it all boils down to money, funding, planning, and staying the course with your plan.
A flawed and stale plan though tends to aid in a site's demise. When running an penny auction, your plan needs to be an agile one that changes with the ebbs and flow of a site's startup period. Let's face it, in the beginning, there will be a lot of bids purchased as all your members are new and will need to have enough to get aquainted with the process of penny auctions. This can be exciting activity for the site and the promise of a steady stream of purchases start dancing in your head.
Bidding will also be a flurry of activity in the beginning as well, so auction prices generally go above expectation. So you now have both a quite a few new members and maybe some experienced bidders on your site. Many of those new to penny auctions may stop bidding before buying more bids, or may only bid with the free registration bids or coupon bids. Your plan needs to account for these bidders to never purchase another bid on your site. If they ask for refunds, you need to have those funds on hand. Bids are an accrued currency, that or not expensed until they are placed on an auction.
ADVICE: Keep your site's bid back balance available at all times to know how much is owed if refunds are requested. Have this $$ available in an account at all times.
Although it is nearly impossible to predict bidding patterns on any one auction, or a particular item, or a particular day, you should have data available to monitor the auction history after a certain time period of being open. What is the demographics of your bidders... Young, older, senior citizen. All these things can help determine your bidders habits if your site is shipping and keeping bidders through advertising. A good script should provide you tools for these data analysis points. Are more bid packs only purchased when your site runs discounts, dealz, etc? Are more bids purchased near the beginning of the month (think Social Security income, or after bills are paid)? What time of the year is busiest for a site? Penny Auction industry tends to be slower after new years, and busier during the Christmas shopping season. Your site plan needs to adapt to these changing patterns if you want to survive.
ADVICE: Keep an eye on your site traffic statistics, utilize google, compete, yahoo analytics to determine some of this. Use script tools to analyze auction, products, bidder, and bidpack purchase data. Adapt auction site spending according to these numbers. Analyze other site data at places like AllPennyAuctions to get a better understanding of these numbers industry wide.