A penny auction business is a type of auction where participants place bids after paying a non-refundable fee. This type of auction normally never last that long as it ends in just seconds (10-20). Every time a small increment bid is made. The last participant to place the bid wins and he or she pays the last bid price. The retailer or the penny auctioneer makes money through the cost of placing the bids and the final bid price. This business just like any other business involves risks. Generally, it is tricky to start. So how does one start a penny auction business? This article highlights key tips and points on how to start a penny auction business.
What you did not know
- First, you must understand that penny auction business sells bids rather than products
- The business operates based on dollar auction theory. This theory involves two parties agree to bid or auction a dollar to the highest bidder, where the least bidder also pays but does not get the items.
- The business also operates on pay per bid model. This is where bidders pay for bids and in turn bid against each other until one bidder wins.
Steps to start a penny auction business
First, always prepare a business plan. It is always a requirement before starting a business to create a plan. A business plan helps you lay out key factors and objectives that you should work towards achieving. Now that you have the knowledge of penny auction business, you can create a penny auction business plan. If you know what a business plan is, then you understand how far it will boost your penny business. It will help you
- Calculate and estimate the costs including the startup costs
- Establish the feasibility of the business
- Have an overview of other competitors
- Set goals and objectives
- Identify the products or items, customers, and other services
The second thing is to obtain the auction software. The good thing is that after your successful creation of the business plan you can now acquire the right software that lines up with your objective and goals.
The third step is the establishment of the right items, products, or the merchandise. This is very essential as your customers’ trade on this merchandise. Therefore, aligning or having a plan for this is a good solution. Set how you acquire them, how you will get it to your customers once they win, among others. Therefore, it is highly recommended to provide all the necessary information on your website for them to see.
The fifth step is very important. Set out rules, regulations or policies, the terms and conditions. This should be evident on your site. They should be fair for competitive reasons.
After setting out the guidelines for your site, now it is time to market it. Employ marketing strategies to sell your site so customers can be attracted. Use SEO, social media blogs such as Facebook, twitter, LinkedIn, among others.
Finally, you have to provide good customer service. This should be seen right from your site. It should be user friendly, direct, and easily understandable. Your customers will want you to talk to them or respond whenever they need assistance 24/7.
Do your research properly before you involve in any business. Penny business is not an exception. Make sure you have what it takes, know the business, attain your merchandise, have a good website that is user friendly and provides good customer service 24/7. The tips on how to start a penny auction business provided above are guidelines and proper planning and research is essential.