From eBay to Bidtopia: Bargainland's Success Story

Bidtopia is born after high-volume liquidator Bargainland says bye-bye to eBay, which requested it to cut its business by 75 percent.

From eBay to Bidtopia: Bargainland's Success Story

Bargainland was one of eBay's highest volume sellers, reaching nearly 30,000 concurrent auctions in 2007. Many will remember eBay member Bargainland for its no-reserve, 99-cent as-is auctions. Everything from dog toys to kitchen furniture and eighteen-wheelers were listed by this eBay user in an auction format starting at 99 cents.

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Bargainland CIO Paul St. James told Ecommerce-Guide.com that Bargainland sold only stressed inventory; merchandise that otherwise would never continue on forward through the retail chain.  "Our diversity of products was literally everything under the sun, with no specific category or niche. We're talking about the lowest grade of store returns up to brand new merchandise that is discontinued from bankruptcy, or product that was on a train that derailed. We really had no clue from one day to the next what we would be selling."

Bargainland offered dollar no-reserve, as-is auctions, and this selling model quickly became very popular. Last year it landed Bargainland the title of the highest volume seller on eBay, with an ASP (average selling price) around 50 dollars. Bargainland's facility is an immense warehouse, housing over 60 people just to list on eBay as product arrives at the warehouse. St. James said that last year the company did tens of millions of dollars worth of business through eBay.

While this in itself is an eBay success story, unfortunately, new eBay policies and changes began crippling Bargainland's business.

The Trouble with eBay

According to St. James, Bargainland (which is also a company named for the popular eBay user ID), was greatly affected by changes at eBay. Policies on designer brand names, for example, limited Bargainland to listing only five of these items at a time, and in other instances, Bargainland was required to have a 98 or 99 percent positive feedback. St. James said that when you sell this type of product, even if you list every single item as damaged in the description, you just cannot achieve that high of a rating. The company also believed that eBay, through its new policy changes, was discouraging the types of listings that was the core of its business.

St. James told Ecommerce-Guide.com that they were asked by eBay to cut back the number of listings or change to a different type of auction. According to St. James, eBay wanted Bargainland to cut its eBay business by 75 percent. He said, "We were doing tens of millions of dollars worth of business with them, and really, how can you cut back 75 percent of that in three months?"

Despite the problems caused by eBay's requests, St. James said he is sympathetic to the reasoning behind eBay's new philosophy of moving toward more fixed-price listings, and he remains an eBay fan. So, he simply started adjusting his business model. Bargainland did comply with eBay's terms, and as its number of listings decreased, the company looked at other online auction sites, discovering that no one could handle its volume, or even a fraction of it. When using other sites didn't pan out, the company accelerated its own in-house development.

Bargainland's Own Site is Born

Within a month, Bargainland came up with a basic site to host its own auctions. Bargainland was still selling on eBay, but in greatly reduced numbers. From the moment the new site launched, St. James said it was successful, and over the next two months, the company focused on stabilizing the site and moving more of its listings from eBay to its server. Bargainland realized that in a short time it had met the ASP attained on eBay.

Laughing, St. James said he wished he could say that this has been the company's plan all along. However St. James said that achieving identical ASPs but with more bids per listing on its own site (compared to eBay) was a total surprise.

Bargainland didn't see any need to continue with eBay and switched everything over to its own servers — a marketplace that was developed and intended to be its private Bargainland 99-cent, no reserve auction site.

PowerSellers Come Calling

Word of Bargainland leaving eBay made its way through online selling circles, and calls started coming in from other eBay sellers, wanting to sell on Bargainland's site. There was one problem: the platform had not been designed to support multiple sellers, only Bargainland's own inventory. So, the company decided to give it a test run with a single seller who agreed to the mandate of only offering items in a true auction format starting at 99 cents.

What Bargainland found is that the test seller brought traffic in through his own channels and those customers not only bid on his items, but also cross-bid on Bargainland's products, increasing the company's ASP. The test seller coming in to Bargainland's site also reaped the rewards of Bargainland's existing customer base.

St. James said, "We tried it with one seller, and it worked well so that we moved to a beta program called 'The Dirty Dozen," which let 12 other sellers try the code and process in a rough state. These beta testers were satisfied with the results, so we moved forward."

The Result: Bidtopia

With other sellers onboard beta testing the site, it was apparent that the marketplace was no longer just a platform for Bargainland, but rather a group of like-minded 99-cent, no reserve sellers. To this end, Bargainland formed Bidtopia.com.

The company bought the source code for a dated, barely functional auction Web site and, using the Microsoft Visual Studio 2008 Professional Edition development system, rapidly modified the several-year-old application, launching the new site in a month. Bargainland is now updating Bidtopia.com to run on the Microsoft .NET Framework version 3.5.

Meanwhile, the biggest hurdle for Bidtopia so far, has been adapting the platform designed for Bargainland's own use to make it accessible to other big sellers.

St. James said that since Bargainland had its own API, they assumed other big sellers would also have their own to connect to Bidtopia. They soon learned, however, that many sellers did not have their own API, and many were using third-party tool providers who could not hook in to Bidtopia. This, according to St. James, has been the biggest stumbling block.
Fortunately, Auction Floor stepped in and launched its beta version of a tool that interfaces with the Bidtopia API, and in our interview, St. James indicated that several other tool providers have projects and betas in the works.

Better for Big Sellers

While this sounds like a viable venue for eBay merchants looking to leave or expand their sales channels, it's important to note that Bidtopia is not for the average small eBay seller. In fact, it's not even designed for the Bronze or Silver eBay PowerSellers.


Bidtopia
Movin' On Up: Bidtopia is born after Bargainland bids eBay good-bye.
(Click for larger image.)
Bidtopia is only for those who are doing enormously high volumes and want to clear out products with dollar no reserve auctions.  Bidtopia sellers must complete an application form and an extensive phone interview. Sellers are required to have a minimum of one-year of experience with auctioneering or an e-tail platform, and must verify the quality of their feedback and the quality of their inventory.

When joining Bidtopia, sellers must also sign rights that allow Bidtopia to come in and inspect their facility with a 24-hour notice. This, according to St. James, is to ensure the seller is a legitimate business with inventory in stock.  While the rules and regulations are strict, St. James believes this is key in ensuring a high level of quality and standards for sellers and buyers on Bidtopia.com.

If a person is not capable of conducting a PayPal or credit card transaction, St. James says that there isn't much value in having them on Bidtopia. To this end, every buyer must pay a 99-cent fee to join Bidtopia. This fee processing helps Bidtopia ensure that the person is capable of conducting an online retail transaction.

"If a buyer is suspended for any number of reasons, we can keep them off the site through their sign-up information and initial 99 cent fee. It's near impossible to join Bidtopia, get suspended and be able to register as a different user."

Bargainland, Bidtopia... What's The Difference?

Bidtopia is a completely separate company from Bargainland. On the Bidtopia site, Bargainland pays the same 2.75 percent final value fee, as other sellers do, and also receives no more priority than any other seller. On Bidtopia, Bargainland is now just one of several Bidtopia sellers. Auction search results are ranked by bid activity, and search results are not based, in way, on seller identity, according to St. James.

Currently the listings are predominately Bargainland's, but St. James said this will change, and he indicated that we can expect to see sellers on Bidtopia who sell even larger volumes than Bargainland.

Going from number one volume eBay seller, to selling on its own Web site, to forming a new company and auction Web for like-minded volume sellers, has been a long journey for eBay user ID Bargainland. St. James said the company's success is possible only because of its loyal customers on eBay.

"I doubt that too many other sellers really could have done this. Being the largest and having done this for 10 years meant that when we started out on our own, we had an enormous following of loyal repeat customers who purchased, on average, five items per transaction. Our customer base is what really enabled us to be successful on our own site, and now on Bidtopia."

Vangie Beal is a seasoned online marketplace seller, frequent contributor to ECommerce-Guide.com and avid online bargain hunter. She is also managing editor of Webopedia.com.

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