Eleven years ago David Zinberg sold jewelry on eBay. After discovering just how difficult it was to turn a profit, in 1999 he launched his own site called Bidz.com. 

A true success story, Bidz.com offers consumers an exciting way to obtain unique, high-end and name-brand jewelry pieces in a live auction, rather than through a traditional Web store format.

Leon Kuperman, the company president and CTO, says that the online live-auction platform really appeals to people. Consumers receive auction details only hours or minutes before the auction end time, not for days as on eBay and other online auction marketplaces.

According to Kuperman, Bidz.com traffic exceeds one million page views each day.  The company ships between 8,000-12,000 items per day, and in 2008 sales reached $207 million. Most recently Bidz.com ranked second in Internet Retailer’s Online Jewelry Category and number 71 in the Top 500 Guide of the largest e-retailers.

Turning a Profit with Dollar Bids

The big incentive for consumers to buy on Bidz.com is that they can bid on jewelry with just a dollar – and we’re talking jewelry that typically retails for tens of thousands or even hundreds of thousands of dollars. At any given time you can expect to see 2,000 or more items open for bids on the site.

Bidz.com turns a profit even when selling product below market value because the company buys direct from manufacturers—this includes distressed products, manufacturer overruns and closeout merchandise.

Kuperman said that the dynamic-pricing business model is why Bidz.com can offer such extreme value to its customers. Offering well-known brand names on the site helps bring repeat customers back to bid and purchase.

Fixed-Price Shopping

Last year the company launched a fixed-price online Web shop at Buyz.com. Here, consumers not interested in using an auction-style platform can buy the company’s products at fixed prices.

While auctions are an exciting way to shop for jewelry there will always be consumers who want a good price but don’t want the hassle of going through an auction buying process. Kuperman said that Buyz.com publishes only in-stock merchandise, and the site offers anywhere from 6,000 to 12,000 items for sale.

Bidz.com (Click for larger image).

Marketing Tasks and Lessons Learned

In previous years, Bidz.com was open to other sellers via a merchant program, but the company found that by having only one predominant vendor on the site it increased consumer trust.  While the site no longer offers a merchant program, it does partner with several vendors in categories that Bidz.com, doesn’t cover, such as the fine art category.

Bidz.com also offers Web publishers affiliate revenue opportunities through a number of popular affiliate channels including Commission Junction, Zanox, and LinkShare. The company tends to focus its marketing messages on product types and specific brand names— something it believes is crucial to repeat customer sales.

Bidz.com also invests in another e-commerce trend: shipping deals. “It’s difficult to offer free shipping when you start an auction at just a dollar,” Kuperman says. “If an auction ends at a low price, adding free shipping on top of that really cuts into profits.”

Instead, Bidz.com offers its customers free shipping on a combined three-item purchase totaling $100 or more, between the Bidz.com and Buyz.com sites. The company uses other marketing incentives including time-limited gift certificates it sends out to its subscriber list.

Kuperman attributes the company’s overall success to being a trusted vendor with brand name jewelry at low prices that drives repeat customers.  Promoting the brand name merchandise is the company’s primary marketing incentive, followed by gift certificates and other promotions.

New Features and Focus on Customer Service

Bidz.com has certainly changed over its ten years of doing live auctions online, and Kuperman says the company is always tweaking and improving its business.

One newly added feature is a concierge service. A phone number listed on the auction page lets customers call in and connect with a jewelry specialist who immediately answers any questions about the item. The company is also planning to increase its customer support line to 24/7 support.

Kuperman says that in the coming weeks Bidz.com will also introduce video streams in the auctions to give consumers a more realistic view of the actual item on offer. He said they’ll incorporate the video streams into the high-end product listings first, and then roll it out to all items.

In a less-than-stellar economy, jewelry sales tend to go down, and Bidz.com is facing the same economic issues as most companies in the jewelry industry.

Kuperman believes this is the perfect opportunity to tweak the business, and the company is changing to meet new consumer demands. This includes offering a better mix of product, increasing customer support and rolling out new consumer-friendly features.

Vangie Beal is a veteran online seller and frequent contributor to ECommerce-Guide.com. She is also managing editor of Webopedia.com. You can tweet with her online @AuroraGG.