• PC World
• »Software
• »Browsers & Add-Ons

Excess inventory, limited local markets, modest advertising budgets... Small businesses face a tough challenge in any market--and in today's go-go economy, the competition is even rougher. Luckily, help awaits just around the corner, in the form of online auctions. Sure, hobbyists and junk addicts love them, but online auctions can also open doors for businesses of many sizes.

"I have customers from countries I can't even find on a map," admits Perry Calton, a collectibles seller from Lawton, Oklahoma, and one of Amazon's top-ranked online auctioneers. "I can be selling during prime time in England, or prime time in California. Online auctions give me a 24-hour business that works even while I'm sleeping." And it does work. Calton estimates that his gross reached six figures over an eight-month period in 1999, and he says that he expects to double or triple that figure this year.

Online auctions are hotter than the plains of Oklahoma in July--and for good reason. By selling to consumers via online auctions, businesses can boost sales, liquidate excess inventory, gain new customers without investing a ton of advertising or marketing money, and raise their Web visibility.

For small businesses, online auctions have become another sales technique, albeit an offbeat one. But you need a different set of tools for running a business-to-consumer auction than you need for handling a person-to-person auction. In particular, businesses require management software (to handle the deal's back end), low fees, and convenient payment methods.

Major auction sites provide some of those tools, and most try to attract high-volume sellers. For instance, Amazon offers an innovative payment method that lets buyers use their credit cards to close auction deals, without requiring the seller to have a merchant account--an agreement between a business and a bank for processing and paying credit card transactions. Yahoo, meanwhile, has begun blending its you-build-it e-commerce stores with its auction areas, letting businesses stock both spaces with the same goods so they can pursue auction and fixed-price retail selling strategies.

Success Stories

According to the sellers we talked to, online auctions work wonders. Mike Baker, a full-time online auctioneer from Springdale, Arkansas, runs more than 2000 auctions a week on three major sites, selling essentially one product: 8-by-10-inch (and larger) reprints of fine art. He wants to be a major player in his business, and with other online auctioneers now buying stock from him, he's well on his way. Antique dealer Lee Bernstein of Schererville, Indiana, uses Amazon's ZShops--a gallery of fixed-price online stores for new and used goods--to sell rare and out-of-print books.

Online auctions bring substantial benefits besides increased sales to the small-business table. With listing costs as low as 10 cents per item (and sometimes free), they're an inexpensive way to attract new customers. And if you already have an e-store, setting up a link to your own Web site at the online auction venue is a cheap way to draw eyeballs to your URL. "I'm getting more than 200 hits a day on my pages from auctions," says Calton.

But how can your business take advantage of online auctions? Years of experience with traditional techniques of selling might not help you if the closest you've come to an auction is PBS's The Antiques Roadshow. To find the best road to selling online, we picked the brains of several auction experts and four experienced high-volume sellers. We also took an extended look at six top business auction sites identified by Gomez.com, an independent online company covering e-commerce sites.

At each site, we evaluated the tools available for high-volume sellers, compared pricing structures, and gauged buyer traffic. We found that, while auction sites overlap in some features, they have individual differences that might make particular ones work better for some businesses than for others. Using the experts' advice and our own experiences, we've put together a step-by-step guide for using online auctions in your business--from picking the right auction site to monitoring the dollars as they roll in.