Better Than Clearance Sales E-Tailing’s Future Lies in Auctions

According to research done by Jupiter Communications, the future of e-commerce lies in the auction model. Jupiter predicts that online business-to-consumer auctions will move $3.2 billion worth of merchandise annually by 2002.

The interactive sales format that auctions provide will give online retailers better results in liquidating excess inventory than traditional fixed-price discounting, according to Jupiter. The $3.2 billion figure represents only business-to-consumer auctions, not person-to-person auctions such as eBay.

Among Jupiter’s predictions: the number of online auction purchasers in the US will grow from 1.2 million in 1998 to 6.5 million in 2002. While these purchasers will represent only 11 percent of the total online shopping population in 2002, they will prove very valuable to online retailers, because they will visit and buy from sites more frequently than the average customer.

“Online retailers will continue to have difficulty anticipating consumer demand for purchasing specific items online,” said Nicole Vanderbilt, senior analyst at Jupiter. “As they look to liquidate excess inventory, retailers should embrace the inherent interactivity of the Web and move beyond traditional fixed-price discounting to online auctions.”

Vanderbilt added that online retailers that take advantage of auctions would benefit from higher repeat-visit and purchase rates and greater promotional value.

Jupiter research also shows that 1999 will be the year that business-to-consumer auctions move beyond limited technology product offerings to a more diverse product mix. While online auction purchasers have been mostly male, technology-savvy users, the availability of other merchandise, including toys and apparel will attract a more mass-market consumer to the interactive sales format.

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