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EcommerceBytes-NewsFlash, Number 1420 - November 28, 2006 - ISSN 1539-5065    1 of 3

Overstock.com Addresses Changes on Auction Platform

By Ina Steiner
November 28, 2006

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The new head of Overstock.com Auctions is going "back to basics," causing third-party sellers consternation at some of the changes going on at the auction marketplace. Despite apparent fears on the part of sellers that Overstock may be "deemphasizing" or phasing out auctions, Stormy Simon said her job is to create a healthy auction business with a lot of pleased sellers. AuctionBytes spoke to Simon and her colleague, Meghan Tuohig, to learn more.

Stormy Simon took over the auction platform after J.T. Stephens left the company in September. Simon said, "We had a change in management, and new eyeballs on the site, new management means changes." One change that had auction sellers steamed was the addition of tabs at the top of Overstock.com pages that they felt overwhelmed the one and only tab that led to auction listings.

Does the design/navigation change put auction listings at a disadvantage? Simon says no. "Every section and department now has an equal playing field. Auctions have the same opportunities as Bed & Bath or Jewelry & Watches. So I'm not sure that I look at it as a disadvantage toward Auctions. We made the changes to our tabs to match our brand, it goes along somewhat with our commercials. It wasn't to de-emphasize any department, it was more to bring all departments to life." Simon said she could not share traffic data, but said, "When you look at consumer behavior, they like the new layout."

Another area of concern is the decision to remove seller IDs from search results pages. One Overstock.com auction seller said of the change, "Sellers fear that buyers will not want to open each item to see who the seller is."

Simon said she looked at some of the other auction sites, including eBay, and said their search results looked cleaner. "When I looked at Overstock Auctions search results, I found it messy." Simon said she also spoke to buyers and bidders of products, not just sellers, to get their take on what appealed to them visually. She said they also found it messy.

Bidders told Simon, "once you start to do auctions, you may become loyal to a certain auctioneer, but sometimes you're just shopping for product. There are those one-time buyers - if you need a big toolbox, and a guy sells tools, well you just might buy that toolbox from him that one day, but you might be buying rakes and stuff the next day, so you wouldn't go to the same seller."

Simon said shoppers can always search by seller if they are loyal to a particular seller. "We want to encourage people to click into the actual item and read the item description, people should be doing their research when they click into the item to read more about the seller. But we think the most important information is the picture, the title, the price. And the cleaner look offers a better overall user experience when you go to the search results."

Another change Simon is rolling out is the phasing out of the Trusted Merchant program, which was introduced in 2005. The program enabled qualified Overstock Auction sellers to become bonded through BuySafe, giving them the ability to guarantee transactions up to $25,000. Overstock.com will continue to allow sellers to participate in BuySafe's bonding service program, but Overstock will no longer have a separate branded program.

"BuySafe offers a service, that service is to bond sellers who qualify. That's a BuySafe offering. That's BuySafe's core business. In auctions, it's not Overstock's stance to approve or disapprove a seller." Simon added, "We're going to take a level playing field, and we're not going to trust or untrust any of our merchants. And to say trusted on one merchant is almost saying untrusted on the other."

Integrated search on the shopping site will remain, displaying items from BuySafe bonded merchants alongside core Overstock.com listings in the search results. Non-bonded auction listings do not currently show up in integrated search, and that will not change.

Overstock.com Auctions sent an email to sellers on Sunday announcing it was changing its policy to require Make it Mine prices be two times the auction starting price. Make It Mine is a fixed-price option on auction listings similar to eBay's Buy It Now feature.

Simon said that the site has become overrun with listings with Make It Mine prices only a penny or nickel above the listing starting price. She said that when the company instituted subscription plans, starting prices skyrocketed. "Sellers were not incentivized to begin to list their products at lower prices. They started meeting the MIM price, and that's the exact reason why the MIM policy was changed."

She said, "People can shop on Overstock.com shopping. Overstock.com auctions - I want to bring that back to a true auction model." Overstock.com Auctions is an auction site, Simon said, and "we want to make sure we have those auctions available to potential buyers and bidders."

When asked about the promised Stores feature, Simon said Stores are not forthcoming. "When I came in there were just some other pressing projects that we needed to get through that are buyer-facing. The Stores - I'm not sure those are going to bring more bids. And my goal is to bring these sellers bids. We're going to focus on anything that brings bids."

"When I talked to our buyers/bidders about the auction site, that's not something they said was going to entice them to bid. They didn't feel the Stores being there would make them bid more, or less, really, they felt it in the middle. I don't see any benefit - if I'm shopping for a camera, I'm going to search for it. I don't necessarily need a Store to go into. Is it off forever? No, but it's not on the top of the list."

Finally, AuctionBytes asked about what appeared to be underlying concerns from some sellers over the site's commitment to the auction platform.

Simon said, "Auctions need to organically grow. We can't force that. It's got to be organic. We have all these folks that visit our shopping site, and we're missing something if we're not delivering bids. So, we're going back to the basics. Let's let this baby grow organically. We've got this amount of people that shop at Overstock.com, and all we've got to do is get them one more click to Auctions. It think it's a possibility. I think we need to educate the Overstock buyer. And show them some of the reasons why auctions are fun, or auctions are worth their time, whatever it is. Now I don't have the answers right now as to why we aren't converting more traffic over to Auctions. But that's my job. Meghan and I are taking it very seriously."

"We think we can have a healthy auction business with a lot of pleased sellers. We can please them by creating technology to give them a store, and Make It Mine policy, or we can bring them bids. We think the sure win is to bring them bids, and that's why we're going to focus on these bidders."

"Could you just also let the auction community know, we truly appreciate them. And I think, we all think, the way we can make them happy is by bringing them bidders, and we have to listen to the voice of the customer that wants to buy the items, and we're just trying out new things. Whatever's going to work, is what we're going to stick with."

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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