EcommerceBytes-Update, Number 132 - December 05, 2004 - ISSN 1528-6703     4 of 8

AuctionBytes Industry Profile: Dave Taylor, Consultant, Author of The e-Auction Insider

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AuctionBytes is running a series of interviews with people who have had an impact in the online-auction industry in order to get their views on the current state of the auction world.

Today we talk to Dave Taylor, who joined the Internet back in 1980 when it was "just a dirt road," as he puts it. Most interesting to our readership, Dave subsequently founded an online-auction search tool called iTrack in 1999. A year later he sold the company to an incubator and joined their executive team. He is the author of many books, including one of the first online auction books, "The e-Auction Insider," with his friend and colleague Susan Cooney.

Dave continues to write, teach and consult on Internet and small-business topics (http://www.intuitive.com), and operates a number of Web sites, including Free Web Money, a site that offers expert insight on monetizing Web site, affiliate programs, search engine optimization and more (http://www.free-web-money.com) and College Finances (http://www.college-finances.com) that offers unbiased information on personal finances for the college crowd.

He also runs a site called AskDaveTaylor.com where you can submit questions about online auctions, marketing, affiliate advertising and technical issues for free.


E-Auction Insider Dave Taylor

AuctionBytes: Tell us a little bit about yourself. What did you do before you became involved in the online-auction industry?

Dave Taylor: My first meaningful job was as a research scientist at HP's R&D Labs in Palo Alto, California. I put a lot of time into electronic mail and online conferencing systems and was very involved in the birth of the Internet, as it were, including the initial organization of the Usenet system. Then I left HP to do consulting and worked with a variety of companies. I also started to do some writing and worked with lots of different magazines. And somewhere along the way, I also started to get involved in the online auction business.

AuctionBytes: How did you discover online auctions and how did you become involved in them?

Dave Taylor: Actually a friend of my wife's said, "have you ever gone to this place called eBay?" and I said I have no idea what you're talking about, what's eBay? So she said, just go check it out: e-b-a-y dot com. And of course I said ok, and I went there and it was just like WOW, this is an amazing site!

AuctionBytes: Do you remember what year that was?

Dave Taylor: That would have been early in 1999.

AuctionBytes: You became more involved in the industry. How did that happen?

Dave Taylor: I can tell you the first thing I sold was a camera lens that I had tried selling to friends, and I had gone to some used camera-equipment place, and the best price I could find was $100. So I put up a little ad on eBay and I remember I sold it for $300. That instantly impressed me about what a totally different way this was to sell things, and obviously to buy things. In fact, I think I've sold more auction items than I've bought, which probably makes me an unusual member of the eBay community.

As I was getting involved with eBay, there were certain things that I thought would be interesting to keep an eye out for - collectibles of a certain category - and eBay didn't have any tools that would actually help you with that. This was before they introduced their own tracker system, so I built my own instead of waiting for them to get to it.

AuctionBytes: And what was that called? Oh, you built it for yourself first?

Dave Taylor: Yes, I built an auction tracker tool for myself and afterwards started talking to friends and showing them what I was doing. They were all extremely eager to use the service too. So I ended up turning the tool into a company called iTrack. Then I expanded the service to actually search across eBay, Yahoo, Amazon and I think there were about 20 different auction sites that it worked with at the time when there were a total of twenty different auction sites online. The idea was that you would just indicate that you were looking for, say, a '59 Mustang hubcap, and then it would figure out how to structure that query for each of the different search engines, run the query, figure out what was new versus the previous day's report and then generate a consolidated email message which would show you all the new matches across all the different auction sites. And it took off - it was a very, very popular service.

AuctionBytes: When did you actually commercialize it?

Dave Taylor: Late in 1999.

AuctionBytes: And you sold iTrack to Cosmoz in 2000?

Dave Taylor: Correct. I finally ended up selling the company to another organization that was basically an incubator and joined their team as an executive. That actually didn't work out very well because of some other executives who had a dramatically different approach to management, and I ended up departing from Cosmoz after less than a year.

AuctionBytes: Once you left that company, what did you do?

Dave Taylor: I got involved with other facets of online auctions. I was one of the people that helped found the Online Auction Users Association and was involved with that for a while. I'm an enthused entrepreneur, though, and there are times when groups move more slowly than I like, and I had a lot of ideas about how to make OAUA really rock and make it be a huge service for the online auction community and get it to where eBay could actually endorse it and such, but there were a number of other people involved who were more interested in it being more grass roots. So I ended up working on other projects.

AuctionBytes: Can you tell me a little bit more about your current business?

Dave Taylor: I have a number of different businesses right now. One of the things that I concluded after the whole dot com collapse was that diversification was a very good thing, which fortunately I had already done.

I am now involved in a variety of both technical and business book projects and I have two startups - one is called AnswerSquad (http://www.answersquad.com), another one is called ClickThruStats (http://www.clickthrustats.com). I also help entrepreneurs launch their own companies through Growing Ventures (http://www.growingventures.com). Finally, if that doesn't sound like I'm busy enough, I'm also constantly engaged in research with different Web sites in terms of search-engine optimization, online advertising, presentation of information and how to organize data so that people can find it, and that kind of thing. So I'm probably managing about 25 different Web sites right now. Most of them are more or less just experiments to figure out how things work, though I'm also working on a book on online marketing.

AuctionBytes: Sounds like you're doing quite a bit. Can you tell me what some of your most memorable experiences were in the online auction industry?

Dave Taylor: One of my most memorable from a business perspective was hitting the brick wall that is eBay. In the early days of iTrack, we had an issue where they decided that we were querying their servers too often and so they shut us down, but didn't tell us. It took about 10 days to finally find someone that would say, "Oh yeah, we turned it off and here's who you need to talk with." And they actually, at the time, were an absolute nightmare to work with, because they were the big huge monster on the little block, and they knew it. So they didn't want to talk to anybody. They didn't have any interest in interacting with any entrepreneurs, with any small businesses, any people who might have interesting additional tools or capabilities for auction users. The birth of iTrack was an interesting experience in that sense!

On the plus side, I would say that I've always enjoyed auctions in general, because I think they're terrifically exciting. It's exciting to sell something for far more than you thought you'd sell it for. And it's also exciting to buy something and win an auction, especially when you have people sniping, and yet somehow you squeeze by and you get it for (hopefully) less than your maximum budget.

AuctionBytes: How do you think the online auction industry has changed since you were first involved?

Dave Taylor: I think it's more formalized: It's more of a business now. There seems to be a lot less of the sort of spillover of enthusiasm from the people who are having a fun time just rounding out a collection or selling excess collectibles that they have. It's so big and so overwhelming, and there's so much now. I also think that the eBay affiliate program has changed the nature of online auctions too because now you search for things using a tool like Google, you end up finding all these affiliate sites that are designed to catch your search that then just point you to eBay auctions.

AuctionBytes: And is that bad? What's bad about it?

Dave Taylor: It's like being in a room with too many mirrors. If I was looking on eBay for something, I'd go to eBay and look for it, but when I'm looking across the Internet, I'm hoping to actually find multiple sources for something, rather than the same source on multiple sites.

AuctionBytes: And eBay is actually pumping up their affiliate program because it's profitable for them.

Dave Taylor: I have a friend who is making a remarkable amount of money through the eBay affiliate program. And I appreciate what he's doing. But he's not building Web site that are pretending to be their own auction site, or pretending to be storefronts for people that he doesn't even know, so there's different levels of this.

But even without getting sucked into that, I just don't really see much innovation in the auction space anymore. Back in '99 and 2000 when eBay was just getting on the radar screen, there were magazines coming out about how to be effective on eBay, and there were all sorts of private seminars going on and it was fun! There was a lot of enthusiasm and there were some people that by dint of just being smart were making some really good money. But now it seems like it's much more of a business and I guess that's sort of the inevitable evolution of eBay and of online auctions, but it just doesn't seem to be as exciting anymore.

AuctionBytes: Do you think that online seller are in a better position now than 4 or 5 years ago?

Dave Taylor: I would actually say no. And the reason for that is because I think that 4 or 5 years ago, the people that were good at selling were relatively unusual. Now, though, when you have a garage sale, you can see the eBay sellers descend. The people who come and look over your stuff and the question in their head is, "Can I buy this for a dime and sell it for a dollar?" And they're not looking for things for themselves, they're not looking for things for their friends who can't get out of the house because they're sick or something. They're looking to make a quick profit. And there are so many of those, and there are so many people who are going to those overstock job lot places and buying 500 of something and then selling them and such that I think it's really changed the nature of online auctions.

When you do a search on eBay, I think you're just as likely to find someone who is doing this because they went to some seminar that was advertised on an infomercial about how to make $50,000 a year on eBay as you are to find someone who is just an enthusiast. And there are plenty of stories of people who, for example, have antiques stores or old bookstores where they shut the whole store down and they just do eBay. And that whole evolution of professionalism - there's been a real change in the last few years. It's not that it's bad, it's just different and imparts a very different feel to eBay than what I remember from even four or five years ago.

AuctionBytes: Do you think there's room on eBay for amateur sellers?

Dave Taylor: Yes definitely, but I think that is a function of what category you're in: I think that there are certain areas where I would be more leery than I used to be about buying things.

AuctionBytes: You mean the categories?

Dave Taylor: Categories, yes. And there are some where I don't think I would even bother trying to sell things.

AuctionBytes: Can you give me an example?

Dave Taylor: Consumer electronics. I think that there's so much likelihood that someone is trying to rip you off and frankly I think that there are, if I may be blunt, criminals that are much more savvy now, so they'll go and rip off fifty stereo receivers from the cargo dock at Best Buy and then sell them all on eBay for a quick, untraceable profit. You have no idea where anything comes from.

AuctionBytes: Could eBay do something to try to make that situation better?

Dave Taylor: I don't know that it's really anything that they have control over. eBay is structured in such a way that the more you sell, the better you are presented on their auction site, but to some extent I almost wish it was the other way around. That there was the "eBay amateurs" side where your search results could, say, omit everyone that has a storefront and omit everyone that has sold more than $10,000 in the past year, because I want to find the little people.

One of the things that I've enjoyed when I've been doing auctions is getting into email dialogues with people. I'm sure you've done the same where it's like, "well you're selling this, but the one I'm looking for would have the #7 underneath." And they say, "Oh yeah it does, how did you know that? I got this 4 years ago from my grandma and where did you find out about this stuff?" You make friends through that kind of thing, but when it's a business and they have 2500 auctions going simultaneously, none of that happens.

AuctionBytes: Can you share a tip, trick or tool that helps you buy or sell on eBay?

Dave Taylor: My number one tip to anyone is that a good selling price is a result of perceived scarcity. This could be a huge epiphanous comment for people that are selling. If you're selling something that a lot of other people are selling, the first thing you need to do is search closed auctions to see what the average price is, and then go to the ones that have ended successfully with the highest final bid and study how the subject and description were written. There might be a certain word in the subject that people are going to search on, for example. Nonetheless, when I've been successful and made a solid profit as a seller is when I've offered items that are hard to find, are collectible or perceived to be collectible.

I think that's why I think it's difficult to actually be successful selling when it's something that's just a commodity. This is modern economics anyway, the commoditization of industry. For example I have these really nice little flashing Google lapel pins. My immediate thought was, "These will really do well on eBay" because this is a company that has gotten a lot of hype, a lot of publicity and anything with Google in it is something that is going to be eminently sellable. Add to that the fact that a flashing lapel pin is fun, an interesting novelty that will draw attention to the person who wears it. It'll make them look cool and hip. It's written all over the thing that this could probably sell easily for 20 bucks per unit, if not higher.

AuctionBytes: So you're skilled at presenting your auctions? Of course, you're a writer...

Dave Taylor: Well, I much prefer auctions where the seller tells me a little bit about what they're selling, makes it fun, and tells me why this is something that I want to own. By contrast, there are so many auctions now, especially from the auction listing tools, that have one sentence about the product and 15 paragraphs about the ominous evil things that will happen if you aren't the perfect eBay buyer. I think that's a huge disservice to the seller, because I'm not going to bid on an auction where the person seems to be so mean and cranky before we've even started. They can certainly say that they expect me to pay if I'm going to bid, and so on, but that can all just be the small print at the bottom of the listing after they've shown me and ultimately sold me on the product.

Think of it this way: You don't walk into a car dealership and have them say, "Before you actually take a test drive with this car, I really need to make sure your shoes are clean, and we need to run a credit check, and when was the last time you did a test drive on any vehicle anyway? Are you really going to buy, and how serious are you?" They're not going to do that, they want to sell the car. Once they've sold it, they'll start going over all the small print.

It just amazes me how many sellers just completely miss that.

AuctionBytes: Where do you see the online auction industry headed?

Dave Taylor: Bigger. Less fun. More corporate. I think that eBay has danced for years with trying to get corporate overstock and corporate refurbs into the eBay system. eBay is really the 800-pound gorilla. Just like Google is "the" search engine right now, I think eBay is "the" auction site.

Further, I think that eBay is going to have to decide whether it wants to continue to have the informal auction site that it more or less still has now or whether it's going to become this huge general online transaction site.

You know when they have non-auction stores and fixed price bids, it's just like Amazon. I mean is Amazon a book store anymore? It doesn't seem like it. Amazon is just a general eCommerce engine, and that's all well and good, but that means that it's opening up the opportunity for someone else to come along and build a better bookstore.

So the more that eBay loses their, "Oh you want to buy a Pez dispenser because you're a collector, just like my girlfriend," the more someone else can come along and do a really fun, really nice - modeled after eBay, sure - auction site that's focused more on the collectors and less on the businesses. When I search for laptops, I'm just as likely to get Dell corporate as I am to get "Mike" the guy down the street who actually has a spare laptop, and that's a huge change in the business of online auctions.

AuctionBytes: What do you see as some of the biggest challenges facing online auction sellers over the next 5 years?

Dave Taylor: Fraud and proving that you're not a fraudulent seller I think is the #1 challenge. In a lot of ways, it's being found. In some sense, eBay is a microcosm of the Internet as a whole with that challenge of being findable. The more you pay attention to how are people finding the kind of thing you're trying to sell, the more you're likely to sell it.

Also, eBay has an entire revenue channel focused at helping you differentiate your auctions through upselling you on all these little fancy listing doohickeys, but I would suggest that none of them are necessary. In fact, if you look at the successfully completed auctions for just about any category, very rarely will you see that people have paid the dollar extra for bold or five dollars for the yellow highlight or $3 for this or $20 for that. Most of these sellers have instead paid attention to what words people search on and what information they need to impart about their product. I would say, the challenge for sellers today and the challenges for sellers in 5 years are the same. To be found and to sell.


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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