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Bonanza Secret Sauce: Seller Empowerment

The recent Internet Retailer Conference in Chicago was the first for Bonanza CEO Bill Harding, who flew from his company’s headquarters in Seattle to attend the show and, as he put it, “get the lay of the land.”

It was also the first face-to-face meeting with EcommerceBytes, and we had plenty of questions for the 33-year-old entrepreneur. The company Harding founded at age 25 is turning 8 years old and now employs 40 people.

Back in 2008, he found a receptive audience in eBay sellers who were unhappy with the controversial changes taking place. But as with all of the “alternative marketplaces,” Bonanza faced a major challenge: how would it attract buyers?

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Without inventory, there are no buyers, and without buyers, sellers lose interest – a classic chicken-and-egg dilemma for online marketplaces.

One way was through sellers telling their customers about new marketplaces. Another key strategy for Harding, one he thought would help him hook buyers, was providing “real-time selling.” It still exists, Harding said, but now it’s treated more as a “bonus feature” than a “cornerstone feature.”

“I think there were various factors that led to its ineffectiveness,” he said. “At the end of the day, there are a lot of sellers who run great businesses but aren’t regularly available to chat during business hours.”

Harding has no problem with sellers listing on other marketplaces. He told us about half of Bonanza sellers also sell on eBay; 20 – 30% also sell on Amazon; and about 25 – 30% sell exclusively on Bonanza. In fact, seller empowerment is now a key part of Bonanza’s strategy, and the Bonanza Broadcaster and a brand new tool called the Customer Marketing Tool are key.

Bonanza introduced its Broadcaster program in 2012 – it’s an ad platform that allows sellers to specify how much they’re willing to pay for exposure through Bonanza and through other channels. It’s explained on the site:

Bonanza’s advertising program is the main reason that our sellers make more sales than they could on any other marketplace or platform. We pool together the many places that buyers go to shop, and we publish (or “advertise”) your items to as many different buying channels as you like.

And unlike other selling platforms, Bonanza has no listing fees or upfront advertising costs. You tell us how much you can afford when your item pays, and our computers go to work making bids on your behalf to get your item in front of every possible buyer.

Harding called an essential piece of Bonanza’s sellers toolkit. He said it was Bonanza’s mission to get its sellers’ items in front of as many buyer eyeballs as possible. “Thus the reason we allow sellers to publish their items to numerous channels (Google Shopping, Bing Shopping, affiliate network, Nextag, etc) with zero time spent translating item format to fit each venue. We handle the busywork automatically.”

Meanwhile the new Customer Marketing Tool just launched in beta to a select group of sellers. “The gist is that we don’t agree with the marketplace orthodoxy of camouflaging the existence of the seller. Amazon is especially bad about this. If the seller is invisible to their buyer, then the seller will be forever dependent on Amazon’s buy box to make their sales. We want to help create sustainable, repeating customers for a business. The Customer Marketing Tool is going to give sellers the best possible means to make that happen.”

Another key challenge of being a “long-tail” marketplace is recognizing where a new item fits in the context of existing listings – 20 million items in Bonanza’s case, Harding said. “Is the item’s conversion rate going to be 10% or 0.1%? What other items is it most similar to? What do people who purchased it previously think about it?”

That’s why Bonanza has a catalog – to help buyers find what they’re looking for more quickly, and can get additional information about the item (i.e., product reviews, related merchandise) once they do find it.

“What makes Bonanza’s catalog different than Amazon’s is how items get placed. For Amazon, sellers often have to fill out a long form to get their item into the right place in the catalog. For Bonanza, we use a type of machine learning to recognize keywords in an item’s description such that we can infer where the item fits into the product catalog without a seller doing extra busywork.”

Many “eBay alternatives” have come and gone – mostly gone – so surviving 8 years alongside giants eBay, Amazon, and Etsy is no small feat. Bonanza is hosting a promotion to celebrate its 8-year anniversary that ends today (June 20).

While Harding admitted to having been attracted to entrepreneurship in part by the money-making potential, he said the longer he runs Bonanza, the more he enjoys it. “It’s pretty unusual to be in a position to make such a big impact on so many entrepreneur’s lives,” he told us.

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Ina Steiner

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. Send news tips to ina@ecommercebytes.com.


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