Let me ask you a question: How many times have you gone on eBay and seen an auction that was selling a product for 1 cent? Well, I can honestly say that I’ve seen this hundreds of times – and people still do it till this day. What’s the “secret” behind these 1 penny auctions? Well, I will give you some insight into what these sellers’ strategies are.
But before I dive into their reasons for running 1 cent auctions, you have to understand something. Never copy a competitor or someone else not in your niche by running a 1 cent auction if you don’t know what you’re doing. Sure you may get sales (and you probably will get a lot of sales)… but what good are the sales if you’re profits still remain in the negative? So don’t do it if you don’t know what you are doing.
But like I said, I will reveal to you what some of these sellers’ strategies are so that you can use this technique effectively also. It will make sense when you learn what the strategy behind it is, and because of it, you will probably have the opportunity to earn the sales from it that other people are. Here’s the first strategy of the 1 penny auction:
1) Backend sales
“Backend sales” are sales from repeat customers. In any business (offline or online)… 80% of your total business profits will come from sales from your repeat customers. So the more you can sell to these people, the better. They’re free to market to, you can increase your prices, and they will gladly buy from you again because you’ve proven yourself to have quality items for sale.
Scale this technique up to marketing to your customer list for the next 2 years, and you could potentially earn hundreds if not thousands of dollars from your repeat customers… all from your 1 penny auction. But this isn’t the only reason that people run 1 cent auctions. Here’s another reason:
2) To drive up bids
I’ve seen reputable people on eBay sell the latest and greatest new cell phones, and they always start their auction at 1 cent. By the end of the 7 day listing, the cell phone will have sold for over $200… with about 30-40 bids on the phone. This is kind of a risky option, but more often than not, if you do you homework correctly and have analyzed your niche correctly… it could work more often than not.
Now you can always set a value at where if your 1 penny auction doesn’t reach AT LEAST a certain sales figure, you can discard the auction, and start all over again. The person with the highest bid wouldn’t be allowed to have the item. This is called a “reserved auction”.
1 cent auctions can lead to some good results if you have a great product, an attractive sales page, and a good strategy for making that auction profitable for years to come down the road. So keep these things in mind.
Good luck with selling on eBay today.