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Best Buy's hotel auction represents growing trend

The first half hour, little happens. Hotel representatives sit at their computer screens with their own strategies and confidence that they've already submitted a fair rate.


As bidding time runs out, room rates on the screen drop rapidly -- in one dollar-, even 50-cent increments. The screen only shows the lowest bid and the ranking of each bidder's offer.

Reverse auctions like this are becoming popular for meeting planners and corporate travel managers to select preferred hotels.

Best Buy Co. Inc. conducted its own reverse auction last November and asked 27 hotels to participate. The invitation contained a time for the bidding, an ID number and password, the amount of room nights -- 9,000 to 10,000 a year -- Best Buy was to auction, and the assurance that its decisions wouldn't be based on price alone.

For businesses, auctions are a way to cut costs. Corporate purchasing departments are increasingly negotiating travel rates, often using the same software to buy hotel services that was designed to trade goods. However, hoteliers complain that their rooms are not a commodity and shouldn't be treated as such.

A rock and a hard place

Best Buy was surprised at some of the results from its auction -- its first for hotel rates.

"We pride ourselves on being good negotiators, but it was humbling yet exciting because we got lower rates than expected," Best Buy's travel manager Kerry Miller said.

Lower-end properties bid much more aggressively, Miller said, while higher-end properties stuck closer to their initially submitted rates. In the end, Best Buy chose four "upscale" Bloomington hotels as preferred properties for short-term travel: Radisson South, Wyndham Minneapolis Airport Hotel, Country Inn & Suites and Sofitel.

While they welcome Best Buy to the area, several hotel managers admitted that the auction created some bitterness and animosity.

One manager said due to the rate cut for Best Buy, the hotel won't negotiate group rates for other customers as low as before

Targeted Online Auctions
Creating Effective and Profitable Auctions
-By Sherlee Plett

Every day, 24 hours a day, 7 days a week, 365 days a year, millions of people from all over the world go shopping at online auctions. This is not an exaggeration - eBay, with a 76% share of the auction site market, reports 42.7 million users and a growth factor of 100% per year!

What are these auction buyers looking for?

A Harris Interactive Poll conducted on 2,196 people found that online auctions appeal to people mainly because they are looking for:

  • bargains (43 percent)
  • hard to find items (23 percent)
  • collectibles (21 percent)

    Not only that, 83% have actually bought something!

What are they buying?

They buy items in all sorts of categories, but not just anything sells. So targeted marketing has become crucial, especially since auctions have become a very serious business for many companies. And its not just sales at stake these days. More and more companies are using auctions to generate additional traffic to their websites and to make additional offers.

Here's the bottom line:

If you have what online auction buyers want and they can find your listing, you will get bids and you will get sales. The real task is figuring out just what it is they want. Beanie babies were hot years ago, but now you can't give them away. But there are some items that seem to always sell well, year after year. If you can work out what those items are, you can get off to a running start.

From a marketing viewpoint, online auctions are ideal:

The buyers are drawn to the auction sites by the tremendous number and variety of items available on the auction sites, so the problem of how to attract buyers is already solved. They are using the traffic generated by the auction site and the customers arrive in a receptive frame of mind. They like the auctions, looking at pictures and they enjoy the competitive bidding process.

So how do you cash in on this?

By using targeted online auction strategies that take full advantage of the buying habits and patterns of online auction buyers and the built-in categories found on the auction sites.

eBay, the auction site giant, boasts 3,000 categories of auction items! Their whole effort is to make it fast and easy for bidders to find the items they are looking for, to zero in on their targeted items. Essentially, these buyers self target. Most businesses have to find their buyers. At online auction sites the buyers find you.

Offering items in online auctions is easy:

You do not have to have a website, though serious auction sellers do have websites. You do not need to generate traffic with expensive advertising. It has already been created at the major online auction sites. Registration and set up is fast and easy. Fees for listings are extremely affordable. This is essentially instant e-commerce without all the headaches.

At its most basic level, the formula for selling at online auctions is simple:

  1. Offer something buyers want, specifically. You must have a specific target and product in mind, that you know sells well.
  2. Categorize and list it effectively
  3. Make a compelling listing
The setup is easy, the costs are low and the formula is simple. The problem is that it is so simple that there are literally millions of sellers each trying to sell to their target buyers.

So you need every advantage you can get so you can:

  • Offer products that consistently attract buyers.
  • Make your auctions stand out from all the others.
  • Effectively position and list your own products.
  • Price items to sell well and profitably.
  • Use multiple income streams and product lines to multiply your all of your sales and marketing efforts.
  • Capitalize on the huge numbers of people who look at your listings and gain exposure for other products and income streams.

Targeted online auctions give you these advantages.

There are many auction resource sites you can visit to learn more about online auctions and how they can provide you with multiple income streams and a boost to your online marketing efforts.

You can also learn the necessary skills and knowledge for using targeted online auctions by buying and reading the newly-released ebook: How To Make Money With Online Auctions - A Proven Method.

Article by Sharlee Plett.   Sharlee Plett is a published author, web designer/developer and is the webmaster of: Make Money with Internet Auctions.

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