The loss leader method has been around Ebay for a few years at this point, and has been working remarkably well for some sellers. For others, it doesn’t work so well. The loss leader method is, in a nutshell, auctioning off a high worth or high interest product at a very low starting bid to encourage traffic, excitement, bidding, and linkovers to your Ebay store. These have their pros and cons…

Pros of the Loss Leader Method:

  • More traffic to your other auctions and your store.
  • More bids on that specific item.
  • Inventory moves fast as you gain more traffic and sales
  • Sales go up
  • Interest is piqued in your store and brand
  • More email newsletter signups
  • Low listing fees for the loss leader item

Cons of the Loss Leader Method:

  • Possible loss of income if the auction is unsuccessful
  • Additional fees for the item listed on auction
  • Smaller or negative profit from individual item

Can you think of any more cons to this method? I can.

  1. Buyers might hold out until they find this item at a low cost. If you start the bidding low, it could drive the overall value on Ebay for that item lower.
  2. People who would have normally bought the item at full price will wait for the auction to end, and possibly not buy the item at all.

On the opposite side of things, the buyer could:

  1. Not feel like waiting for the auction to end, and buy the item right now.
  2. Bookmark your store. This wouldn’t have happened if you hadn’t offered the low starting bid on the item.

Ebay is getting pickier about items that are displayed prominently in the search results. Often times those items that are cheapest and have the lowest shipping (along with best seller feedback rating) will be given an advantage due to the “best match” search option.

Utilizing the Loss Leader Method Correctly

Done correctly, the loss leader method can yield some great results. As you can see above, the pros really do outweight the cons. With your loss leader auctions, you’ll want to follow some simple guidelines:

  1. Make the item something interesting, and something that’s in demand. Selling off a cheap item isn’t going to work. People want higher priced items at a bargain. Try slashing the price down to $9.99 or less.
  2. Link to your store in your loss leader auction several times. Better yet, link to an identical item in your store that they can purchase right now with free shipping. Or, link to a category of your store selling the same type of item.
  3. Create some enticing anchor text links that makes them really want to click it. Something like “Can’t wait for the auction to end? Click here to buy it now in our store with free shipping.” This works.
  4. Create some suggested items within the auction for them to click on. If you can add some thumbnails of suggested items at the bottom of your auction, this is likely to receive some hits. The Auctiva gallery store window also works well.
  5. Budget in your loss leader item as part of your advertising costs. That’s what it is, isn’t it?
  6. Don’t pull out all of the stops, but pull out a few. A small upgrade like the border feature, subtitle, and/or highlight might make your loss leader stand out.

So what do you do once the auction is over? Now, fulfill that order and make the buyer love it. The item will likely be receiving traffic even after the listing is over in the completed listing results. If they scroll back and see that the buyer left glowing feedback, there’s a good chance they’ll look at your current listings. Having links in your completed auctions to your store is an excellent idea, and might bring in some additional traffic.

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