When Elliot Moskow, 21, was looking for a place to resell jewelry he'd purchased at police auctions, his first thought was to create an eBay storefront.
He did, but his items weren't sellingand he still had to pay listing fees. The cost was too great, says Moskow, a junior at Bates College in Lewiston, Maine.
Moskow wanted an alternative, so when a friend told him about Dutch auctionsan auction style that involves starting bids high and slowly decreasing them until an item sells or goods reach their floor priceMoskwo did the logical thing: He created an online auction site based on the Dutch-auction model.
"I thought to myself, that would be a great idea to open to the public," says the economics major.
Moskow teamed up with alumni Peter Schaefer and Chad Casey to develop the site, and after months of work, Pricefalls.com launched on Jan. 11.
Both buyers and sellers are able to benefit from the auction format, Moskow notes. Prices drop at a set interval, depending on the starting price, a predetermined price floor and the listing duration. Buyers get to watch prices fall on the items they want, while sellers have control over the final price of their itemsand they don't have to pay listing fees.
The new online auction site currently has more than 100,000 items listed, ranging from bath towels to movies and DVDs to sports memorabilia. Starting prices range from $200 to $15.99. Most of the listings are Moskow's. However, he plans to remove some of the items as more people list goods on Pricefalls.com.
"We don't want to compete with our customers," he notes.
A "good number" of regular sellers have begun to list on the site in the two months it's been online, and Moskow expects that number to grow steadily.
The building blocks of a site
Buyers don't compete in bidding wars like they do on auction sites such as eBay
Pricefalls.com's Dutch auction model differs from the one used by eBay. On that site, sellers set a minimum price on multiple identical items and buyers drive the price up by bidding on one or more of the listed items. The final sale price is determined by the lowest viable bid.
eBay recently acknowledged the selling format gets little use due to its complexity. The auction site announced plans to eliminate Dutch auctions in May.
A high initial bid and lower winning bid aren't the only things that make Pricefalls.com different and attractive, though, Moskow notes. Buyers don't compete in bidding wars like they do on auction sites such as eBay, and they can purchase goods for an item's current bid or price at any time, instead of waiting until the auction ends.
Sellers also decide the listing durationthe time during which an item's price falls until goods are sold or prices reach their price floor.
Moskow plans to launch a national marketing campaign in the next few weeks.
"We plan on expanding Pricefalls until it is a prominent player in the online auction community," Moskow tells reporters. "I believe that if the public takes the time to examine the Pricefalls model further, they will find that our concept is not only unique, but also more lucrative than that of our competitors. This being said, it will take dedication, hard work and time to build the Pricefalls brand into an empire like eBay."
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Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.