How to Start an Online Auction Business?
How to Start an Online Auction Business?
In this article you will learn how to start an online auction business. How to develop a business plan and what should it contain, whether you need registration, how to make your own website and how much it costs, how to advertise online auctions and other important points.
Even if you do not plan to take out a loan or raise venture capital, you should draw up a detailed business plan for your project. So you can understand what kind of business you want to start and what is needed for this. There are no single correct rules for writing a business plan, but usually it contains the following information:
Branch analysis. Information about the state of the online auction market, with a focus on the region where you plan to work, and the prospects for the development of the branch as a whole and the niche you have chosen. It is important to understand the current state of the niche here, as this will determine the prospects and marketing policy.
For example, according to the PRWEB agency, the online auction market in the United States is one of the fastest growing and adds 12% per year in an average. The branch has over 130,000 e-Commerce and online auctions, employing 500,000 employees. At the same time, the branch has a relatively high concentration, since market leaders (eBay, Etsy and others) account for most of the sales.
These data indicate that the market is at the stage of growth, but it is already clear who will take the leading positions (if nothing changes). However, this does not mean that there is no place for beginners. On the contrary, as long as the market grows, any startup has a chance of success. But you need to choose the right business strategy: find a narrow niche and, like Amazon and Google, go from a specialized project to a global player that deals with everything.
Competitor analysis. In order to find such a niche, you need to analyze competitors: what niches are already represented and if users are satisfied with existing online auctions.
Such niches and by whom they are occupied in the USA and the EU:
You can understand whether users are satisfied by the reviews on the online auction website and in social networks, as well as by the site's Internet metrics: if the market (niche) is growing, and traffic and trading volumes are falling, then the site has problems and you can “snatch away" its audience.
Choosing a niche. Ideally, you need to find a niche that is not occupied by anyone. So you will have time to build an auction for small amount of money and bring it to mind. The problem is that there are no empty niches left in developed countries, so if you plan to start in the USA, Canada, Western Europe, Australia or Southeast Asia, immediately get ready for a serious fight with competitors, since there are no free niches left in these countries. That is, be prepared to spend quite a lot of money and effort on launching an online auction and promoting it.
Empty markets can be found in Africa, Eastern Europe, Asia and South America, so if you are planning to start an online auction business, it is best to do so in the regions listed. Such niches can be:
If you aren’t resident. If you intend to launch an online auction targeting a country where you do not physically reside, you need to obtain the status of a non-resident businessman. This is usually a fairly simple procedure that can be carried out without a personal visit to the country of registration. For example, in the USA it is easier and more profitable to do it in the following states:
However, it must be remembered that the individual entrepreneur has several very important disadvantages. So, if the business expands, then the legal entity needs to be re-registered - this is an additional effort and expense. In addition, if a business has debts, then an individual entrepreneur will be responsible for them with all his property.
Those wishing to protect themselves from these problems choose a corporation or limited liability company. In addition, the status of LLC or C-corp adds value to the business, making it more respectable and reliable in the person of users and partners. It's also easier to optimize taxes.
What documents are needed to launch an online auction in the USA:
There are three ways to create a website:
Here are some of the things that are included into such a campaign:
How to choose a partner is described in the article: «How to Choose a Marketing Agency».