Best practices for selling vehicles online

Publish Date: 
May 26, 2010
By Arlo Redwine

According to R.L Polk, people are registering about three used motorcycles for every new one. During the height of the last sales boom, this ratio was closer to 1:1. Frugality is on the rise. Consider also the growth in e-commerce — and how it’s taught people that anything can be shipped — and you begin to see the value of eBay Motors.

Dealernews spoke with experts and dealers about best practices for selling units on eBay as a regular practice — not just for getting rid of junk (not that there’s anything wrong with that). EBay itself has a wide range of tutorials. Click on “eBay Motors” on its home page and see the links underneath “Sell” in the upper-right corner, especially “eBay Dealer Center.” You’ll find schedules for free webinars and classes held nationwide.

Now for what we learned:

Listing software. You’ll need it. Templates save time, and software is the only way to get bidder contact info (name, telephone number, e-mail and address). Last spring eBay changed the name of its free software from Carad to Dealer Center. It dropped motorcycle support but soon reinstated it. Its software doesn’t support other types of powersports units.

Auction123 is the maker of the most popular third-party software supporting automobiles, motorcycles and other types of powersports units (others include Auctiva, AutoRevo and Vendio). Unlike eBay, it offers a multichannel inventory management system for listing on your website, Craigslist and CycleTrader.com, or for e-mailing listings to prospects. Also unlike eBay, after a dealer enters the year, make, model and trim, the software can automatically insert specs for bikes going back to 2004.

Dealers new to Auction123 qualify for a free trial period for eBay listings. Afterward, they can keep trying out the software for $9.95 per listing. If they like it, they can choose among packages that start at $149 monthly and may include unlimited eBay templates, Craigslist templates, inventory exports, a website showroom and data imports. Prices do not include listing fees.

Like eBay, Auction123 consults dealers. The company’s Tracy Roche, in fact, gave us an overview of how dealers operate. She also suggested a client, Harley-Davidson of Mason City in Iowa, as an ideal seller. The store’s online sales manager, Trisha Hagin, walked us through a typical sale. Let’s go in order, shall we?

Prep, photos, videos. Bikes intended for eBay should be cleaned and polished. Mason City even reconditions minor blemishes. EBay tutorials explain how to photograph units. Suggestions: shoot early or late in the day with the sun at your back, make the vehicle fill the frame, use simple backgrounds, and include odometer and VIN shots. Each listing should have at least 12 to 15 photos, but you can upload many more — up to 300, for example, when using Auction123 software. Studies have shown doing so is worthwhile.

Mason City has built a studio for pictures and video. Hagin says the store spent about $1,000 to have lights with multiple stages installed, and about a grand for a rotating motorcycle stand. Other equipment: a 10.2-megapixel DSLR camera, photo-editing software, a $400 camcorder, a tripod and wireless microphones. The backdrop is simply a dealership wall that’s been painted various colors over the years (see photos below).

Hagin believes YouTube videos inserted into her Auction123 listings are invaluable for building buyer confidence. “You can airbrush a photo; you can’t airbrush a video,” she notes.

Members of the Mason City sales team present the bikes in a fairly standardized way. They spin the units, pointing out features and accessories. They mention several times the store’s toll-free number and that the unit can be shipped to anywhere (Hagin says shipping to even California and other countries isn’t difficult — you just have to know the rules). Then the sales reps start up the bike and rev the engine. “There’s nothing better to create an emotion,” says Roche of Auction123.

Mason City’s videos are usually two and a half to three minutes, but nothing’s set in stone. “We’ve currently got a bike on there with a seven-minute video,” Hagin says, “but the bike also has a laundry list of rewards it’s won. So sometimes it takes longer to get it done right.”

Clean Harleys comprise most of the store’s used inventory, but when a bike has issues, they’re fully disclosed in the description, video and pictures.

All Mason City’s eBay listing titles contain the words Watch Video to catch the eyes of browsers.

Listing on eBay. Hagin lists all the dealership’s used motorcycles on www.harleyofmasoncity.com but only a portion of them in its eBay Store dedicated to vehicle sales (user ID hdofmc). Because she uses Auction123 templates, the listings are nearly identical-looking. In fact, looks, more than time-savings, attracted her to the software. “I’m very proficient in HTML,” she says. “Auction123 just made our stuff look cooler.”

For her regular eBay inventory, Hagin uses seven-day auction-type national listings with a starting price of $1 and a reserve set at the full sticker price, which she estimates using NADA and Kelly Blue Book while considering local market conditions.

When it comes to listing on eBay, Roche says the biggest mistake a dealer can make is setting the starting price too high. Dealers who don’t start low usually get bad results, she says. “Let’s say it’s a $10,000 bike. They’ll put up a $10,000 Buy It Now and start the auction at $9,500. They won’t generate many bids with a pricing strategy like this.”

On the other hand, using a reserve, setting the starting price low, and not adding Buy It Now often creates a bidding frenzy.

According to Roche, dealers should be consistent in their pricing across various marketing channels. So, for example, if a person bidding on a particular eBay listing goes to your website to learn the asking price, he or she shouldn’t discover that it’s lower than the hidden reserve.

EBay tells sellers to monitor the time and day their auctions will end. Most bidding is done on the auction’s last day, so it’s best to schedule auctions to end during the weekend in the early evening on the West Coast.

Hagin uses no-reserve auctions and Buy It Now listings (sometimes with Best Offer) only for units she wants to get rid of quickly. Unusual trade-ins like boats, for example — or metric units. “We don’t want them cuddling with the Harleys and giving customers bad ideas,” she jokes. In this way, eBay allows Mason City to accept a wider variety of trade-ins.

This past spring, eBay raised the insertion fee for listing a motorcycle or other powersports unit from $15 to $20, while lowering the successful listing fees. These back-end fees went from being always $80 to being $30 when a unit sells for $5,000 or less, or $60 otherwise. A dealer’s first four listings every 12 months carry no insertion fees but higher back-end fees ($60 for units that sell for $2,000 and less, $125 otherwise).

So seemingly eBay lowered the costs for selling. But according to Roche, many auctions result in an offline sale due to the reserve not being met during the auction. In these cases, the large decrease in the successful listing fee does nothing to alleviate the modest insertion fee increase.

Hagin closes just one unit on eBay every few months. Most of the time, either somebody contacts the dealership to buy the bike immediately (and Hagin cancels the listing), or the reserve isn’t met.

Hagin isn’t closing outside eBay intentionally. “It’s just the way it works out,” she says. “A lot of people don’t want to mess with the bidding process, but it’s a good advertising venue.”

EBay’s Anson Tse contends that most dealers do close on eBay. “We always advise sellers to close online because that gives the buyers additional benefits,” he says. The company’s Vehicle Purchase Protection program provides up to $50,000 in buyer’s protection. EBay also assists dealers closing online if they unknowingly misrepresent a vehicle. And then there are the benefits of positive feedback. Dealers receiving it on registered sales could qualify for the perks that come with becoming PowerSellers and Top-Rated Sellers.

“We do know that the dealers who close online end up having more satisfied buyers,” Tse says.

EBay also raised the fees on many optional features for listings. Even so, Hagin says they’re well worth the money.

Is she unhappy about the cost increases in general? Naturally, though she’s not angry. “It’s going to affect how many bikes I list at a time,” she says. “Some of our aging inventory may not get run as often, but adjustments are part of life.”

She notes that the price of postage has gone up several times since eBay last changed its prices in summer 2008. Before then, eBay charged $30 for an insertion and $40 on the back end.

We’ll take a closer look at the closing issue in the next section, where we’ll explore how to get the most out of your listings once they’re up.

But first we should mention the local classifieds eBay launched in April 2009. The first six listings are free. The next six listings are $10 each. All listings afterward are $15 (reduced this past March from $30). Dealers can post 24 photos for free, and there are no successful listing fees. In November 2009, eBay expanded the exposure of the listings from 100 miles to 200 miles.

“We do see a pretty good adoption and positive reception of the local classified format,” Tse says.

Hagin, however, prefers national listings. “We do a lot of local advertising as it stands, so it’s not something that’s terribly high on our priority list,” she says. She sells one or two bikes per month due to her other local listings on Craigslist and CycleTrader.com. On average, she sells about 24 motorcycles per month due to eBay, about half of which are sold to out-of-staters (she sells about 50 units per year to other countries). Margins are a little bit lower than normal, she says, but using eBay doubles her used-bike sales, so it’s worth it. (Continued on page 2.)

 

Bidders as leads. Notice that we say “due to eBay.” Again, many dealers use eBay mostly as an advertising venue. “I don’t look at eBay as being just a selling tool,” Roche says. “I look at it as being a huge lead generator for the dealer.”

On average, a motorcycle sells every eight minutes on eBay. This equates to about 5,500 units per month, 66,000 per year. But these are only the sales closed on eBay. Many more motorcycles, apparently, are sold due to eBay. (To see how many are now being advertised, click on “Motors,” then “Motorcycles.” Go to the left bar to break it down further by dealer and private-party listings. You’ll see all national listings but only the local listings within 200 miles. On a Wednesday in mid-May, there were 2,250 bikes listed by dealers and 5,019 by private parties.)

EBay recommends contacting all bidders to ensure they have financing. Roche suggests calling them because they’re good leads. “Even if the bid isn’t close to the amount they want for the vehicle,” she says, “the dealers call the bidders. They ask them, ‘Do you need any more information on this vehicle? Is there anything else that I can help you with? What are you looking to spend?’ And then, in the event that the particular vehicle listed isn’t in the person’s price range, they can offer other inventory.”

Roche says dealers often list units specifically to attract leads. Her suggestion? “Really assess your inventory before you start throwing it up on eBay. Determine what vehicles you have multiples of in varying years and conditions. List the nicest, newest one. Throw a reserve on it; don’t put a Buy It Now; set the starting price low. Then as you’re calling up the people, at least you have another arsenal of inventory that’s similar to what you listed.”

In this way, dealers can sell multiple bikes due to one listing. A sportbike dealer, for example, could use a clean late-model CBR1000RR to sell other literbikes.

As a seller of mostly clean Harleys, Hagin doesn’t bait customers in such a manner, but she does see how a metric dealer might. She also balks at the idea of contacting all bidders, instead contacting only those whose bids are close to the reserve. “If the bid is very close to what we want, then we’ll bug the hell out of people,” she says. “But if it’s not, then why bother? If they were that serious, they’d be calling us, too.”

Roche says that when speaking with bidders, dealers should never volunteer the reserve price. But they should reveal it when asked, she adds.

In addition, Roche says, dealers should never mention the current bid because the bidder may be using eBay’s proxy bidding feature in which eBay raises the bid automatically each time the bidder is outbid, to a certain amount set by the bidder. Roche tells dealers, “When you call bidders, don’t ever say something like ‘So I got your bid for $25,000. How much are you looking to spend?’ because you don’t know that guy actually has his proxy bid set up to $32,000. Now you’ve just kind of locked him into $25,000.”

Dealers can lower the reserve on a bid until 12 hours before the auction ends (when they can no longer end the auction, either). When they do, eBay sends every bidder an e-mail about the change. Marketing-savvy dealers always lower the reserve about a day before the auction ends. “We generally lower it by a buck,” Hagin says. “It’s going to send out the same e-mail whether you lower it a buck or $500.”

Dealers with eBay Stores also can use the e-mail marketing functions that come with them. Roche even suggests collecting bidder contact information for targeted campaigns. “It’s about forming relationships on a national level with people,” she says. “If last month you had a motorcycle up on eBay and this month you happen to have something similar, you can target an e-mail campaign at all those people.”

Roche says eBay leads are particularly valuable. “These are people who are actually performing an action,” she says. “They’re placing a bid on something.” Auction123 software can integrate with a dealer’s CRM software.

Dealers also can use eBay to promote their own websites. They can link to their sites in their “About Me” page as long as the links are not accompanied by verbiage indicating that sales are conducted there. Within vehicle listings, dealers can link to a financing page on their sites as long as the page has no links to pages where items are being marketed. And most eBay users are smart enough to just type in the dealership’s name into a Web browser.

Dealers can improve buyer confidence by having professional-looking websites with testimonials, like Harley-Davidson of Mason City’s. “We’ve been in business since 1972, and our reputation is everything,” Hagin says. “We’ve gotten customers who refer their friends over to us even when they’re out of state. They’re like: ‘Deal with these people. They’re the best.’”

Because of Mason City’s reputation, Hagin doesn’t care whether her eBay feedback grows. She’s concerned only about negative feedback.

Younger dealerships may want to close sales on eBay intentionally to build their reputation. Note, however, that feedback related to PG&A sales are not separated, so dealers can build feedback selling those items instead.

 

Deposits, payments, shipping. Whether they close online or off, dealers usually require a nonrefundable deposit via a credit card, money order, Paypal, money transfer, etc. Hagin’s listings require a deposit within 48 hours of the auction’s end. A large metric dealership told us that it requires, within 24 hours, a deposit via Paypal between $100 and $1,000, depending on the selling price.

Hagin says that most buyers never qualify for financing. The decline rate is about the same as for walk-in customers. The metric dealership requires full payment within 10 days.

Shipping is usually the buyer’s responsibility. Some dealers also promote “Fly In, Ride Home” programs in which the store broadcasts its willingness to pick up the customer from the airport. Many dealers are willing to deliver units within a certain distance.

Fraud is rare, according to the dealers we spoke with. Hagin says she’s been given a few bad checks, but she doesn’t allow units to ship until checks clear.

A more common problem? Auction winners backing out. Hagin relates two recent incidents: a man claiming on the phone that his five-year-old won the auction, and another man who dropped his bike while riding it home from the store. He claimed he deserved a refund because the store sold him a bike that was too high. Hagin allowed the former guy to retract his bid, but she’s using eBay’s third-party dispute resolution center to deal with the latter.

EBay allows dealers to block users with no feedback or excessive negative feedback. Hagin says she follows an eBay procedure for prequalifying questionable eBay users.

When winners never pay for a won vehicle, it becomes an “unpaid item.” Dealers report that when this happens, eBay reimburses the successful listing fees quickly.

When a listing is unsuccessful, dealers can relist it. If the second try is successful, eBay credits the dealer an insertion fee. Dealers can also offer a Second-Chance Offer to bidders who were close to the reserve.

Harley-Davidson of Mason City and the metric dealer are PowerSellers with their own eBay Stores. As such, they have been assigned an eBay account specialist. They are both happy with their specialists, but say that eBay’s regular toll-free support isn’t very good.

Hagin, who calls eBay’s customer service “kickass,” says she does wish there were more protections for sellers. “I miss being able to leave negative feedback for people who desperately deserve it,” she says.

Not surprisingly, Auction123’s Tracy Roche is highly optimistic about eBay’s place in a dealer’s selling toolbox. “EBay is never going away,” she says. “It’s the only site that can give dealers that much national exposure — that can give them the opportunity to collect good, quality leads at a fraction of the price of regular leads bought from a lead provider. So eBay is one of the best tools a dealer could possibly use.”