Opportunity Wales Objective 2

eCommerce Case Study Publication

Alpexus Limited T/A Auctionhere

Document Change Control

State Registered Draft Revised Draft Final Approved Version 0.1 0.2 0.3 0.4 1.0 19th June 2007 19th June 2007 19thJune 2007 21st June 2007 First complete draft. Reviewed by Beth Caines, amendments made. Sent to Tony Lloyd for review, amendments made. Approved by Tony Lloyd from Auctionhere. Date Comments

Possible values for State are: Draft, Final and Approved

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Case Study Overview Alpexus Limited T/A Auctionhere, Wrexham Auctionhere have developed a powerful eCommerce tool useful to any business who wants to trade on the Internet
Auctionhere is a relatively new type of business often referred to as an eBay sales service. These companies sell items on behalf of customers who do not have the time or knowledge of how to sell on eBay. The item is left with Auctionhere and for a percentage, they take care of photography, item descriptions and postage and packaging. They are responsible for everything and once the sale is complete, they forward the money onto the customer. The company has achieved eBay Trading Assistant and Powerseller status and is based in Wrexham employing 4 staff, 3 part time and 1 full time. Auctionhere has achieved some initial success and is now offering regional franchises in order to grow the business. This Case Study shows how this North Wales SME developed software in order to give them an advantage over competitors. The software was initially designed just for eBay, however it has been further developed to become an inclusive eCommerce product. Auctionheres software is of use to most businesses who require a method of selling products on their company Web-site, eCommerce sites such as eBay and Amazon, and shopping comparison sites such as PriceGrabber and Shopzilla. Auctionhere can be found at: www.auctionhere.co.uk www.auctionherefranchise.co.uk http://stores.ebay.co.uk/Auctionhere-UK

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eCommerce Case Study

Alpexus Limited T/A Auctionhere

Auctionhere have developed a powerful eCommerce tool useful to any business who wants to trade on the Internet
Author: - Mandeep Kaler eCommerce Innovation Centre

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Introduction
This Case Study is based on work undertaken as part of the Opportunity Wales Objective 2 eCommerce programme funded in part by the Welsh Assembly Government and the European Union. All information is published with the full approval of the business concerned and this particular Case Study was written by Mandeep Kaler from the eCommerce Innovation Centre, at Cardiff University, the Centre of Excellence for Opportunity Wales who worked with Auctionhere UK Limited. Opportunity Wales case studies provide detailed descriptions from a wide range of small businesses across Wales. They cover not only success stories from eCommerce but also the trials and tribulations and the hard work which successful businesses often have to face.

The Business
Alpexus Limited is an umbrella company for Auctionhere UK Limited and HomePages Friends Limited which is run by Mr. Tony Lloyd. After moving back to the UK from the USA, Tony was surprised to see that the UK was embracing eBay but businesses had not taken advantage of the opportunity of using third party eBay sales services. eBay sales services are businesses who sell items on behalf of customers who do not have the time or knowledge of how to sell on eBay. The customer leaves the item with Auctionhere and for a percentage, they take care of photography, item descriptions and postage and packaging. They are responsible for everything and once the sale is complete, they forward the money onto the customer. In 2004, after some research which showed that few such services existed and were mainly located in London, Tony set up Auctionhere UK Ltd with his sons Peter and Alastair. The company has achieved eBay Trading Assistant and Powerseller status and is based in Wrexham employing 4 staff, 3 part time and 1 full time. The staff comprise of Tony as the CEO, Dr. Rod Thompson responsible for IT and Software Development, Mr. Tom Bentley the Franchise Director, Mr. Richard Insall-Jones responsible for Marketing and Tonys wife Mrs. Fiona Lloyd who is co-founder and is responsible for Finance and Administration. In 2005, Tony conducted a 5 month pilot study where they set-up collection counters in the charity shops of Nightingale House Hospice. During the pilot, Auctionhere achieved a turnover of 22,000 making a profit of 5,000. The encouraging results led to Nightingale wanting to continue and develop the relationship. Franchise Tony was so encouraged by the results that he decided to expand Auctionhere by providing regional franchises. Taking advice from British Franchise Association (BFA) approved consultants, Tony set up two franchise offerings, the first an Auctionhere Associate and the second an Auctionhere Regional Franchisee. Associates have to pay a 15,500 set-up fee and Regional Franchisee have to pay a 29,950 set-up fee. Over the last 12 months turnover has reached 152,000 with 46,000 being commission. Currently, Auctionhere has made no profit due to set-up and development costs, however these figures show the significant growth experienced by Auctionhere.

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The basic service starting with a 7 day 99p bidding price involves a visit from an Auctionhere representative who will take a photo and write a description of the item. Auctionhere will research the item out from eBays 40,000+ categories followed by uploading the item to eBay. During the auction, Auctionhere handle all queries, invoicing and payment collection. They will arrange shipping with the client and deduct fees before passing the payment onto the client. The client has no interaction with eBay and relies fully on Auctionhere to represent them. Fee Structure A starting price of 99p has no upfront fees and no cost to the owner if there are no bids. Auctionhere charge a commission of 33.33% up to 300 and 25% over 300. Higher starting prices incur upfront fees. If the item sells these fees are refunded. A reserve price can be set for the cost of 2 plus 2.25% of the reserve price. Motor Vehicles require a non refundable fee of 30 which allows a client to set a reserve price. The commission for a vehicle that sells is 60. More information on fees can be found at www.auctionhere.co.uk. An example of how the Internet can offer advantages over traditional charity stores can be seen with the following example. A classic pair of used binoculars in very good condition were for sale for 2 at a Nightingale House Hospice for several months. After little interest, the binoculars were given to Auctionhere who wrote a description, uploaded good quality pictures and dealt with all questions. The listing lasted for 7 days with a starting bid of 99p. At the end of the 7 day listing the binoculars sold for 28, a considerably higher amount than Nightingale Hospice were expecting to sell them for. Where there is money to be made there are of course competitors and Auctionhere is competing with Auctioning4u who recently acquired iSoldIts UK stores, SellStuffEasy and Dropshop. There are also several American and European competitors who may consider moving into the UK at some point in the future.

Existing Technology
Auctionhere has two Web sites www.auctionhere.co.uk (figure 1) and www.auctionherefranchise.co.uk (figure 2) as well as an established eBay shop at http://stores.ebay.co.uk/Auctionhere-UK. Both Web sites serve as brochure style sites, one which advertises the services offered by Auctionhere to customers and the other advertises Auctionheres franchise offerings. Local Web developers in Wrexham built and host both Web sites. Figure 1 Auctionhere Website Figure 2 Auctionhere Franchise site

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During the set-up of the business, several different eBay software programmes were used. Many of the software programmes had individual merits but there was no one piece of software which had the functionality required. The main requirement identified early on would be a mechanism to cater for managing commissions with regards to an item being sold on behalf of a third party.

eCommerce Solutions
Various eBay and third party developed software were deemed useful but did not have the functionality required to add value to the franchise offerings. Tony therefore decided that investing money into software which would provide the attractive elements of other eBay software combined with the added functionality of established delivery costs and a module, would better manage commission costs for products being sold on behalf of a third party/customer. The main objectives of the software were to: Provide integration into eBay; Create a Content Management System (CMS) in order to upload product information, the CMS should be easy to use with little technical skill required; Create a Customer Relationship Management (CRM) system in order to build develop a client base; Automation in order to streamline time consuming tasks; Produce sales and inventory reports in order to aid management and develop strategies; Management of commission costs when selling on behalf of a third party.

With the input of three eBay users and the technical expertise of Rod, the software was developed in house. The first version of the software took a year to build and cost around 40,000 to build. It was decided early on that the software will need to be accessible to all users with as few specific hardware or software requirements as possible. It was decided that it was best if the software application was server based and accessible from a Web browser as Internet access would be essential in order for listings to be added to eBay. Figure 3 Simple and Intuitive Settings

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Figure 3 above shows a simple menu setting allowing the user to easily navigate through the software. Tony and Rod have noticed the added value that the software offers to Auctionhere and has continued to develop it in order to keep it competitive. With the emergence of more shopping comparison Web sites becoming amongst the first to show up during product searches on popular search engines, Tony and Rod decided to develop the software into a multi channel eCommerce solution with eBay being part of the software. With the idea of central integration in mind, Auctionhere have developed software which will allow users to submit products to several different eCommerce sources. An item added once to a clients account can be managed and quickly advertised on several different Web sites such as the clients individual Web site, eBay, Pricegrabber, Amazon, Kelkoo, PriceRunner, Shopzilla and Froogle/Google Product Search. Figure 4 Multiple Listing Options

Figure 4 above shows the listing options for a client when they want to upload a product for sale. This reduces the amount of time required for a client to upload their products as without the Auctionhere software they would have to visit each site individually to upload the product information. Tony and Rod also realised that their software needed to be easy to use in order to make the software more attractive to people who are not technically savvy with the Internet. The CMS which is the interface for users to upload pictures and write or edit descriptions needed to be easy to use. With this in mind, the design was aimed at a user being able to use eMail and a word processor such as Microsoft Word.

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Benefits
The software has proven valuable with over 115 franchise enquiries showing that there is interest in a franchise business model. The software can also be seen as a complete all in one eCommerce package. It works as a CMS, CRM, it uploads to numerous eCommerce sites, it controls stock, produces invoices and financial reports. eBay have been suitably impressed and have approved the software adding credibility to Auctionhere and making it a more attractive to potential franchisees. eBay have also taken an interest in Tonys charity businesses and have established a relationship where Tony has helped eBay in expanding the eBay for Charity Programme. Its great for eBay to approve our software, it shows we are on the right track Figure 5 Shipping

Figure 5 above shows how Auctionhere deals with shipping charges. As companies such as eBay put a percentage charge on final prices but do not put charges on shipping, many sellers manipulate their shipping charges to make more money. This is a heavily complained about problem amongst the eBay buying community. However Auctionhere have addressed this problem by having standard shipping charges which can be easily updated if and when prices change.

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Figure 6: Traditional Management

eBay Management

Kelkoo Management

Company Web site Management

Amazon Management

Business Computer

Figure 6 above illustrates the traditional method of uploading product data to different eCommerce Web sites. Pictures and written content would need to be produced and written in on the individual Web site such as eBay or Pricegrabber. All information would need to be altered on each individual Web site which would be time consuming and repetitive. Figure 7: Auctionhere Software Management

eBay

Kelkoo

Company Web site

Amazon

Central Management Auctionhere Software

Business Computer

Figure 7 above, illustrates how Auctionhere software uses the concept of central management in order for items and their information to be uploaded quickly with little need for repetition for each eCommerce Web site.
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Figure 8 Sales Reports

Figure 8 above shows financial reports generated by Auctionheres software. The software also has a stock management facility to help quickly establish which items sell well, which items are in stock, close to being sold out or need to be replenished.

Issues
Unfortunately one of Auctionheres competitors iSold It, has had their UK shops recently put into administration and was bought by rivals Auctioning4u. This has led Auctionhere to evaluate and redesign its franchise model in order to avoid the mistakes of iSold It, providing a more stable franchise option to clients. The Auctionhere software has met the strict guidelines set and has been approved by eBay. However eBay will not promote third party software as they have their own software to sell to customers. Of course this will mean that Tony will need to put more emphasis on their Auctionhere Web sites and their marketing literature on the advantages and features of their software. At the moment Tony has a very useful piece of software but needs to advertise its benefits. As useful as the software is, it will need to be continuously redeveloped in order to retain its competitiveness. We realise that the software is of great value to us, to look at the latest version compared to the original, you can see the amount of development that has gone into it. We accept we will need to keep updating it If Auctionhere gets the amount of users it wants then it will need to consider moving to a bigger server space as well as considering the level of service as downtime will effect business. Tony has recognised the importance of integration but will need to consider how other software such as accounts packages like SAGE can extract information to avoid double entry.

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Summary
Auctionhere have demonstrated that producing innovative software can add value to a business. In a relatively new but increasingly competitive market, Auctionhere has developed and continued to develop software which in the long run will add value to their franchise package. Auctionhere is still very much in the embryonic stage, when we initially developed the software it was for eBay, but during its development the software has become a comprehensive eCommerce package. A client can setup an item and send it to eBay, Amazon, or their Web site with a few clicks By recognising that consumers use certain sites for shopping such as eBay or shopping comparison sites such as PriceGrabber, Auctionhere has incorporated a cross-selling function which requires little technical skill from users. There is a lot of interest in our franchise offerings which we are now looking at in detail. We are currently making sure that those who take on the Auctionhere name can provide the high level of service we would expect for our customers. To a client the ability to upload product information and replicate it to the most important eCommerce sites with a few clicks of the mouse makes Auctionheres software invaluable and time saving. With the increase in on-line sales making the Internet a powerful sales platform, Auctionhere have developed a powerful eCommerce tool useful to any business who wants to trade on the Internet. Auctionhere can be found at: www.auctionhere.co.uk www.auctionherefranchise.co.uk http://stores.ebay.co.uk/Auctionhere-UK

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