Auction websites strike a deal on beleaguered market

Online buying has already become a trend, with data from Romcard showing that online card payments totalled EUR 127.8 million in 2010. Since Romanians like a bargain, several auction websites have already established a presence on the online market. Certain product ranges sell very well on such websites and at better prices than in a regular store. However, being relatively new, many of these sites face the mistrust of their customers who are yet to place their money whole-heartedly into an online purchase.

Otilia Haraga

Electronic commerce with online card payment grew last year by 38 percent in comparison with 2009, to EUR 127.8 million. The number of processed transactions also rose by 82 percent, reaching 2.26 million, according to data from Romcard.  “In 2010 new entrepreneurs entered on the market looking to expand their business online and to find more accessible solutions at lower prices. At the same time, buyers reacted very well to promotions and price discounts so that campaigns with a clear concept and efficient implementation have managed to attract payers from the offline to the online,” said Daniel Nicolescu, GECAD ePayment CEO, in a previous press release.

A model of business that is gaining new adepts every day is the online auction website, as these platforms offer the opportunity to buy certain products for less than usual. This is possible because people who post their products for sale on such websites are in competition with others offering the same product, and therefore they reduce the price in order to sell. The cheapest product will get the attention of potential buyers.

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The decrease in prices is also due to the increased choice.

 “When making the decision to buy on the website Okazii.ro, clients consider factors such as the price of products and services, the time of delivery, recommendations, the reputation of the website on the market and the relations they have with the website,” Ramona Hromei, PR officer at Okazii.ro, tells BR.

Launched officially on April 15 2000, Okazii.ro is the largest website of electronic commerce in Romania. The launch was the debut of online commerce in Romania. The website had only 5,000 products for sale at the end of 2000. This year, it posted a record 2.7 million unique visitors a month. “At the moment we have more than 100,000 sellers on Okazii.ro. Last year, the number of products on sale increased from 170,000 to more than 1 million,” says Hromei.

Okazii.ro currently has 50 employees, with an average age of 26 years old, who work in IT, sales, customer relations, marketing, web design and creation, statistics and SEO.

“At the moment, we have in excess of 1 million products on sale, which is a very large range of products even for the most demanding of buyers,” says Hromei. “We have recently surpassed 200,000 unique visitors a day and nearly 5 million postings a day.”

The domains where Okazii.ro scores the most sales are electronic appliances, computers and software, clothing and footwear as well as mobile handsets. There is also a significant volume of transactions in categories such as cars, jewelry and watches, books, photo & video equipment, health/beauty, PC/video games, music and collectables. Last year, the most significant growth was in the fashion segment.

But there are also drawbacks. The issue of trust, or more exactly, mistrust, that is still plaguing the entire online shopping market is rearing its ugly head in this business as well. “Romanians are still reluctant concerning online acquisitions – even though e-commerce is on the up, buyers are still skeptical that the product they will get is what they want,” said Paul Serea, project manager of Okazii.ro, in a previous press release.

In part, this is due to some firms that operate on this market. “At the moment, there are at least six-seven websites of this kind, but many of these are not properly updated, which leads to distrust from visitors, so these websites will not be able to convert visitors into clients,” Florin Ioga, co-founder of Bidmania.ro website, tells Business Review. “We estimate that in 2011, because the market is becoming more mature, the level of interest and trust in this type of website will rise.”

In order to increase the level of trust among both buyers and sellers who access this platform, many of the websites have introduced a system based on recommendations, through which sellers and buyers who interact can rate each other. These ratings can be seen by other potential buyers or sellers and if they are not good, it’s bad for business for the respective trader.

“As we stand, there is a high potential for online auction websites in Romania, but Romanian users are rather demanding and look for quality and trust,” says Ioga. “To succeed, it is necessary to have a good marketing strategy, strengthen the brand and invest accordingly.” 

For the entire work behind Bidmania.ro the investment amounted to approximately EUR 60,000. The company posted a turnover of RON 100,000 in 2010 (nearly EUR 23,500) and estimates it will have a 50 percent growth this year. “The launch of the website was the result of the financial crisis since the site fulfills the need to buy very cheap products,” say Bidmania officials.

The platform is relatively new, having been launched mid-June 2010 after a careful study of the consumption market. “It took us more than one year to create and test the website, and we are developing it permanently,” they say. The team that provides the maintenance is made up of six people, including a graphic expert, programmers, network administrator and operators for processing and posting auctions. All the products offered for auction on the website are new and come accompanied by warranty certificates. Generally, they are products from IT&C, electronics, home appliances, wellness and vouchers, say Bidmania representatives. The most popular items are notebooks, LCD television sets, mobile phones and photo cameras.

“For collecting and posting the auctions on the website, we have a dedicated team. We have contracts with various suppliers from whom we acquire the products that we place up for auction on the site,” says Ioga.

otilia.haraga@business-review.ro