When one of our apparel retail clients first partnered with us, they leaned towards setting the starting price close to what they wanted to sell the lot for—around 20 to 30% of MSRP. These high starting bids can build resentment from buyers who want to feel they are getting the best possible price. To offset this, savvy retailers are implementing B-Stock’s Low Start Price Action Strategy where they start with a price that’s not related to the value or expected sale of the merchandise. This strategy attracts additional bidders at the auction start time, which leads to more competition (note: many retailers experience 3x higher recovery as competition grows from under five bidders to over 15). As a result, the retailer is able to extract the highest willingness to pay. We’ve also seen that when a buyer wins an auction that started at a low price, that buyer will come back and bid more the next time.

Here’s some of the psychology behind the strategy:

  • A low start price is an easy threshold for buyers to initially cross and they are more likely to place an opening bid
  • When buyers see low start prices, they are more likely to register to bid (which ultimately leads to increased participation)
  • A low start price allows the buyer to feel in control of his purchase
  • When a buyer places his first bid, he becomes “emotionally attached” to the lot and will continue bidding to become the winner
  • Buyers are more willing to increase bidding in smaller increments: when a lot is going for thousands of dollars and it’s “just $25 more to win” a buyer will go for it

Many of our retail clients are putting this strategy to work, including a large department store retailer that recently experienced increased bidding and higher recovery by starting all auctions on its B2B liquidation marketplace at $100.

If you’re a retailer and would like to start selling overstock and returned items on the secondary market, please get in touch with us.

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