Bidorbuy beats the crunch

By Siyabonga Africa, ITWeb junior journalist

Johannesburg, 24 Oct 2008

Bidorbuy managed to beat the credit crunch and raise its sales by more than 121% year-on-year by the end of September.

A statement from the online auction Web site states the value of the items traded between July and September was more than R50 million.

The Web site adds that international trends predict online sales will increase, while offline sales flounder in the current economic downturn.

Local online retailers, some of which saw increases in the region of 30% during the last two years, expect this trend to continue even though many are lowering their estimates due to the fears of recession.

Bidorbuy director Andy Higgins says the Web site's business model is broader than those of physical retailers because consumers also transact with other consumers.

“That is why bidorbuy thrives in a recession environment,” says Higgins. “In difficult economic times, people will be more than ever looking for bargains, and will consequently come to bidorbuy to shop for discounted or second-hand items. The new sellers will come too, looking to sell whatever it is they can sell.”

Key to success

Higgins says the key to a successful online auctioning site relies on the number of subscribers. Yet this means one cannot ascertain whether low sales can be attributed to economic slumps, or to the disenchantment of sellers.

Bidorbuy subscribers grew by 40% year-on-year to more than 290 000 by the end of September. Higgins says this is a considerable increase given the low Internet penetration in SA. He looks forward to further growth, given the expected increase in local broadband availability and affordability after the completion of one set of the undersea fibre-optics cables next year.

The company also hopes to up earnings by bolstering fixed-price sales of goods. “Our time comes after Christmas, when everybody rushes to bidorbuy to sell all the unwanted Christmas gifts.”

Bargain-hunting

World Wide Worx director Arthur Goldstuck says online retail and auction sites will experience some increase in their revenue due to the credit crunch. “People will not be increasing their spending. Instead they will be looking for bargains on the Internet.”

Goldstuck attributes the influx of e-shoppers to the growing trust in online shopping. He uses a concept called the “experience curve” to explain the relationship between time, trust and online shopping.

“The longer people have access to the Internet, the more they'll grow accustomed to shopping online and the more trust they'll have in it.”

Goldstuck adds that bidorbuy has gone to great lengths to gain people's trust.