Setting Up Shop.

Building a charitable online auction

They came, they saw, and they clicked. Over the course of 10 days, more than 200,000 unique visitors logged on to the second nationwide American Red Cross (ARC) "Virtual Auction" in March.

Many went away with indulgent rewards, including an all-inclusive vacation to Jamaica, a Shaquille O'Neal autographed basketball and tickets to attend a taping of the sitcom Everybody Loves Raymond. By all accounts everybody also loved the auction as the Red Cross rounded up $335,000 in a scant 10 days, proving that there is a niche for nonprofits in the highly competitive online auction market.

For those executives contemplating whether or not to dip their toes into the auction waters, it is not an option only for the big boys of the sector. In the world of online listings an organization's size doesn't matter to the bidder.

"I don't necessarily believe that it has to rely on the size of the non-profit, that's the beauty of the Internet," said Megan Hampson, development specialist, Seattle-King County Chapter of the ARC. "It depends on the talent that the nonprofit has and how it fits into their overall online fundraising plan."

An online fundraising plan begins with identifying the scope of the auction one wishes to hold and researching auction houses to host the event. The number of items contained in the auction will have a bearing on what type of Web site best suits your organizational needs.

"If you're going to be building a large auction you're going to need to be able to customize it, and an online auction house can help you do that," Hampson explained. "You need to be able to take a look at what you have in house. What kind of technological expertise does your staff have? How does an auction fit into your overall online fundraising plan? What is your hardware and software like - is it up to date? Are you going to be able to staff the auction appropriately in terms of a customer service stand-point?"

For most Net-savvy individuals, the sites that are synonymous with auctions are eBay, Yahoo! and Amazon. But for the ARC, the Seattle-King County chapter enlisted the help of the Microsoft Network (MSN) for a variety of reasons.

The organization wanted to make it crystal clear that visitors were participating in a Red Cross brand auction. MSN provided for that need by allowing the nonprofit to customize the bid page and the site layout - options that were not yet offered by the big three auction houses. Beyond the design allowances, MSN also trumpeted the event through its network of Web sites.

"That's one of the things that's great about MSN. They dropped all the fees and they did so much work for us," Hampson said. "That's one of the reasons that we went with them. We have a relationship with them - they're in our own backyard. (And) it fit well with MSN. They're trying to grow their auctions and it was a way for them to be able to partner with us and have it be beneficial for them. And it was beneficial for us."

That's not to say that the big auctioneers aren't non-profit-friendly. It all comes down to an organization's particular need. For instance, the ARC has utilized both eBay and Yahoo! in auctions conducted from their national headquarters in Washington, D.C. According to Marti Jones, manager of marketing relations at the national office, both Yahoo! and eBay have provided prime real estate on the Web for auctions that were highly successful.

"We have a very good relationship with the P.R. crew at Yahoo! and they go above and beyond for us," Jones said. "Just purely because, like Seattle with MSN, we have a good relationship with them. Combined with our P.R. crew, Yahoo!'s P.R. crew ... it's kind of a bombardment on all ends. It's the same way with eBay."

Exposure is the name of the game at AuctionWatch.com, one of the many auction sites available to organizations looking to peddle their wares. The most obvious benefit of Auction-Watch is that it drives an enormous amount of traffic to its auction listings. Approximately 4 million unique visitors peruse the site every month.

The aim of AuctionWatch is to make sellers list their items in an easy and efficient way. The site construction tools are designed to get the auction-newbie up and running in a few simple steps, while building an online storefront of items in the process.

"A storefront is a pretty time-consuming thing to build," explained Larry Jordan, vice president of marketing for the San Bruno, Calif.-based Web site. "A nonprofit can build their storefront in a matter of minutes. It's literally three steps - they can choose different colors, put a logo in, list the payment types that they accept and boom, they have a permanent presence. A charity auction is kind of like a one-time fundraising event, but if you wanted to be able to continuously generate revenue for that nonprofit, and create a presence online, this is another way to do that as well."

The storefront can be used to list all of the organization's items on one page - regardless of which of the big three auction sites they are listed on. Once a bidder is logged on to Auction-Watch, that storefront has the ability to send the user to other auction and commerce sites.

These services don't come without a cost. While building the storefront is free of charge, there is a fee to list items on the site. An organization is billed 5 cents plus 1 percent of the final sale price per item. That amount is in addition to any additional fees incurred by listing the items on eBay, Yahoo! Or Amazon.

Jordan believes that AuctionWatch is a viable option for those nonprofit organizations seeking out the bidding masses and is hoping for more business from nonprofits in the future.

Host with the most

Nonprofits just beginning to test the auction tide may be better served by using the established auction houses rather than jumping into the larger and more expensive pond of establishing their own permanent site.

"What I would encourage isn't so much to build your own site, unless it really makes sense to the organization like it did to ours, but I would encourage e-commerce," advised Joan Dorn-bach, vice president of marketing for Goodwill Industries. Goodwill is the host of ShopGoodwill.com - an auction site that offers a permanent flow of goods from the organization's various chapters across the country.

"It makes such sense to expand your market. You're taking advantage of a market out there that you wouldn't have in proximity to your brick and mortar location," she said. "Even if you didn't have thrift stores and were looking at it in terms of a regular auction, if you put it online you're going to have people participating from all around."

The system, which is operated and maintained by Goodwill of Orange County, Calif., works because Good-will already had the technical resources to establish its own presence as an auctioneer. Those resources contributed to making the organization's online auction plan farther-reaching than existing nonprofit auctions.

Dornbach explained that the aspects of conducting an online auction include the logistics of what the auction items are, what is being offered and the infrastructure of the system. "There are companies that will sell you the software. There are companies where you can pay to have it hosted or you can invest and create your own site and own your own servers, which is what we do. I don't know if anyone else would do what we do unless they have some form of technology capability to start off with and most nonprofits do not," she said.

Technology may be able to build a stronger site, but auctions will live and die on the strength of the items up for bid. Auctions will best serve the nonprofits that have either a steady retail stream of goods or those organizations that best tap into their donor base.

"It's a lot of work (getting the auction items). It's a lot of volunteer involvement," admitted Hampson. "We utilize staff and volunteers and work many months getting the items. It also has to deal with the quality of the items you want to get versus the quantity. With the Red Cross auction, we're trying to improve the quality of our items - not necessarily just build up a whole bunch of items. Really interesting, unique packages and experiences and just quality items."

Even with a wealth of unique items and the ability to place reserve prices on each of the listings, there is no guarantee that a bidding war will spur a windfall of auction dollars.

As a result, auction-holders may wish to consider seeking out sponsorship.

ARC auction sponsors included Costco Wholesale, Eddie Bauer and the Starbucks Coffee Company and accounted for $136,500 of the $336,500 raised.

"It's a great tie-in for them because they get to have their name listed on a bid page and have a link back to their site so that people can get to know a little more about their company," Hampson said. "You can approach businesses that you think there's a natural tie-in for. The next step is to spread sponsorship out throughout the country."

It may seem daunting starting from ground zero, but organizations have room to grow in the large marketplace as long as their reach doesn't exceed their grasp.

"I think it could be successful for small nonprofits," Hampson said. "They could get 20 to 30 items quarterly and they could throw them up there - not create a big site - and not incur direct expenses."