I took a quick peak at those other sites and noticed a higher price for their wines. So i really wonder how it all shakes out in the end. Using winebid i place my bid knowing that i have to multiply it by 24% to get it to my door. Bid fee, tax and shipping. Total end price.
sellers often negotiate fees. So having a 2% increase really doesn’t change revenue that much
true. but winebid could tack on a flat 2% fee and then negotiate from there on top of that.
while this is conjecture in opinion, i don’t think winebid suffers from their regular buyers not buying enough. i think their goal is to attract new buyers and keep inventory high. i don’t see how raising the buyer’s fee attracts new buyers or even keeps/gets inventory high.
Isn’t the real key the aggregate load for both buyer and seller? Some auctions charge only one side or the other and the percentages are higher and some charge both. A lot of auction houses charge buyers 20+% which seems high but then they also cut or eliminate the seller’s commission. If Winebid is charging buyers 17% and sellers 15% then I suspect in the aggregate it is higher than many auction houses - however, I bet they are seeing a lot of sellers who want a low or zero commission and that means they have to increase buyer commissions to match the auction houses who have higher buyer commissions and cut seller commissions.
I should have added that reduced or eliminated seller commissions enables them to reduce reserves (sellers look at their bottom line when deciding what to sell and how to price it) which balances out the higher buyer commissions.
Might actually come out of the sellers pocket if it results in lower sale prices.
Sometimes when you squeeze the toothpaste tube too hard it comes out the other end.
Buyers and sellers are rationally looking at their bottom line number, so whether the friction costs are ‘paid’ for by the buyers or sellers, doesn’t really matter. Both parties are sharing the load.
Just because I’m pretty anal about numbers.
Peter Kleban and Mstanford both correctly stated that this is a 13% increase.
An increase from 15% to 17% is not a 2% increase. You can correctly describe it as a 2 percentage point increase. However, to calculate the percentage increase the calculation should look something like this:
100 * (17 - 15)/15 = 13.33%
That is, in fact, a pretty good increase in revenue for them. If they auction off $6,667.00 of wine (to one buyer or to five or to ten . . .) instead of collecting $1,000 in premiums at the old 15% rate, they collect $1,333.
Perform similar arithmetic on the dollars and you still get the same percentage:
100 * (1333 - 1000)/1000 = 13.33%
I would be giddy if any of the companies in which I owned stock could increase their revenues by 13%.
Returning to reality, a 13% increase will cause many people to rethink future purchases. The proof of that is in many of the above statements of current customers. So, I do realize that their annual revenues will not increase by 13%, because I’m pretty sure that their sales will decrease.
The end result will be a lower supply of wines. Buyers calculate their all in price when bidding. It will lead to lower bids and will drive sellers away. Lowering commission rates would attract more sellers. Pretty simple calculus for any auction company to change their supply side.
Buyers should not care what the buying premium is - just adjust your bid to what you’re willing to pay. For example, if a wine is “worth” $100 and the buying premium is 25%, just bid $80. If for the same wine the buyer premium is 50%, bid $66.67. The squeeze is ALWAYS on the seller as the market will simply stay at a total (no matter how it’s calculated) of $100.
I don’t think the issue is attracting regular buyers. Although I may be wrong. Of all the auction sites out there, with the exception of K&L, Winebid has very unique offerings, at least when it comes to US wine. Perhaps this is partially due to their location in the heart of wine distribution country, but who knows. All the other big auction houses, like Acker, Wallys, HA, etc… all they want to sell is the boring stuff you see every place. Screagle, Harlan, Scarcrow, Schrader…super high Parker scores…yawn. They don’t want to touch some of the more awesome boutique items that a lot of the fans of US wine are really interested in pursuing.
I think on some level they recognize their niche in the online auction industry and have decided that the potential loss of some buyers is more than offset by the increase in buyer’s premium.
I’m not saying that I’m happy about it, but it means that I may focus more on other auction sites that have a more buyer friendly perspective, like K&L, Brentwood, & TCWC (although wish they actually got their act together and came up with a decent online auction system).
Depends where on the laffer curve the buyer “tax” sits. If it’s past the peak then yes it would result in lower revenue.
They obviously believe they’re in front of the peak.
Fascinating problem.
While I am sure there are occasional deals on this site I a zero interest in it. There are too many solid retailers reselling cellars with far better deals with zero buyers premium and solid shipping prices.
Let’s see, a wine priced at $60 on WineBid is currently $69 after the buyer’s premium, next month it will be $70.20. My guess is if the wine is a good price at $60 to begin with (still the main issue), the $1.20 increase will not matter.
Sellers used to pay an 18% premium at WineBid (lower if the total consignment was big), maybe WB lowers that by 2% to encourage more consignments?
I say buy before 10/4/15 and save!
Winebid really does offer some wines you don’t see elsewhere. The 2% in the end doesn’t really matter. How they communicated it was a bit under the rug, but rarely are price increases announced in big bold letters.
I’m curious why I didn’t get an email announcement from them. I buy from them just about every week, so would consider myself a regular customer by any reasonable definition.
+1
Almost makes me as mad as the increase. Almost.
I’m a bit bemused at the “outrage” at lack of email, as it’s a change taking place next month - there’s no evidence they weren’t planning on giving plenty of notice (10/4 is a Sunday, so assume they will let people know and feature prominently on website by that Monday 9/28,
I don’t buy from WB very often, but might check in more in Oct. If so many people react violently to a 2% increase (yes, 13% increase in premium, but 2% in overall cost to consumer on same bid) it might lower bids and decrease total cost. If a $50 wine (57.50 with current premium) becomes a $45 wine (52.65 with new premium) ok by me. No one knows how much higher premium will affect bids, but only thing that matters to consumer is overall total. Assuming at least some consumers are rational, some wines should end up cheaper for someone.
FWIW, I’ve seen evidence that there are a number of buyers on Winebid who do not correctly factor the buyer’s premium into their bid.
-Al
Who’s “outraged” Dale? All I see are people surprised that not everyone with an account received an email.
I was an occasional bidder, but for me the increase has negated lower prices once I factor in the buyers premium, WA state sales tax and shipping - plus tax on the shipping charge!
I will still use them.
However, I am open to suggestions for other auction sites (besides K&L and Benchmark)…