Everyone probably knows about the change of heart that Tatarah had recently – changing the lowest unique bid model to the highest unique bid model. Frankly, if they admit that it’s part of a marketing strategy or that if they find the model unsustainable, I’d be quite ok with it – but you know what they blame it on? They blame it on Singaporeans who are not used to the lowest bid model.

See lah! All you guys who tried Tatarah! It’s all your fault!

Right. Blame it on the users.

YOU might have seen the advertisements on buses and MRT trains, and maybe even sung along to the ‘Ta-ta-rah!’ jingle on radio.

You might also have heard that one lucky man drove away with a new Suzuki Swift after bidding just 23 cents for it.

But barely a month after its launch on Oct 26, much-hyped online auction site Tatarah.com has hit some snags. From technical hiccups to a sudden change in its auction format, the site could well be renamed ‘Tatar-argh!’.

When it started, Tatarah got netizens excited with its novel premise: Unlike conventional auction sites like eBay and Yahoo Auctions where the person with the most dosh wins, it allowed the ‘lowest unique bidder’ – the only person who had bid at the first lowest price – to net the prize instead.

Depending on the price of the product, each bid – made via the site or through a text message – was also subjected to a ‘processing’ fee, usually from $1 to $3.

From electronics to spa vouchers from partners that included Harvey Norman, Guerrilla Games and Aramsa Spas, new products were put on auction at a minimum bid of 1 cent.

Bargain hunters like civil servant Jason Yue, 31, were won over. He scored a Nokia N95 mobile phone for 35 cents, a Louis Vuitton Speedy 30 handbag for 38 cents and an Olympus FE220 digital camera for 30 cents.

Mr Yue also earned enough ‘T points’ – loyalty credits given by the site every time a member registers, refers a friend or makes a bid – to offset his total.

He recalls with glee: ‘When I went to the Tatarah office to collect the items, I didn’t pay anything at all.’

But trouble started to brew for Tatarah on Nov 1. The site crashed and remained ‘under maintenance’ for 11 days.

The abrupt closure rankled marketing executive Claudia Lim, 26, who had two outstanding bids, for a Louis Vuitton bag and a Nintendo Wii console. ‘They should have done a stress test on their servers before they launched the site.’

Last Monday, the site went live again after resolving its technical problems. But another surprise awaited. Replacing the ‘lowest unique bidder’ auction format was a ‘highest single bid’ system favoured by eBay and Yahoo Auctions.

To keep the prices low, the site capped the maximum bid for each item at half its listed retail price while keeping the minimum at 1 cent.

It means members now have to bid higher and near the capped price to win.

A Sony PSP Slim was sold last week for $119.05, about $1 below the maximum bid of $120. Under the previous format, another set had been sold for 25 cents. The handheld game retails in stores for $299.

The about-turn prompted netizens to wonder if the earlier ‘lowest unique bid’ system was merely a sales gimmick that could not be sustained.

Finance manager Alexander Tan, 32, reckons that Tatarah’s business model was ‘flawed from the start’. ‘How can they cover their costs if they are selling items that have fixed cost at such low prices?’ he asks.

For Ms Lim, the change has robbed the site of its novelty. She says: ‘The idea of the lowest bidder winning was what attracted most people.’

What’s the deal, Tatarah?

LIFESTYLE visited the company’s office at Sime Darby Centre in Dunearn Road for answers.

The outfit, which has a team of 12, is headed by managing director Soh Szu Wei, 42, and chairman Lai Seck Khui, 56. Mr Soh was formerly the cluster general manager for Singapore, Mongolia and DPR Korea at British American Tobacco Group while Mr Lai was formerly chief executive officer of Times Publishing.

The men, who have no background in IT, hit upon the idea of Tatarah last year while pondering a business with low overheads. Says Mr Soh: ‘Google share prices were going through the roof. We thought why not e-commerce?’

The company was started with a ‘seven-figure’ investment, most of it going to a $600,000 marketing budget.

Tatarah’s technical issues, he explains, were a ‘happy problem’. The site crashed because more surfers – some 30,000 of them during peak periods – than expected visited the site at certain times of the day, such as after dinner.

About 15 auctions had to be cancelled, with 7,000 bids affected. The company is now in the process of refunding processing fees to its users.

It has since beefed up its computer servers.

And as for the change in auction format, Mr Soh says this was done in response to member feedback. ‘The general public is more used to a ‘bid up’ system versus a ‘bid down’ system.’

He admits that members now pay more, but maintains that bidders still get a bargain because the eventual price can be subsidised by the T points they have collected.

The company buys items at wholesale prices from their partners, or at retail prices from other vendors. It then re-sells the goods at discounts to members.

Most of the revenue is expected to come from advertising, in turn driven by the number of people drawn to the site. It has amassed over 1.8 million page views since last month.

The processing fee required with each bid goes mostly to the telcos, he adds.

Ultimately, Mr Soh hopes to use his existing database of more than 10,000 Tatarah members to expand the business into other sectors of e-commerce.

So it’s not the sales profit but eyeballs which count.

Everyone who visits a site has an intrinsic value to site owners and advertisers, he says.

‘Look at Yahoo,’ he adds. ‘They provide a search engine for free, but they are worth millions now.’


Article obtained from straitstimes.com on 18th November 2007

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