I recently had an email conversation with Jonathan Ruffo, founder of Jittery. Below is part of our dialogue:

Q1. Your business model is unique among auction sites: no fees for listing or selling. Instead, your revenue comes from “services with a measurable return”. Why is this a better model? Do you project having higher or lower revenue per auction than other auction sites?

A1. Long term this business model will generate a higher level of income per auction, and it’ll do it while providing a greater return on investment to the seller. Without transaction fees, Jittery has no desire or incentive to literally control the flow of commerce, we don’t need to set up a toll-road in other words. As a consequence, Jittery doesn’t need to control communication. The less friction and barriers you have in the transaction process, the more you can do on the marketing side (in both effectiveness and reach). If you want a comparison, look at Google’s income generation prior to doing ads on a per click basis, and after switching to that method - their income shot up dramatically when advertisers could truly measure their return on investment.

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Q2. With no listing fee and no closing fee, it seems to me the total cost of selling a $1.99 bumper sticker and selling a $199,000 house would be about the same. Do you expect to have a higher proportion of big-ticket items on Jittery than on other auction sites?

A2. As Jittery grows in scale, and acquires increasing numbers of overall platform buying power (a general measure of the sheer capacity of our buyers to purchase), the big ticket items will accelerate in their growth. That will only occur after we hit a certain tipping point. Early on, we’ll lack the big-ticket items; you won’t see jets being sold on Jittery at this point. This isn’t a concern however, as we would prefer a lot of smaller ticket items at this stage, for volume.

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Q3. Your Buy Offer reverse-auction feature is new to the consumer auction market but has been used in B2B auction markets for some time. What’s your biggest challenge in gaining consumer adoption of this method?

A3. You have to use traditional auctions as a structure to play off of. In other words, you have to bring in an audience with what they know, and that audience will gradually try buy offers. The scale will be 25 to 1 or worse; for every 25 traditional auctions, you’ll see a buy offer get placed. That ratio will lessen as Jittery grows larger.
In the meantime, you can do a lot to promote the concept, and cross-promote it. Things such as feeding sellers sales leads. While it’s true we were the first to create this combination, we’re finding a certain over-sized competitor thinks this model makes sense suddenly as well; we enjoy the competition though.

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Q4. BlogPoint users can earn ad revenue with BlogPoint. Do you pay per impression or per click-through, and do you think this will be a more effective way to spread awareness of Jittery than traditional advertising?

A4. Jittery will be launching a completely external marketing platform shortly, called Jittery Ads. Part of it is made up of what you referenced, BlogPoint Ads. BlogPoint Ads, will display directly through BlogPoint, and will operate on a per click basis. If BlogPoint is resting idly on a blog, why not let the blogger generate income with it. The other part of the platform will be announced later. This system will dramatically increase the awareness of Jittery - you will have sellers marketing their items and stores, and at the same time promoting Jittery, all outside of Jittery.

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Q5. Auction Buddies is another innovative feature of Jittery. Tell me how it works and why it’s such a valuable feature.

A5. Auction Buddies is a communication platform, enabling truly open communication between buyers and sellers. This is possible only because of our business model. If we charged transaction fees, Auction Buddies would essentially be impossible - you couldn’t afford to let the buyers and sellers talk openly out of fear that they’d take the transaction off-site in order to avoid the fees. The more buyers and sellers talk, the greater the overall level of trust in the platform, and the less they mistrust each other. You’ll find on an auction site where the buyers and sellers can’t talk openly, business is often done in ‘dark alleys,’ and when that’s the case, there’s always going to be a high degree of suspicion on both sides.

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Q6. You have plans to make your market research available to your users.
What kind of data can users find and how can they use it to their advantage?

A6. Buyers and sellers will have free, unlimited access to our transaction information, basically covering every transaction that has ever occurred on the site. Buyers will be able to use it to their advantage to time sales, and figure out when the best time to make a purchase is according to seasonal trends, etc. Sellers will be able to use the information to learn from other seller mistakes, and learn from buyer trends. For example, you’d be able to see what the ideal pricing points are for any given item, improving the success rate for your listings.

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Q7. Your introduction for sellers says they can bring their feedback ratings with them from other sites. How do you confirm their identity, and why is this feature so important?

A7. This feature is so important, because it eliminates the protective walls that keep sellers locked into one specific site. By law, you’ll find that sellers own their reputation (and no respectable court in the country would rule otherwise), and no major auction site tries to claim otherwise, even if they attempt to make it difficult to take feedback with you. At many auction sites, sellers are treated more like inmates than partners; the sites do everything they can to control the seller behavior. The paranoia on many auction sites because of this big brother attitude is almost unbelieveable. Being able to take your reputation with you, eliminates the benefit of the network effect, and the ability to hold sellers hostage; then competition comes down to customer service, features, and just plain listening to your membership.

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Q8. What’s next for Jittery?

A8. Jittery Ads will launch shortly, bringing the same level of innovation to auction marketing as we have to the actual transaction process. Jittery is in a stage of continual improvement. We receive feedback, we adjust; we receive feature suggestions, we analyze and add them if they make sense. These things happen very quickly. Try reaching one of our competitors with a feature suggestion - you can’t, they won’t listen. I feel that we’re probably the most innovative auction site on the Internet currently, even with only perhaps half the planned features in place, and our goal is not to just keep up the pace, but to dramatically accelerate. Our role model is Google: never stop trying new things. For too long this particular ecommerce sector has been quite stagnant, we’re looking to roll out new products & services over the coming months that will expand the sector as a whole while providing valuable new ways to do business. There are two specifically planned additions to the Jittery family, after Jittery Ads. We’ll be looking to talk about those in the near future.

BusinessPundit also has posted an interview with Jonathan.