PropertyRoom.com COO PJ Bellomo said, "Small is beautiful." He was referring to the online auction site's new approach in dealing with its third-party sellers in which it has reduced the number of third-party sellers and in which some sellers are offered complete category exclusivity.

Bellomo said that while the PropertyRoom has reduced the number of sellers participating in its Trusted Merchants program, dollar sales are up. Bellomo and Shanon Lewis, PropertyRoom's Director of Marketing, said that as a result, the communication channel has opened up. "I'm talking to merchants once a week, sometimes even daily," Lewis said. She shares information about promotional programs to help the merchants prepare for expected traffic surges. And she said she listens to sellers - the company has changed subcategory structures based on seller recommendations.

The company no longer earns revenue selling banner ads to its merchants. The goal is instead to work with merchants and push traffic to the category. "Sometimes we'll run category promotions, sometimes we'll promote merchants," Lewis said.

This is in sharp contrast to eBay's latest approach, which is to let Yahoo manage advertising on its sites in the US, and let Google manage advertising on its international sites, and allow ads that link to off-eBay properties.

eBay merchants have complained for years about eBay's efforts to attract more sellers to its sites, saying it drove down prices and sell-through rates as additional sellers flooded their categories. PropertyRoom reports that its trusted merchant program has an average sell-through rate of 80 percent.

Unlike Amazon and Overstock merchant programs in which sellers drop-ship orders, merchants are allowed to brand themselves on PropertyRoom.com. While merchants who make it into the Trusted Merchant program may be pleased at the approach the auction site is taking, it's bound to be frustrating for those who want to try it but do not make it into the program.

PropertyRoom is looking for sellers in particular categories, including iPods, designer handbags and electronics. "Designer sunglasses fly off our site," Bellomo said.

"Some sites are addicted to listing fees, and make lots of money when sellers fail - through listing fees and marketing programs." He said in contrast, PropertyRoom doesn't make money when their sellers don't make sales.

PropertyRoom built its site through its police auction inventory, making its name by selling stolen goods legally on the Internet through its connections with law enforcement agencies all over the country. Does the inventory offered through the Trusted Merchant program lift the whole marketplace? Bellomo said the core police auction model "is sustainable in and of itself, but there is a level of demand that it can't match." Inventory from the Trusted Merchant program fills in excess demand.

Bellomo joined PropertyRoom.com in January along with Rob Hagen, the company's CEO. The two seem to be in a race to reinvigorate the site. Bellomo said the technology change they made in moving onto their own platform "was a rough transition," but the site has seen the payoff already. "March was a record month for the company, and April beat the March record," Bellomo said.

http://secure.propertyroom.com/Seller/TrustedMerchant.aspx