eBay’s online marketplace raked in nearly $6 billion last year helping people sell nearly anything they’ve got, including a hocking a few iPhones. Savvy consumers often flock to the service, sniping for hard to get items or some deeper discounts than retail stores. Common sense says that markets prices goods appropriately, based on supply and demand. However some economists found otherwise.
A study from some UC Berkeley economists found that consumers didn’t always buy goods at the best deal. Here are some of the insights:
- Some buyers outbid the “Buy it now” price for a good, finding 45 to 50 percent of eBay auctions for a sample of iPods exceeded the “buy it now” price.
- The percentage of daily bids is highest at 8pm. The percentage of closing auctions is also highest at 8pm. The study says this may be counterproductive since it creates greater competition for bidders attention at that time.
- Buyers seem to favor auctions with more bidders.
- A comparison of CD auctions with equal total costs (price + shipping), found the low-cost, high-shipping auction attracted more bids, more bidders, and 25 percent more money.
- Secret reserves turn off buyers.
- Research on auction websites shows eBay attracted almost 60 percent more bidders and 30 percent higher prices than the same items on Yahoo Auctions. Maybe that’s why they shut down.
this seems to be good advice; more in the category of “uncommon common sense”
The study is only slightly surprising– especially on highly desirable items, it’s only human to get a little caught up in the moment. I know I’ve overbid as opposed to look for another item to pursue.
I can’t believe it took scientists to figure out the same thing that any good eBay’er already knows.
I guess if this web2.0 thing doesn’t work out, I could be an economist.
I agree with gettit. These are barely revelations. The “Buy it Now” feature disappears upon the first bid (early in the auction’s cycle). So any bidder can ruin this opportunity for all latecomers. EBay auctions end with snipe bids, so it is only natural that most bids are placed at exactly the same time that most auctions are ending. 8pm? In which time zone? I would assume that 8pm MST would be the ideal auction ending time because this opens the best range across the nation from 10pm on the East Coast to 7pm on the West. The trust level goes up for items which already have bids as people feel more confident that it is a good deal and that they are the lone dope in the marketplace. Lower bids with higher shipping rates are popular because many users confirm bids before looking at shipping charges, and then feel locked in because they don’t want to damage their feedback ratings post auction or establish a record of bid retractions. No one likes reserve prices as you are forced to bid not only against other buyers, but against the seller’s reserve price. I have never understood why these sellers don’t just raise their opening bid price. They even have to pay to set a blind reserve. And everyone knows that eBay far and away leads the market in online auctions. They get the most traffic so they offer the most active & competitive market.
Is this kind of output all it takes to get an economics degree from UC Berkeley? =)
yeah not really surprising at all… ending auctions on the weekend seems to make a favorable difference. selling at the beginning of the month (before people run out of money) also works pretty well… biggest improvement i’ve had w/ big ticket items (guitars) is selling overseas– the increasingly unfavorable exchange rate sucks if you want to go to london, but works out well if you sell guitars to londoners.
On a website were people are willing to pay $2000 for an iPhone, these findings are not surprising. Need Custom Software Development?
According to the Time Magazine, one of our addictions is shopping. So I could see how a compulsive shopper would BUY IT NOW for an obese price.
Anyone who wants to make a profit with the latest gadgets will because we WANT IT NOW. We don’t care if we go deeper into debt or can’t eat for the next two weeks because we want it NOW.
What the heck does this have to do with web 2.0 or start-ups? Is it a slow day for news or something?
Cheers,
Aidan
http://www.MappingTheWeb.com
Useful article. It’s a pity that it’s followed by the usual ‘what does this have to do with web 2.0′ comments, though.
I am creating an eBay-killer.
Sounds implausible, but the bigger they are, the harder they fall. The first step to killing a giant is to find its Achilles’ Heel. Luckily, eBay has one, and many other chinks in its armor. And the best part is, they are setup in a way where even once those are made visible to them by a competitor (like me), they can’t fix these, because they’re a basic part of eBay. When you find flaws in the foundation of your house, you either have to pray or rebuild from scratch.
Now, if only there was a major player that would be looking for an eBay killer. A company that had its own low-cost payment processing abilities. A company that could make it easy for people to find things they’re looking to buy. A company that could allow sellers to easily advertise their wares across the internet the moment they go on sale.
Oh yes, I’m creating an eBay-killer, and I know just such a company that will buy it when its ready…
Very interesting article, even if it has nothing to do with 2.0
Advice?
Do a websearch to see what the usual prices are.
Most of what I’ve been buying on eBay lately have been books. But every book I bid on, I’ve searched the web’s used booksellers, first. It’s not at all unusual for a book to be sold on eBay with an opening bid that is far greater than what Amazon’s network of used book dealers are asking.
jdege - Not sure how accurate it is but WipBox has a tool that figures out the average selling price of items on eBay and Craigslist.
Beyond all the tricks of getting the highest final bid for your eBay auctions, what most eBay sellers fail to realize is they can optimize their listings using software tools to reduce the cost of their eBay fees and maximize profits for their business. After becoming one of eBay’s top sellers at selling over $1,000,000, I created software to help my own business, and then others, transforming the way sellers view and operate their eBay business. Best of luck to you all!
Corey Kossack
Author of “eBay Millionaire or Bust”
http://www.ProfitBuilderSoftware.com
Some of these studies have been around for a while, and I have reviewed them in my blog:
Gillian Ku at London business school did a study which showed that low starting prices had a positive impact on ending prices
trevorginn.com/ebay-starting-prices/
More information on the Bidder curse
trevorginn.com/the-bidders-curse-overbidding-on-ebay/
Here is a study which shows that the number of bidders increases the buyers valuation of an item
trevorginn.com/tips-for-ebay-selling/
A German study has also found that selling in the evening is not always the best strategy as competition if higest
trevorginn.com/the-ebay-evening-fallacy-and-the-effect-of-feedback-on-selling-price/
Finally this study shows that eBay is not always the cheapest platform, despite what buyers may think
trevorginn.com/ebay-bargain-hunters-paradise-lost/
This may be obvious, but 8pm makes perfect sence. East coasters are home from work, west coasters are wrapping up for the day. What accounts for the mid-US? When I fly trans-con there seems to be a lot of farms down there….do they wrap up early?
Yeah, by 8pm I have plowed the fields and fed the chickens. Just in time to “win” an auction on ebay.
EBAY HAS MANY AUCTIONS THAT HAVE “SHILL BIDDERS” TO PUMP UP THE PRICES.
Good luck on the auction of everyone! I had eBay auction list that are ending very soon with NO bids. You might want to check them. Thank you.
http://www.noauctionbids.com