posted on October 26, 2000 12:47:42 AM
Almost daily now, Ebay is announcing a new feature or a policy change.
As Red Deer has already pointed out here on AW, today's new feature can be found on the announcement board, and takes the form of a "Buy It Now" option on auctions on Ebay. Ebay is the largest and most competitive of the auction sites on-line, and it is the one place where auctions truely do work on a supply and demand basis. I personally see such a feature removing auction aspects from the site and interfering at times with existing competitive auctions.
A true story:
Seller A is a freind of mine in Australia. In January this year he listed a tobacco tin for $20.00 US. Within 12 hours it had reached $525.00, at which point bidding slowed. Within 36 hours another Australian seller (Seller B) had listed an identical tin for $200, they had cut & paste the title but made their own description, his tin sat at about $450.00 for the next few days. On the search list these items sat next to each other identical in title, and with similar prices. Seller B had gotten greedy and not realised that by listing the same rare tin at the same time, that he also removed the perception of rarity. However, the last 24 hours proved important for seller A with his tin finishing at $1425, seller B's tin on the strength of that result moved immediately to $750 and ultimately completed the auction at about $1200.
Now seller B was clearly greedy and couldn't wait the extra week to allow Seller A's tin to actually establish an even stronger market for these tins. So imagine the impact on the market place if Seller B had, on the strength of how seller A's tin was going, listed his tin with a $500 "take it now" price. Seller B listed a second tin shortly after, so with the "take it now" in place could have sold 2 tins for $500 in the time that seller A's tin was still running as a real auction and effectively (a) quickly depressed the market for these tins and (b) removed the underbidders from competing for Seller A's tin.
Things are already competitive on Ebay, and the "Take It Now" feature is likely to be used in a way by some sellers that will result in Auction interference. Any bidders who check past auctions will also instantly see anything that has been underpriced on a "Take It Now" basis, and will likely revalue their bidding accordingly.
This "feature" holds the potential to remove or interfere with many of the crucial auction components that make Ebay a vibrant and competitive site.
posted on October 26, 2000 05:26:33 AM
If I were seller A, I would buy the one at $500 and let my auction set the market, and then have two to sell at the market I set.
posted on October 26, 2000 05:50:27 AM
Well, you haven't proven your contention that seller B was "greedy" by not letting seller A's auction finish. There are MANY good reasons to list an item now instead of later, you know. Is there some unwritten "code of ethics" that proclaims that "first to list" gets a clear field or something?
And your contention that BUY NOW will result in auction interference is completely unproven as well. Competition is NOT interference, you know. Its, well, competition!
Lets take your example, by the way. You seem distraught that seller B would have the audacity to actually dare to list two items of the same thing your friend was listing. How rude! (as the saying goes). And now the seller is going to be stupid enough (I guess that goes with being rude) to sell them for half price now that this new feature is available. Well, maybe...but I don't think so.
Well, I guess you can tell that I don't think your example particularly sheds much light on the effect of BUY NOW. Many times the BUY NOW option (which can be seen in Yahoo auctions) is a HIGH price, intended to catch the desperate or ignorant, and is hardly going to siphon off bidders from other auctions.
posted on October 26, 2000 06:59:50 AM
captainkirk
I strongly beg to differ with you, about BUY NOW PRICES being higher. I use Yahoo "Buy Price" all the time, and I under cut 99% of the opening prices of others with similar products using the regular auction format. It is NOT a high price, it is normally a very reasonable price. I have an item I post on Yahoo opening at $59 - at the Buy Price, and it sells constantly - on eBay I occasionally post it on the regular auction format and it sells around $100 to $125 - In reality my Yahoo customers constantly save money because I am happy with the $59, even though it is obvious that many people are willing to pay much more.
Now, you are asking why don't I constantly post the item on eBay and get the higher price, I do occasionally, but I can do as well on Yahoo for FREE, on the BUY PRICE, and turn it 2 or 3 times while I wait for the eBay auction format to run its normal 7 days and close.
It is the Wal-Mart approach - I'd rather sell more for less and do fast volume than sit while a few people run an auction higher and turn the item once a week. My buyers are happy at the $59 price and I am too. Well, for that matter my eBay customers have been happy with the much higher price that they run it to, but I hate slow auctions, I'd rather post, sell, close and move on. I am not greedy.
I am really looking forward to how well this will work on eBay.
Of course the first problem confronting any seller on eBay is the continual instability of the site.
This "Buy Now Price," is nothing new, not only does Yahoo use it, but many other auction site use it too.
Just a curious question, if the 7-day auction format on ebay is too long, why not set it for 5 days? Or 3 days? I think you mean that people on Yahoo simply snap up your product at the take-it price, but seems like they could do the same on Ebay if you used a short-term auction. It sounds like your merchandise has people ready and waiting to bid on it.
posted on October 26, 2000 07:20:45 AM
G'day CaptainKirk,
Actually the only ethical problem within that example is the cut and paste of the title, and that action does show the incentive for offering the tin at that particular time. Certainly there is no ethical problem with diluting the market (such is supply and demand), although allowing a "high flying" auction to run its course BEFORE cashing in on it, may indeed establish a much higher bench mark for the item you are (both) selling.
Your quote:"And now the seller is going to be stupid enough (I guess that goes with being rude) to sell them for half price now that this new feature is available." Bear in mind that at the time of listing for seller B, $500 is very enticing - that did not become half price for another 5 days. Not understanding the psychology of auction does not make a person stupid, and I have not suggested that anyone was stupid. Not everyone knows market value of the items they are selling (often that market value is actually set by the auction), so it is not unlikely that people will choose a figure for the Buy Now option that is indeed half of auction value.
This quote by JWPC in the Reddeer thread highlights this, and for him it is his market strategy.
[quote]I am strickly a seller, and I use the BUY PRICE on Yahoo for a beautiful piece at $59; when I post the same item on eBay it usually goes upwards of $100 to $125, but I'm quite happy at the $59, and when the BUY IT NOW price opens on eBay, the first person to bid in my auctions will have bought it! My opening bid level will be my "buy price," just as it is on Yahoo. No, I don't make as much, but I am happy and my buyers are too, and I hate these endless, drawn out auctions.[/quote]
His choice, and one that is fully suitable to his business, but by introducing this to the Ebay site, it dilutes the entire auction process on the only online site that has so far captured the true essence of auction.
I find it odd though that placing retail prices onto items in a venue where the same items are being auctioned is simply looked at as being "competition". Ebay works for me because it is an auction. By placing retail options onto some auctions it dilutes the true auction process by firstly placing an upper cap value into the minds of some bidders, and secondly by distorting the auction results when an item is under valued on a "buy it now" basis and it is snapped up by a buyer. The "buy now" system potentially places upper value limits onto the market, instead of the existing auction process which only sets a minimum price.
This "feature" has the potential to interfere with the auction process and deflate the prices. It is more than mere competition, it is an entire change of direction for a successful market place.
posted on October 26, 2000 07:33:34 AM
G'day JWPC,
Sorry to quote you from the other thread, whilst you were already here explaining the same..... shows how slow I type!
"This "Buy Now Price," is nothing new, not only does Yahoo use it, but many other auction site use it too."
... the reasons that the other auction sites have had to turn to it is because they have not had the success in creating a properly rounded auction system that Ebay's volume has successfully captured.
G'day Tolz,
Auction is one of the longest established forms of capitalism that there is, however there is no point in diluting it or making it a mixed media, in a way that dilutes the very essence of it.
posted on October 26, 2000 08:09:54 AM
Kevin_T- I agree totally! Ebay is an auction site, and I feel it should stay that way. The "buy it now" feature is going to used mostly on mass market items, that people know will only bring a set dollar amount. It is just another thing that is going to "Junk up" ebay, and turn it from an auction site to a shopping mall, if it hasn't gotten there already! JMHO
Well, I guess we are seeing different auctions at yahoo. The ones I look at (computer stuff) I wouldn't jump at the "BUY NOW" prices if you paid me. Well, I guess if you paid me I would, at least if you paid me enough, since they are high compared to market prices as measured by auction results.
I'd be surprised to find that too many sellers voluntarily choose to "sell now" at 60% of what they could get with an auction. Most sellers are probably content to wait - its a pretty good return on investment. If I had multiple of an item to sell at that price, I'd be willing to wait an extra day or two to get twice the amount. Personally, to be honest, I think its more likely that you *can't* sell the item for the $100+ on yahoo, given their smaller bidding, so the best you can do there is the $60. Or maybe they are buying them to resell on ebay? Wonder if you are creating competition for yourself? This just sounds like simple segmented supply and demand to me - you can sell so many per year at ebay for $100+, and so many per year on yahoo for $60, and might not have really anything to do with the BUY NOW feature.
Kevin:
I agree, by the way, about the unethicalness of stealing the item title. I hate that.
Now, when you say that it is "not unlikely that people will choose a BUY NOW value of half of auction value", I guess I have a hard time disagreeing with what you say..since its so vague. We've seen "auction value" swing by 50% for any given item, and what is "not unlikely" mean in your post? Of course it will happen to some degree...but enough to somehow dramatically affect the market? That implies that a whole bunch of people have a whole bunch of valuable items and have no idea of the value and also choose to set a very low BUY NOW price. Hmmm...I guess I choose to doubt that that chain of events is likely to reach significant numbers. Given how easy it is to search completed auctions, and given people's tendency to want to OVERvalue an item, I'm guessing that more people will set a too high, rather than a too-low, value.
By the way, I hope you're not meaning "auction interference" in the technical (i.e., against ebay rules) sense here? Auction interference is a deliberate attempt by one seller, using illegal means, to steal another seller's bidders - spamming them, spreading false rumors, etc. Simplying starting an auction with a BUY NOW option can NEVER be auction interference, at least per ebay definition.
posted on October 26, 2000 09:04:00 AM
G'day Captain Kirk,
I will concede that my use of the words "auction interference" is a play on the wording of the rules, whilst also trying to point out that by dropping "upper limit" retail values into an auction system, it does interfere with the auction process.
As I see it, Ebay themselves are starting to interfere with the auction process in a very serious way (and not for the first time).
Different people will use the buy now price in different ways. JWPC has already indicated his preferences. Some will set a price that they consider to be far above the market, but which turns out not to be. If I were to base my book prices on ABE actual retail values, and set my "buy now" price at 150% of retail for Enid Blyton books, I would actually achieve half of two recent Ebay results. Currently there are areas of that market that are being changed by Ebay, and the retail market is yet to catch up. The same thing happened with Clarice Cliff china in the early 1980's - retailers had to catch up to rapidly increasing auction values. If retailers had been invited to offer their wares during the Christies and Sotheby's auctions of that period, then Clarice Cliff china would not be the assett that it is today. In some instances the average auction results were 4 times the estimate and this is where auction holds the power to revalue items very constructively. To dilute that power by mixing retail sales in with auction sales, takes away the absolute vibrancy of an auction system that has the correct balance of users to be setting market trends.
posted on October 26, 2000 11:03:00 AM
there are a lot of collectible things that aren't SPECTACULAR collectible things. Yes, it's true that "you never know" how high an item will go. THAT SAID, if you've been selling a certain thing for a while you know more or less how high SOME things will go. If it goes higher that's a fluke but it could just as easily go lower. For instance. I have a vintage collectible item now that normally goes for 25 or so but sometimes goes higher depending on buyer whim. When I auction it in Nov. I will set the buy it now at 35. It doesn't upset me that much that a fluke spurt of bidding COULD HAVE driven it to 45 or 55...because the same fluke could just as easily left it at 25. So for me I'm happy with 35. I'm really happy with the buy-it-now price option and I've already written eBay to tell them so....The bidders who are hoping to get 45 or 55 will still be able to because there will be some people who will hold out thinking "Maybe I will get this for 25". Meanwhile the bidding on the holdout's item will go up to 45. This is a way to satisfy the different types of bidders---the ones who want it now and the ones who are willing to wait and see if they can get it cheaper. I think you are all waiting for the return of the I'll-pay-anything bidder and they are gone.
