August 31, 2009 - 25 comments

How eBay Can Save Itself in 1 Day

Ebay is broken. And everyone knows it.

I have friends who won't even use eBay because it sucks so bad in so many ways... shipping, payment, bidding, and my personal hatred... last minute bidders.

Why I'm Pissed:

All last week I had the highest bid on a lovely navy blue suit built perfectly to fit my smaller frame (hard to do) and with a conservative yet striking two button styling. Man, did I want this suit. My max bid was set at $40 and I planned to raise it as the bids (hypothetically) went up over the week. All week I sat at $19.99 and was highest bidder on this suit.

And as the week went on... nothing happened.

Nobody else came along and bid. It looked like I was in the clear. Even as the minutes wore down to 5, 4, 3... it seemed that I was the only guy that knew about this suit.

Until 30 seconds before the end of the auction. When two people started bidding and eventually outbid me with about 5 seconds to go. One of them eventually got the suit for $41.99 ($1.99 higher than my earliest max bid). But the thing is... if things had been slowed down a bit, I would have happily gone much, much higher than $41.99.

How Last-Minute Bidding Is Killing eBay:

First of all- I don't blame the last-minute bidders. They are doing what they have to do in the ecosystem that eBay has created. But the fact that all the action happens in the last minute of a 7-10 day auction is just ignorant (at best) and intolerable (at worst).

Everyone gets screwed with last minute bidding. Let's take a look at how:

Sellers: In the scenario above with my suit... I would have been willing to pay much more than the final price for that suit if I'd have had time to keep bidding. These higher sales prices go right to the seller.

Buyers: Normal people who can't sit in front of the computer waiting to make a last-minute bid simply won't do auctions because they know they won't win. There is no point in bidding on anything that has more than 1 minute remaining, because you are just going to lose it. And early bidding means that you are upping the final price of the item. Smart people don't bid until 30 seconds out, even if they've wanted the item all week.

eBay: Normal people don't use ebay auctions... thats a huge lose of the market. And eBay calculates a good deal of their fees based on the Final Ending Price of the auctions. Higher ending price, more fees to eBay. (And happier sellers.)

How To Fix eBay:

Easy. And a developer at ebay could do this in one day:
eBay implements a feature that extends the listing of the item for three hours with each bid. In other words, an auction will never close that has had a new bid in the last 3 hours.
See ya later last minute bidding.

So what happens in this mental experiment? How would this change everything if last minute bidding went buh-bye?

Sellers would get higher prices, because people would have time to keep bidding. People would have three hours to stew about how much they really want that suit and put in another bid on it.

Buyers would come back to auctions because it once again seems reasonable that they can honestly decide how much something is worth to them and bid on it in good time.

eBay would make more money on higher sales prices, and would actually make eBay a marketplace, versus a last-minute brawl for the highest bid of the bargain hunters with quick enough internet to faciliate their bullshit.

How Real Auctions Differ from eBay:

I came to this conclusion last night while watching a back episode of Lost. I was still pissed about losing the suit, when an auction scene came on the tele.

Now I don't need to tell you how a real auction works. You know that. But try to imagine what an auction would look like a la eBay.

Auctioneer: "Well it's 12:04 now, so whomever has the highest bid in 5 minutes at 12:09 wins"

Crowd: {Silence for 4 minutes 50 seconds}

Auctioneer: "Anyone?"

Crowd (with 4 seconds to go): "I'll take it!!!" (everyone yelling and screaming at the same time).

Alright, so I'm no playwright, but you get the jist of how drastically different this scene is from a usual auction. It would be ludacris of an auction house to end the auction at a certain time, instead of giving all bidders a chacne to think, respond, and bid to their true maximum price.

With Every Good There is a Bad:

Adding this feature would of course have some consequences. But I suspect they'd be good for eBay overall.

You would lose last minute bidders. Their days of bullying and grabbing a deal at the last minute are over, and they'd have to move along to more creative ways to screw over the masses. (Sorry, I really wanted that suit!)

But you would gain all the average Joes (and Jonis) back. They'd feel safe and confident in bidding again because it isn't a last-minute game anymore. It's, like, a real auction.

Chime In:

Disagree? Got a better idea? Tell me about it in the comments below.

Published by: Bradley in internet-marketing, Misc.

Comments

malditogeek
August 31, 2009 at 4:00 pm

FYI, that kind of per-bid time extension is already delivering outagerous margin profits in the “entertainment” auction sites like swoopo.com. Even with some ethic concerns like the cost per bid, with no refund if you lose the auction.

Sahar Sarid
August 31, 2009 at 4:30 pm

Bido, as well as many other auction houses out there, have anti snipe features for a long time now. No need for three hrs extensions, few minutes is all that is needed.

Best

Sahar

Vernon
August 31, 2009 at 4:46 pm

Sorry, but I don’t agree that the bidding system is broken on ebay. I’ve won a couple dozen ebay auctions myself without bid sniping. You say that you would have been happy to go well above $40 for the suit – so why did you put a max bid of $40? What you’re supposed to do is put in your real maximum bid – just bid and forget. If indeed nobody else bids on the suit, you get it for the minimum bid. If you’re outbid, then somebody obviously went over your maximum and that’s too bad.

The thing is, the above strategy cannot be defeated by any amount of last minute sniping bidders as long as you honestly state how much you’re willing to pay for the item (an exception being if strategic bid retractions are allowed, but that’s beyond the scope of this comment).

brazzy
August 31, 2009 at 4:49 pm

Ebay isn’t broken; your bidding habits are. If you were planning to pay more than $40, you should have bid more right from the beginning. There is absolutely no point in bidding less than what you’re willing to pay (apart from worries about sellers doing fake bids to drive up the price to the maximum and retracting the last bid, but that’s a different matter). Really what’s the point? The excitement of the bidding race? If you want that, go to real life auctions, they’re much more rewarding experiences in other ways as well. Ebay is about negotiating a price, nothing more and nothing less.

    admin
    August 31, 2009 at 5:05 pm

    Brazzy,

    You are right. I should have bid more to get the suit. My whole approach to ebay was f***** from the get go.

    But the point of this article isn’t a better bidding method for buyers, it’s about saving eBay’s stock price (sorta), and that means extracting a higher price from each sale and adding to their bottom line.

    But yes, you are right on about how to bid on ebay. I’m going to find another suit and put my true maximum in.

    Brad

Random Reader
August 31, 2009 at 5:00 pm

If you wanted the suit for more than $40, you should have bid more than $40 in the first place. Face it: *You* screwed up, not eBay.

John G
August 31, 2009 at 5:05 pm

You should probably learn how “proxy bidding” works before ranting too much longer on this topic. Decide what you want to pay, enter a snipe for it at eSnipe or a similar service, and most important, don’t let other people influence your earlier decision.

Vitaliy Levit
August 31, 2009 at 5:14 pm

I feel your pain !

There are some tricky ways around this problem tho —
http://www.esnipe.com/
http://www.powersnipe.com/
http://www.ezsniper.com/

Never tried them myself, but these are just a few I pulled up with a search.

Congrats on the HN thread.

    admin
    August 31, 2009 at 5:47 pm

    Thanks Vitaliy! Those are good services, but to me it’s a shame that ebay would make it so that anyone should have to use an outside service (that ebay discourages) to use ebay well.

    Hope to see ya around soon…

Wayne Eaker
August 31, 2009 at 5:23 pm

Wow…you are getting hammered here in the comments, but I agree with you. The people who say that you should have bid more than $40 are ignoring fundamental human nature. You are going to value the suit relative to the price you see being placed on it. The problem with eBay is that the final price is SO out-of-line with the price 5 minutes before the auction is over that you get no time to consider its worth in a proper context. You bid TWICE what anyone else did all week. The suit has no absolute value…there’s no way to know that $42 is what it’s worth. (and most likely, one of the other snipers would have paid $42.50 had they had the time)

I think if eBay added your 3-hour rule, auctions would last about 3-6 hours longer than they do now…as you say, I think it’ll totally change the mentality. I stopped using eBay a long time ago for the reasons you described in this post, and I consider myself a normal person.

    admin
    August 31, 2009 at 5:44 pm

    Wayne-

    Right on. It’s about shifting the emphasis of the auction on to letting people decide what the value is in good time, instead of making it a game of seconds.

    Many of the commenters present really good ideas about how to win an auction. But my assumption is that a lot of people make this same mistake I made… not bidding their highest bid to start with… and lose out to last-minute bidders because of it. So if you and me made the mistake, how many millions of others have too? And how does this affect the perception of ebay as a marketplace, and how does it effect their bottom line?

    There is also the issue of- even though it’s completely irrational- people changing their max bid in the pressure of the moment. I truly thought 8 days ago that $40 bucks is all I would pay for the suit. But after showing it to my GF (she liked it) and remembering I have a wedding in October… well it made me want the suit a lot more. Had I had a few hours (or 5 minutes) to see I wasn’t going to win unless I parted ways with a few more bucks… I would have done it. No question. How many other people have been in this same boat?

    Brad

impeeryus
August 31, 2009 at 6:33 pm

having spent many years on Ebay primarily as a seller but also as a buyer, I can indeed confirm that it’s this buying mentality thats broken-and not the Ebay auction system. You had all week to evaluate what this suit was worth to you. The primary mistake buyers make in auctions is thinking “what can I get away with paying?” instead of “whats the MOST I will pay?” If you had placed a better max bid you more than likely would have won your suit for less than you thought but more than your final bid. Extending auctions for last minute bidders is an insane idea-when do you suppose someone would eventually decide that yet another $2 bid would be $2 too much? God forbid it was a $1000 item starting at $24.99-by the time the bidding got to $275 the seller would be dead of old age….
In so far as “fixing” Ebays stock price-I suggest you take a trip to the Seller Central forum on Ebay and find out the real reason Ebays stock has crashed-almost certainly never to return. Its because Ebay decided to take away almost every right a seller has-the right to decide payment method-disciplinary action towards sellers based on a Detailed Seller Rating feedback system which sellers have no right to respond to. Ebay tells buyers that giving a seller 4 out of 5 is a good score while suspending sellers whose rating drops below 4.3 out of 5!!!
The right to give reciprocal feedback has been taken away from sellers-leaving them unprotected from malicious buyers who extort part refunds and free shipping on the threat of leaving a bad seller rating. Ebay does not support its sellers in any fashion.
Ebay has cranked up its final auction value fees to the point where-at about 12% of the final auction price- its cheaper to call an auction house to take the stuff away and send you a check. Add another 3% to 4.5% loss of your total take-INCLUDING SHIPPING- on an item, in Paypal fees as sellers have been banned from taking checks or money orders and FORCED to use Paypal only for their transactions. Add to that Paypal is Ebay owned and rarely supports the seller in any dispute. And the list goes on. Now-Ebay fees are paid for by the Seller. Stock price is based in part on gross revenue. Ebay management and thier policys have caused 10’s of thousands of sellers to leave the site in droves, taking thier business elsewhere-and thier fees. Apparently Ebay management forgot the saying “you can’t sell from an empty cart”…..Now the shareholders are seeing the result of this fatally flawed management fiasco. I have NEVER seen a multi billion dollar company commit financial suicide in such a determined manner-and so quickly too! Kudos Ebay- you get the upper management dumb bunny award!

    admin
    August 31, 2009 at 7:15 pm

    Thanks for your input. Sounds like you’ve been around the ebay block a few times.

    I know what you mean about alienating sellers. My roommate is a full-time ebay seller, so I’ve heard a lot of his frustration. They are almost exact echoes of yours.

    However, I don’t think it’s the buyers mentality that is the problem. If buyers mentality = human nature, I’d prefer to use a service that takes note of human behavior and designs for that. Any system that expects the masses to shift from their nature behavior into something else will eventually be overtaken by a system that adheres more closely to what people are comfortable with.

    We are all old dogs, and none of us want to learn new tricks. I’m only 24, and I already suffer from old-dog-itis.

    Thanks for your comment though. It was well thought out and shows that maybe the ebay problem can’t be fixed in one day afterall.

    Brad

ocdgeek
August 31, 2009 at 6:54 pm

eBay has so many problems it’s hard to narrow it down to just the bidding system. In my opinion their biggest problem is their lack of support.

ocdgeek
August 31, 2009 at 6:58 pm

impeeryus you are correct! eBay provides zero support to sellers.

Maxwellvintage
August 31, 2009 at 8:15 pm

Go to Buy It Now or Best Offer Items and get what you want faster and maybe even for what you think it is worth.
As far as bidding on an item, like everyone else said, if you really really really want it put your maximum at an outrageous number like 1000 and you are guaranteed that you will get it. Try it next time. Don’t worry you won’t be outbid unless it is an absolute idiot and then he deserves to pay that much. eBay is still fun and you should not take it that serious. Bid and Buy responsibly and only if you can afford it. Enjoy!

John
August 31, 2009 at 8:47 pm

Well Bryan, all I can say is you should of had your GF look at the suit earlier. That would of allowed you the time to bid. We sold on eBay for 10 years and we have also bought on eBay.

As a seller I have never had a problem with last minute bidders. In fact I am glad for them. Believe me when I tell you I have been in the ephemera business for nearly 40 years and know what things sell for. The hammer price from last minute bidders are most always in that percentile of the items worth 80% of the time. With approx 10% selling lower or higher so you see it averages out.

As a buyer we have always placed our highest bid on 80% of the items we are interested in. If it goes beyond that we walk away. The other 20% are specialty items we bid on for resale. These items we bid higher on….Surprise you to hear that?….The reason we bid higher is we know the value and therefore know what our profit margin is. We bid on these with a 30% resale average after costs to eBay. Since we know the cost to eBay upfront we know what our high bid is and bang it in the last 5 seconds of the sale. sometimes we get it and sometimes we don’t.

So Bryan my advise to you is this….Have your GF look at the items several days before it closes. Remember your GF is always right. Get used to it because that is just the way it is. Place your highest bid on the item after your GF gives you her approval. Finally after you have placed that high bid. Move away from your computer and go chase your GF around. This way if you loose the bid you still won the prize….Later

    John
    August 31, 2009 at 9:07 pm

    Whoops!!!!! Sorry about the name mix-up Brad. Getting old and wishing I had a GF to chase around. Don’t worry your time will come someday to.

Patricia013
August 31, 2009 at 8:55 pm

@ impeeryus – I so totally agree with you! I’m an 11 year seller on Ebay and now only casually list a few things there a month. Its more stressful now then the few sales are worth.

Brad, you make veteran ebayer’s laugh! The name of the game is bidding. You should have figured out what you felt that suit was worth and what you felt would be the maximum you would pay for it. Then bid that amount. If you win,fine…if you lose, well, that’s more than you were willing to pay. Its all so elementary and so easy! You feel you were sniped – but YOU allowed it to happen. Incidentally, as a seller, I LOVE snipers
:-)

impeeryus
August 31, 2009 at 8:56 pm

If I may just point out to Brad-theres another way to look at your (Brad’s) frustrating situation with the lost suit. Rather than “old dogitis”, having entered an auction atmosphere with perhaps a novice’s lack of understanding of the proxy bid system, you have now been subjected to a learning curve. I would bet that next time you see something on Ebay that you want, remembering this incident you will probably think harder about what you actually are willing to pay. On doing this you will place a higher bid, resulting in either a win for you or a higher price for the seller. This in turn provides all the positives that you listed above-satisfied sellers, a happy buyer-you-and more fees for Ebay.
As far as the “masses” go-if everyone wanted to play-say- yahtzee and some didn’t understand the strategic gameplay-does this mean the game itself is unworkable? Or that the players needed to familiarise themselves with the gameplay before they took thier turn? ;O)

Stefan
September 1, 2009 at 1:42 am

Ebay is broken in so many ways. If you try to buy a mobile phone on ebay it goes something like this (at least for a casual user like me):
– Enter model of the desired phone in ebay search
– get 100s of sponsored results, phone-accessories like chargers, 1 euro/dollar auctions tied to contracts, etc.
– after approx. half an our of scrolling and clicking I finally get to the “real” phone auctions
– now I have no clue what the phone is really worth because, as you mentioned the price goes up in the last minute. So I spend another hour watching the final price of phones being sold to determine a fair market value that I can bit on the next phone being sold.
– this process takes more than an hour. Its far easier to just go to amazon marketplace and it takes like 10 minutes.

Stefan
September 1, 2009 at 1:43 am

My automatic avatar picture matches the tone of my post with absurd precision :)

Harry Fudpucker
February 9, 2010 at 2:08 pm

You lost out because you were too cheap. Place a high bid on the very upper of what your willing to pay for said suit. If you dont get it its because you didnt bid enough, plain and simple. If you do get it good for you. Its your own fault. Ebay is fine the way it is!

    rawwebdesign
    February 9, 2010 at 2:17 pm

    When you say ebay is fine the way
    it is, do you mean how it is today?
    Or do you mean how it was when I
    wrote this post? Or do you mean
    how it will be tomorrow?

    eBay is constantly changing to
    improve their algorithm. Do you
    suggest they stop improving and
    stay exactly the way they are today
    on Feb 9, 2010?

    The basis of this post isn't how to
    compete with bid sniping. It's to
    take a broader view of ebay and ask
    why bid sniping is a problem (or at
    possibleall).

    Bid sniping doesn't benefit ebay,
    sellers, or buyers who don't snipe.

    I think creating a system that more
    closely resembled a live auction
    would be in the benefit of everyone
    except bid snipers. And that would
    make me very happy.

    -Brad

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