How does bidding on eBay work?

eCommerce existed before eBay did, so selling online wasn’t what made eBay so successful. What did was the fact that anyone could sell and buy, even small items, and the auction process, which allowed buyers to obtain items at prices that were usually a lot lesser than market-prices.

The question is, how can one bid on items when the sale is far away? The answer is computerized bidding, which eBay refers to as “proxy bidding”. The idea about proxy bidding is that you set the highest price you’re willing to pay, and trust eBay’s computers to take care of the rest. In a regular real-world auction, the auction manager raises the price slowly, in increments, until it surpasses the 2^nd highest bidder…and with eBay, a computer does the same thing. When two or more buyers compete for an item, the computer sets the price to be one increment higher than the maximum price set by the 2^nd high bidder. Lets see an example:

1)    Bidder no. 1 starts off and sets his maximum price for something at $60

2)    Bidder no. 2 comes in later and sets his maximum price for something at $120

3)    Bidder no. 3 arrives last, and sets his maximum price for something at $220

The auction starts off at $1 for our example. When the 1^st bidder starts, he offers $60, but since he’s the first, the price is “set” at the starting price of $1. When bidder 2 shows up, the computer will bump the price up to $61…which puts it a little above what #1 was willing to pay, but a lot less than no. 2.

When Bidder 3 shows up, the computer will bump the price all the way up to $121…which pushes bidder 2 out, and makes #3 be the “winner”. However, the auction doesn’t end…it could still last a few more days.

Whenever a bidder’s offer gets surpassed, eBay alerts them via Email, and they could increase their bid. For example, Bidder 2 can increase his bid to $200. At that point, bidder 3’s offer still surpasses that, so the computer bumps it up to $201…and he’s still losing, but bidder 3 will have to pay more than #2 was willing to initially.

This “game” could go on until the auction ends (at the time it was initially set to end…which is usually 1 week exactly after it was started). The existing bidders can still make more offers, based on what kind of time they have to play around. Sometimes, they use “sniping”…which we will cover in a future post.

Want to learn more? Read more articles on my blog, or better yet, attend my public class on eBay buying. Click here to find more details and about the next class dates

eBay feedback – part 2

Last time, I described the eBay feedback system and how it helps you weed out bad sellers. However, sometimes, the numbers aren’t enough to make a decision. For example, what if you need a specific item that’s only available from a specific seller that has mediocre scores?

Well, by clicking on the feedback score, you can actually get a breakdown of the feedback, as well as comments left with the scores. The detailed view shows the feedback divided into 3 categories and over 3 time period:

1)    Positive

2)    Neutral

3)    Negative

a.    Last month

b.    Last 6 months

c.    Last 12 months

“Neutral” may sound benign, but in the eBay world, that’s actually close to a negative than positive. To compare it to the good-old school scoring system, a “positive” is an A, a “negative” is an “F” and a “neutral” is a D (even though it might sound to you like a B or C). In other words, even if a seller has no negatives, but several neutrals…take it as a warning sign.

The distribution by period allows you to see how things have changed over time. For example, a seller might have 10 negatives in the last 12 months, but only 2 in the last 6…which typically means he has improved. The idea is to try to evaluate change over time (maybe one day eBay will make it easier for us and just show a graph?).

A good idea when considering a seller with a non-stellar record is reading the actual comments left by buyers. These are displayed on the feedback page, and you can also filter them to see just the negative and neutral ones. The comments might reflect different aspects of the seller’s issues…some have low-quality merchandise, others ship slowly and yet others are dinged for being unresponsive. Occasionally, a buyer would call out someone simply as a liar, fraud, cheater etc. The issues described might be something that matters to you a lot…or on the contrary. For example, perhaps the seller has good merchandise, but gets bad scores simply because his mailing service is slow. In such a case, perhaps you don’t care if the items take an extra week to arrive, as long as the quality is good.

Want to learn more? Read more articles on my blog, or better yet, attend my public class on eBay buying. Click here to find more details and about the next class dates.

eBay feedback and seller reliability

One of the most common questions about buying online is “how do I trust this random guy to actually send me what I bought?”. This is indeed one of the most important things to think of when dealing with online shopping and eBay’s executives are spending huge amounts of resources into making that leap of logic.

The primary mechanism for evoking trust in the buyer community is the feedback system. On eBay, every user, buyer and seller alike, has a score, which is comprised of the number of transactions the person has completed on eBay, and a quality score. The transaction number is simple enough, and the quality score is a percentage between 0 and 100 which indicate on what percent of the transactions did that user receive “positive” feedback. For example, if the user’s score looks like this:

mandmbeads (842  )

99.6% Positive feedback

Then it means the user has completed 842 deals (which combines the items that person bought and sold). The 99.6% score means that 839 of these sales concluded with a positive outcome, as graded by customers. To be more precise, the % score is only calculated for sales during the last year. For example, the seller might have sold only 294 items during the past year, and only ONE of these 294 sales was a negative experience, and so 99.6% of 294 are 293. This system allows the score to be more reflective of the sellers conduct recently, so if a seller was bad and then improved, he would be “forgiven”, and if he was good and then started rounding corners, that would also be reflected.

Another thing that’s important to remember about these scores is that their scope can be misleading. For example, you might see a seller with a 95% score, and think that it was a terrific fellow (because getting 95% on a test means you’re a pretty smart student…right?). In reality, though, scores given by users are quite forgiving in relation to real life. In the eBay scale, a seller with 95% is a HORRIBLE one. I recommend you prefer sellers with at least 99%, and never buying from any seller that has less than 98%. Naturally, consider the deal number too, because a seller with a low number means a guy who is not very experienced, and also means that the % score for it can be a statistical anomaly (because you can’t really evaluate something based on a small sample). I would suggest preferring sellers with at least 100 transactions, and to never buy from someone with less than 50 transactions on his record. On the other hand, sellers with a very LARGE amount of transactions can also be a problem, because these sellers have such a huge volume that they are less likely to care about a dissatisfied customer. For a seller who moves 5000 items a month, even 10 angry customers will barley affect his overall score, so he is more likely to just ignore such a customer.

Want to learn more? Read more articles on my blog, or better yet, attend my public class on eBay buying. Click here to find more details and about the next class dates.