OT: Strange eBay practice

[akptc]

Hi, this is probably way off topic but I am very curious as to the cause of this behavior. I had an item posted on ebay, with reserve price listed. Many folks bid on the item but stopped short of the reserve price. I am scratching my head about this one and can’t figure it out - why bid at all if the reserve price is too high for the bidder? Is there some kind of strategy in this?

 

[lushd]

Trying to flush out what the reserve actually is, I suspect.

 

[ampguy]

Andy

Andy

are you listing your reserve price in your listing? If so, why not save some money and just start the bidding at that price?

If you're not disclosing your reserve price, they have no idea what your reserve is and might be trying to get a real bargain.

Hi, this is probably way off topic but I am very curious as to the cause of this behavior. I had an item posted on ebay, with reserve price listed. Many folks bid on the item but stopped short of the reserve price. I am scratching my head about this one and can’t figure it out - why bid at all if the reserve price is too high for the bidder? Is there some kind of strategy in this?

 

[akptc]

Ted, that's a great idea. Clearly, I am quite inexperienced in the ways of online auctions, but you're right - the reserve price fee is huge, relatively speaking. Lesson learned.

 

[BrianShaw]

Trying to flush out what the reserve actually is, I suspect.

Could be that... or it could be what I heard a guy at work explain:

If it is an item that he collects but the reserve (if disclosed) is higher than he will pay, he sometimes bids just below the reserve price to make sure nobidy else will get a good deal on the item. Being under the reserve price makes sure that he isn't obligated to buy if he's the only bidder.

When I told him that he was being a jerk, he stopped being my friend.

Personally, I haven't a clue why a seller would post a reserve and then tell everyone what it is.

 

[Ash]

Brian - having a low starting bid and a high reserve (remember, reserves are ALWAYS over £50... so I guess $100??) means that people see a tempting price, and are then coaxed into bidding to almost guess the reserve.

 

[BrianShaw]

Ahhh, I did not know that there was a minimum reserve price. I understand the attraction of the low intitial bid price, though. Those are the kind of auctions I look at first!

What I was pondering is why some sellers will state their reserve price in the posting rather than letting bidders 'discover' it through the bidding process.

 

[akptc]

... What I was pondering is why some sellers will state their reserve price in the posting rather than letting bidders 'discover' it through the bidding process.

I researched it online and found lots of comments suggesting that hiding the reserve price was pretty much cruel and pointless. Of course, with a reserve price of, say, $1000, what's the point of starting the bid at $1... (what I did). Then there is the psychology of impulse bidding, I reckon...

 

[Flyfisher Tom]

Ted, that's a great idea. Clearly, I am quite inexperienced in the ways of online auctions, but you're right - the reserve price fee is huge, relatively speaking. Lesson learned.

I've noticed that some bidders have no intrinsic interest in your item. They are casual bidders, who just like to bump an auction along. In high ticket items, you will frequently see them bid $5 or $20 bids and never bid again.

There are also bidders who put in a bid simply to keep track of the item for comparison purposes relative to another similar item they are REALLY bidding on. In other words, they are trying to see what your item sells for, so they have an idea of either what to bid on another auction, or what to price for the sale of their own similar item.

By the way, you can start the bidding at your reserve price, but you will turn off a lot of the bidding that often comes from identical items that have no reserve. Do a search of completed items for your lens/camera and you will see that having a high first starting bid often serves to retard interest in your item. While items that have no reserve frequently do great because at the outset, people bid and stay interested when they think they have the chance to get a bargain. And once they've bid, your item shows up on their front "My Ebay" page, causing them to maintain interest.

good luck

 

[Flyfisher Tom]

If you've done the research on the market price of your item, there is really no reason to have a reserve. Do a 7 or 10 day auction so that it gets plenty of exposure, start the bidding at a real $1, and let the frenzy begin.

In my experience, having no reserve will frequently get you more. If you are really confident of your price, put in a Buy-It-Now (by Paypal) price. That way someone who is impatient, and truly serious can grab your item right off the bat. And having the must pay by Paypal immediately feature assures that the Buy-It-Now bidder is completely committed and serious.

 

[BrianShaw]

The psychology of pricing things is quite interesting, indeed. A few years ago I sold a home. There were a couple of other homes in the neighborhood that were severely overpriced and wren't moving. I wanted to get rid of my house... and quick. Just as I was putting it on the market an identical house, just one street away, went on the market. My notion was to "right price" my house but I wasn't very happy about having something nearby for potential buyers to compare with. So I figured the "right price" ans set that as my asking price; the other seller set an asking price that was 20% lower than the house was reasonably worth. They had many more people looking at their house than I did. Mine sold quickly, as did theirs. I got my asking price. They got higher than what I got -- because of a bidding frenzy. The only difference was that my buyer took the house "as is" (it really was in quite nice shape) and the other seller had many expensive repairs negotiated into the deal. I suspect that we both came out about the same in the end.

 

[jlw]

There's nothing cruel about an undisclosed reserve price, which is a standard practice in non-online auctions.

One good reason to use an undisclosed reserve price is if you really have no idea of the fair market value of the item. Let's say I want to sell a Canon Filter Previewer (a non-existent accessory about which I once had an incredibly vivid dream) and since I can't find any records of previous sales, I have no idea of what somebody might pay. $1? $10? $100? $1000?

Let's suppose I figure it must be incredibly rare, and decide that if I can't get at least $500 for it, I'd rather just keep it. Now, if I simply listed it with a $500 minimum bid, it's possible I might get no bids for it at all. That would leave me with no idea whatsoever of what people might have paid, so I'd be getting no useful information at all in return for the cost of listing my item.

On the other hand, suppose I list it with a minimum bid of, say, $50 and an undisclosed reserve of $500. Now I can find out something about the item's real market value, without the risk of having to sell it for less than my target price. If I get active bidding topping out at, say, around $200, I have a notion of what I'd be likely to be able to get if I relisted it. Then I can make an informed decision about whether to keep it or sell it.

I agree that disclosing the reserve price is just a waste of your reserve fee. If you know that you don't want to sell the item for less than X dollars, just make X dollars your minimum bid.

 

[akptc]

Thanks everyone for your insights. I am starting to see why my happy-go-lucky approach to ebay-ing is not very effective, especially with non-obvious bargains like the M7 that I had listed. I am in the middle of pricing a software product my company is releasing and must confess that it’s been a huge headache, with not a single team member agreeing on either the price or the best sales strategy. It seems some of it is science, some common sense, but part is just plain luck of hitting that “magic” price 🙂

 

[Athena]

Hi, this is probably way off topic but I am very curious as to the cause of this behavior. I had an item posted on ebay, with reserve price listed. Many folks bid on the item but stopped short of the reserve price. I am scratching my head about this one and can’t figure it out - why bid at all if the reserve price is too high for the bidder? Is there some kind of strategy in this?

Simple. If the Reserve Price is not met, eBay will as you if you want to offer the item to the "next" highest bidder on a "Second Chance Offer".

 

[BrianShaw]

...with not a single team member agreeing on either the price or the best sales strategy.

Pardon me if I am rubbing salt in a wound... but you really didn't expect consensus, did you? Around my job if you ask three people for an opinion you usually end up with five differing opinions. Nothing is wrong with your situation in my book! 🙂

 

[akptc]

Simple. If the Reserve Price is not met, eBay will as you if you want to offer the item to the "next" highest bidder on a "Second Chance Offer".

Aha! that's pretty clever, kind of like a "best offer" system but one that plays more on the seller's likely dissapointment.

 

[akptc]

Pardon me if I am rubbing salt in a wound... but you really didn't expect consensus, did you? Around my job if you ask three people for an opinion you usually end up with five differing opinions. Nothing is wrong with your situation in my book! 🙂

Scary, isn't it? Makes one wonder how any of the prices we see are arrived at 🙄

 

[Flyfisher Tom]

I'm afraid like most things, it will take personal experience to arrive at your most efficient and comfortable selling strategy 🙂

 

[oscroft]

If the Reserve Price is not met, eBay will as you if you want to offer the item to the "next" highest bidder on a "Second Chance Offer"

One thing to watch out with on Second Chance offers is that, in my experience, people rarely seem to accept them. I've offered when I have more than one of the item on sale, and I find that people will bid a price in the auction, be beaten by someone else, and then usually not take the item at the price they bid when it's offered.

 

[akptc]

One thing to watch out with on Second Chance offers is that, in my experience, people rarely seem to accept them. I've offered when I have more than one of the item on sale, and I find that people will bid a price in the auction, be beaten by someone else, and then usually not take the item at the price they bid when it's offered.

I wonder if this is an indication that a lot of folks bid more than they are really comfortable paying, then, once they cool off a bit, buying the item at their highest bid price doesn't look as good anymore?