Slashdot Mirror
The Science of eBay
PreacherTom writes "Professors of marketing, economics, management, and psychology have published dozens of papers to try to explain how and why eBay users buy and sell online. At the same time, there is no shortage of people offering helpful hints online. Kerry Miller takes a novel approach, offering 10 tips to maximize your profit that are based on a summary of these scientific analyses, rather than just 'educated' guessing."
1. Set the starting price low (except for items you expect little interest in). Low starting prices stimulate auction traffic and get early bidders psychologically invested in the auction, leading to more completed sales and higher final prices. Professor Gillian Ku from London Business School and professors Adam Galinsky and J. Keith Murnighan from Northwestern found that Nikon cameras with starting prices of $0.01 resulted in significantly higher final prices than the average price for completed camera auctions.
An auction for a kitchen sink with a starting price of $225 ended without a single bidder. When re-auctioned with a starting price of $75, the sink sold for $275. The exception to the start-low rule: If you're selling an idiosyncratic item you don't think a lot of people will bid on, set a price closer to the item's actual value.
2. Use reserve prices with caution, especially for low-priced items. When using a low minimum bid, nervous sellers sometimes set secret reserve prices to make sure their item doesn't sell for less than the item's true value. Using reserves is a risky strategy for sellers, say professors at Stanford and the University of Arizona, because it reduces the probability that the auction will end in a sale.
In an experiment using Pokémon trading cards, they found that secret-reserve auctions on average resulted in fewer serious bidders per auction and lower final sale prices. However, other research suggests that for auctions of higher-priced goods (over $25), secret reserves might actually push revenues higher when the auctions end in a successful sale.
3. Use photos in your listings. Listings with photos receive much more traffic than listings without photos. Generally speaking, more traffic to your listing--especially on the first day of an auction--results in more active bidders, and the more bidders competing for an item, the higher the sale price. In one study at Stanford, researchers found that an extra bidder results in an 11.4% increase in auction revenue among all auctions, and a 5.5% increase for auctions in which there are least two bidders.
4. Don't flood the market. If you're selling multiples of an item, space them out, rather then selling them all at once, says Ku--that's simple supply and demand at work.
5. Spell-check. Misspellings decrease the amount of traffic an auction receives. Ku, Galinsky, and Murnighan found that Michael Jordan shirts listed "Micheal" went unsold almost twice as often as those that were spelled correctly. When sold, the misspelled brand names resulted in lower final sale prices.
6. Hype it up. Ku and Murnighan suggest that inserting blatant puffery like "This shirt is hot!! A must-have for the summer!!" into low-starting-price auctions could stimulate interest better than more straightforward listings, and possibly even raise final sale prices. Researchers at Stanford found that auctions which mention the high retail price in an item description sell for 7% more on average.
7. Hold longer auctions. Researchers from the University of Arizona and the University of Michigan found that longer auctions tend to fetch higher prices. While three-day and five-day auctions yield approximately the same prices, seven-day auctions are about 24% higher, and 10-day auctions 42% higher on average.
8. Don't end auctions during "eBay happy hour." Though it might seem counterintuitive, a University of Pennsylvania researcher found that auctions ending during peak hours on eBay are actually 9.6% less likely to result in a sale. The reason? More competition. About 35% of auctions end between 5 p.m. and 8:59 p.m., when 25% of bids are placed.
9. Charge for shipping--but not too much. Bidders don't pay much attention to shipping costs when placing bids, say professors at UC Berkeley and Hong Kong University of Science and Technology. CDs listed with a starting price of one cent with $3.99 shipping averaged 21% higher final sale prices than CDs set with an opening price of $4 and no shipping charge. B
Religion for nerds. Stuff that really matters
7. Hold longer auctions. Researchers from the University of Arizona and the University of Michigan found that longer auctions tend to fetch higher prices. While three-day and five-day auctions yield approximately the same prices, seven-day auctions are about 24% higher, and 10-day auctions 42% higher on average.
I disagree with this statement. In my experience, the length of the auction, especially when the item is widespread, makes little difference in final sale price. This is easy to tell if you're a seller on eBay... just watch your counter when you put up a long auction. Buyers usually compete close to the auction's close. It doesn't matter if your auction is listed for 10 days if no one sees it until the 10th day. The only point to having a long auction is if your item is rare or odd, so people will eventually stumble across it. I believe the research numbers may be skewed here because sellers will list items of more importance for longer periods of time because it has ore value, contrary to items that have less valuable. Just my opinion.
I can comment on that one. I generally avoid auctions with reserve prices. Usually the reserve is too high, and I hate the stupid mystery of how much the item is actually being auctioned for. If the seller doesn't want to sell the item for less than XX dollars, just make that the minimum price. There are generally other sellers who have the same item and will be more direct about their expectations, and I like that.
I call bullshit on that. Many people pay attention to shipping, and changes made in the last year to eBay's page display and search results make it harder to con people with inflated shipping charges becuase they are now shown much more prominantly in the auction.