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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."
Most of the tips are common sense or obvious to people who have used eBay a few times, to both buy and sell.
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
You always have to wonder why business professors -- if they know so much about how to read the market -- aren't out there making a fortune instead of making less as a professor.
Apology to Ubuntu forum.
Buy low. Sell high.
That'll be $1 for the advice and $11.95 for shipping.
No C.O.D's
It's funny that many of the auction that I have seen on eBay actually close higher then if you had bought it at a retail store.
In bad times, people sell stuff. In good times they buy. Either way eBay is making $$$.
Same reason alcohol is great: drink to forget (bad times), drink to celebrate (good times).
Originally from this Usenet posting.
Updated:
Don't post stuff in lots. Auction stuff off separately because you'll have a hard time finding someone who wants all of it, but you will get bombarded with annoying emails from people interested only in one or two items who want you to break up the lot. Instead, list everything the same day, mention in each item description that you've got other items that complement this item, and create a link to all your current auctions (assume people won't think to click on the official eBay "View seller's other auctions" link).
Having nice, large photos of everything will encourage a higher final value. People like to know what they're buying.
Having detailed descriptions will cut down on having to answer the same question a hundred times from prospective bidders.
Make the auctions run for at least 5 days, so patient people who like to search and zero in on low-priced items they need will be able to put you in their watch list-- more watchers in the beginning means more people competing with each other and driving up the price at the end.
Time the start of the auctions so they end on a Sunday evening, but before 8pm-- when people are almost certain to be home but aren't yet glued to the TV. (But definitely don't end it the night of the Super Bowl!)
I have used the above tips for years, with great success.
~Philly
I'm not sure why there's any need to overcomplicate this. eBay works *because* there are morons out there with way too much money.
Just make any ordinary item something *sound* special in some way, and start the pricing out with a number ending in ".95", and they jump on it like fleas. I've managed to sell numerous used items time and time again at above retail prices, because of this.
Remember kids, it's not lying if it can't be proven wrong.
8==8 Bones 8==8