The evolution of Ebay to a fixed price platform explained

[frankbmd]

We all know that the Ebay of today is quite different from the Ebay of 10-15 years ago. Auction volume has decreased dramatically and been replaced by the Ebay Store catering to both high volume sellers and high volume consignors in what is left of the auction format. I am attaching a link to a paper that tries to explain the reasons behind this evolution from an academic perspective. I found it interesting in that the data presented confirms my empirical observations. It is quite long, but worth a look. The link provided may not open the article, depending on your browser settings for pdf documents, but may download the article to your computer, where you can open it.

https://web.stanford.edu/~jdlevin/Papers/AFP.pdf

[Jayworld]

Frank:
Thanks for the link. Very enlightening article. I found it interesting that in the Alternate Hypothesis section, this sentence stood out to me: The first is
changes in the eBay platform that might have favored posted price listings. After reading the paper, it seemed to me (from the mathematical analysis of the writers) that even though fixed (or posted) prices were introduced in 2002 in eBay, the straight auction format was still going strong in 2003. I think a major factor in the change from 100% auction environment to now a less-than-50% auction environment was eBay's decision (over a period of time) to change its business model for better financial gain on their part, thus producing the current environment that favors large volume sellers (through perks and discounts in listing fees, number of listings, etc.).

Gone, I believe, are the days in which infrequent sellers (I would be part of that equation) used eBay as an "electronic garage sale" to sell items to a much larger demographic than a local backyard weekend sale. If I had extra stuff (baseball cards, vintage toys, comics, video games, books, etc.), I could post on ebay and realize some money, even after shipping costs, eBay seller fees, etc. Now, with very few exceptions, anything I've tried to sell on eBay (cards, game-used jerseys, etc.) have been at a loss when factoring in seller fees (item cost + shipping cost percentages), shipping costs (gone up quite a bit since when I first joined eBay in 1998), etc.

This is one reason I hardly ever sell on eBay anymore. I still buy on eBay from time to time, and still mostly favor the auction formats, but I guess that's because I'm old school. Of course, bargains can be had on many BIN items, especially when one price compares with other online "fixed price" venues such as amazon.com, sports collectible dealers, etc....

Thanks, Frank!

[ajjohnsonsoxfan]

Craigslist has replaced eBay as the local go to for selling "yard sale" type stuff

[pbspelly]

It's too bad, in my opinion, because eBay used to be great for setting a market price. I used to sell restored 1940s telephones (called Lucy phones, because one was used prominently in "I Love Lucy") on eBay. I'd always list them at .99 cents and see where the market took them. Some weeks they'd sell for $120, sometimes for $150, sometimes for $100. But I was always confident that the market would determine a relatively fair price. I actually wrote eBay a long letter urging them to encourage more of what I termed "eBay market pricing" by giving extra discounts for anyone listing an item at auction for .99 cents or less. Instead, they went the other direction, and encouraged people to list lots of items for set prices. I would now be hesitant to just list an item for .99 cents.

[Cozumeleno]

Originally Posted by pbspelly

I would now be hesitant to just list an item for .99 cents.

It's weird - it's been very much a mixed bag for me. I am not a major eBay seller by any means but will use it to move duplicates or other items I pick up as parts of collections if I don't sell them here.

I've listed items that have sat and sat with what I felt was a very fair selling price. If it sits too long, I will generally start it at $.99 just to get something for it. Sometimes I don't get what I wanted for it, but often it will encourage more bidders and either reach/exceed my initial asking price or it will come very close to it at a point where I would have gladly sold it to begin with.

[ullmandds]

I'm glad I could help keep you busy in retirement!!!!

[savedfrommyspokes]

Originally Posted by pbspelly

I actually wrote eBay a long letter urging them to encourage more of what I termed "eBay market pricing" by giving extra discounts for anyone listing an item at auction for .99 cents or less. Instead, they went the other direction, and encouraged people to list lots of items for set prices. I would now be hesitant to just list an item for .99 cents.

Ebay does encourage user's to use the auction format.....they now go as far as offering to credit back a seller's listing fees on any auction listing that sells. You only pay for the listing if it does NOT sell.

[frankbmd]

Don't the higher final value fees of today more than offset the benevolent credit of a listing fee?

[savedfrommyspokes]

I do not recall the previous FVF rates for sports cards sold on ebay, however, the 9% (or 7.2% FVF for TRS) in FVF currently being charged has been in place for 4+/- years (?).

With ebay now offering the listing fee credit for sold auctions listings and improved discounts on listing fees for store owners, this would be the first time that I can recall an instance where ebay offered a reduction in listing fees without an offsetting increase in fees elsewhere.

If I recall correctly, several years back the FVF rate was higher, but was reduced by approximately 2% when ebay began charging FVF on the s/h collected. For most this sellers, this change did not increase costs, however, the "free s/h" sellers obviously did benefit from this.

[Peter_Spaeth]

I would like to hear the authors' take on Dean's Cards.

[pbspelly]

Interesting article. It reaches the conclusion that much of the decline in auctions is due to consumer demand (consumers prefer not to wait for auctions to end), rather than particular actions by eBay or changes in the type of people who are selling on eBay. Which is not what I had thought. It also says that most of the people who buy things at auctions on eBay now are the professionals, and that they tend to get a discount by doing so, whereas ordinary consumers prefer buy-it-now, and pay higher prices for the convenience.

[frankbmd]

Originally Posted by pbspelly

Interesting article. It reaches the conclusion that much of the decline in auctions is due to consumer demand (consumers prefer not to wait for auctions to end), rather than particular actions by eBay or changes in the type of people who are selling on eBay. Which is not what I had thought. It also says that most of the people who buy things at auctions on eBay now are the professionals, and that they tend to get a discount by doing so, whereas ordinary consumers prefer buy-it-now, and pay higher prices for the convenience.

Interesting yes, but I would not accept their conclusions as gospel. I would venture to say that many of the items that sit in eBay stores for months at museum prices wound command more interest from consumers if they were in 99 cent auctions. In the good old days the mean sales price would define the market value, with an equal number above and below the mean. Sellers have less risk with fixed price sales to be sure, but buyer "convenience" is a stretch to explain the decline in auction volume in my opinion.

Originally Posted by Peter_Spaeth

I would like to hear the authors' take on Dean's Cards.

The business model of Dean's Cards would not seem to be consistent with the conclusions of the article.

[Exhibitman]

A big load of noise designed to put an academic gloss on the only fact that really matters: "Auction listings are also more likely to sell than matched posted price listings, but at lower prices.." And "Frequent buyers tend to focus more on auctions, and they get better bargains when they are bidding." So let me get this straight: sellers gravitate towards selling mechanisms that make them more money? Whodathunkit?

Mic drop...

The days of throwing up cards at $0.99 and letting it rip are over, unless you like to lose money or you consign to an eBay consignment seller and hand over control of the minimum bid to him (which is why I won't use one of them ever again). After the beating that I took in auctions a few years ago when I needed to liquidate some items and allowed them to start at $9.99 via a consignment seller, I would never, ever risk a low starting bid auction again. If I use an auction I start the card at the minimum price I want for it. If I get one bid I am just fine with that but if there are multiple bidders I get the upside. I know a lot of weekend warriors who are in the same boat and who do what I do or use BINs w/ or w/o Best Offer.

[Touch'EmAll]

I think the significant economic downturn that started in 2008 impacted true auction style ending prices. I am sure that left bad taste in many mouths. Sellers were then (and still are) gun shy of getting crushed.

Now, with a much recovered economy, we are seeing better auction prices. If anything, auction prices are very good. I can't speak for others, but I have not won a significant card in a long time - have always been over bid by 1-4 bidders. PWCC and Probstein are not the only true auctions now getting respectable prices - even some little guys auctions I have bid on ended up over what I bid.

But granted, it does take a certain amount of guts to list at $0.99

[pbspelly]

Originally Posted by Exhibitman

The days of throwing up cards at $0.99 and letting it rip are over

But why do you think that is? Do you think because it never really worked and people figured that out, or because it used to work but something has changed?

[botn]

Prior to 2010 I used use auction listings almost exclusively on eBay. Mostly starting items at 1 cent but I also would use a "retail" opening bid on items I was worried might not get the price I wanted in hopes of catching the one bidder. I liked the fast conversion from cardboard to cash.

Due to the changes in the search function categories, the sheer volume of listings buyers have to sift through and the continual flow of material in catalog type auctions outside of eBay, auction final prices were very unimpressive.

I now use the store listings, almost exclusively, and use auctions to move much less valuable items. I am very happy with this model now that I have conformed to it. Inventory does not turn over as quickly because there are not as many page views but when they sell I get what I want and I am willing and able to wait it out.

[mark evans]

I discovered eBay in 1998 and reinstituted collecting sports cards which I had done as a kid in the 60s. The shift from the auction format to BINs makes eBay less enticing to me as a collector.

I figure I have purchased roughly 500 items since I joined in 1998. The vast majority were won in auctions prior to the shift to the BIN format. Speaking strictly as a collector and without criticism of sellers/consignors, the auction prices to me represent fair market value, as opposed to typically higher priced BINs. And, just as important to me, the auctions were a lot more fun than the current system.

I wonder if it would benefit any seller to list (some of) his items with either opening bid or reserve set 5 or 10% below VCP values. If eBay rules permit, could add a BIN as well effective until first bid. If a dopey idea, so be it. Little effect on me regardless, as tough to feed the collecting habit on a gov't pension.

[Leon]

Our stories mirror each other a little bit. I found collecting again in approximately late 1996 and joined ebay in 1999, after collecting as a kid in the late 60s and early 70s. I knew it would change the landscape and it has. Good, bad or indifferent it has changed things. Overall I think it has greatly helped the hobby.

Originally Posted by mark evans

I discovered eBay in 1998 and reinstituted collecting sports cards which I had done as a kid in the 60s. The shift from the auction format to BINs makes eBay less enticing to me as a collector.

I figure I have purchased roughly 500 items since I joined in 1998. The vast majority were won in auctions prior to the shift to the BIN format. Speaking strictly as a collector and without criticism of sellers/consignors, the auction prices to me represent fair market value, as opposed to typically higher priced BINs. And, just as important to me, the auctions were a lot more fun than the current system.

I wonder if it would benefit any seller to list (some of) his items with either opening bid or reserve set 5 or 10% below VCP values. If eBay rules permit, could add a BIN as well effective until first bid. If a dopey idea, so be it. Little effect on me regardless, as tough to feed the collecting habit on a gov't pension.