Posted By:
Eric BrehmIf I could interrupt for a second to re-visit something Red said Friday night ... because I think he made an astute observation, that may not have been fully appreciated here.
Seems to me that when an item is in high demand but low supply, auctioning it is often more effective than setting a (high) fixed price for it, because the auction process itself may reveal to potential buyers, as Red suggested, what the 'market value' of the item really is. That may partly explain why auctions (on eBay and elsewhere) typically receive a lot more attention, and in many cases even bring higher sales prices than, fixed price BIN listings or dealer inventories. I realize that those who participate in 'bidding wars' may be operating with a false sense of security about the price level that is reasonable to bid for a particular item (i.e. that could likely be realized again in the future if the item were re-sold), and that the whole process can spiral out of control on occasion, but that is all part of the game.
I'm sure the auction format is also popular with many buyers because they may hope to get an item for less than it has sold for in the past, if a particular auction for some reason doesn't attract a lot of bidders. But I think that is fairly unlikely to occur with high demand, low supply items such as I am talking about. (Usually all you need are at least two people who really want an item to get the bidding to rise to at least the 'market' rate.)
From a selling perspective, I realize there is some risk that if you auction an item you won't recoup your investment. But I still find it puzzling that so many sellers on eBay use Buy It Now with unrealistically high prices, or run auctions with very high starting bids (which is practically the same thing). Most of the time the stuff just sits there, with no action. It cycles through and you see the same listing over and over again. It has been suggested that these sellers are just patiently waiting for the right (impatient, ignorant, or rich) buyer to come along and pay their price. Perhaps I am missing something?
edited to add: Red's post on this subject was actually Thursday night - way back in this thread