Strange Ebay Business Model

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Posted By: barrysloate

I just went onto the pre-1930's section of ebay and reorganized the list with "highest first." The 50 cards on the first page ranged in price from mid-four figures to a top price of 65K.

Of those 50 cards, 49 of them did not have a bid and the only one that did clearly was not even close to the reserve. I didn't even bother to check page two.

That is an awfully dreary way to conduct business. Whatever happened to "lot goes to the highest bidder?" It's clear that most of these will not sell. It's even possible none will.

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Posted By: pas

This phenomenon is not limited to prewar. There are many sellers who have quite high BINs that seem quite unlikely to sell. My belief is that these folks either negotiate deals off ebay to save the fees, OR they don't have cash flow needs and can afford to wait for the impatient/price inelastic buyer who needs the card irrespective of the price.

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Posted By: barrysloate

It looks less like a marketplace and more like a card museum.

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Posted By: Mark

I don't get it either.... Are these sellers simply going for the exposure ebay provides, and hoping to get a subsequent "off-line" offer? I know that some sellers conduct their business this way, and avoid paying ebay's final value fees as a result.

If not this possibility, I have no idea why certain sellers list items with prices so astronomical as to negate any possibility of a sale.

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Posted By: T206Collector

...most of my T206 collection about 14 months ago and a few months back I noticed a few of them popping up in ebay stores with outrageous prices. They are still there. I take a peek every couple of weeks to check on them again. It's kind of an interesting way to see my old collection -- and at those prices, they aren't going anywhere anytime soon...

I don't get sellers that can keep inventory priced above market. It's as if they're still waiting for the market to reach them, when it's going the opposite way.

_ _ _ _ _ _ _ _

Visit http://www.t206collector.com for signed deadball card galleries, articles and more!

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Posted By: barrysloate

There are different business models but I always believed in a fluid market- lots of buying and lots of selling is the ideal. I've never understood those dealers who overprice their entire inventory and little of it ever sells.

Then again, they haven't asked me for my business advice either.

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Posted By: Keyway

I like the Cobb green background PSA5 for 6,500 or the 6 for 10,500. How about the T206 Rudolph, McGann and Frill all PSA8 for 9,000 each. Man!!! you guys are missing the boat.

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Posted By: jeffdrum

As I have said before, these guys are operating a Virtual Museum. On the other hand, maybe they are laying in the weeds waiting for the hobby's most influential new collectors to stop by. I don't get, but they didn't ask me.

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Posted By: Eric Brehm

Those 49 items do not have bids because they are listed with a fixed Buy-It-Now price. (Although those that include the Best Offer feature may have received offers.) To see what in this category has sold recently, check "Completed Listings" on the left and re-do the search. Some of the stuff is selling, but as as you surmised Barry, most of it is not.

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Posted By: pas

It's all about cash flow. If you need cash flow you have to price to sell, if you don't you can wait to snag the crazies.

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Posted By: Eric B

I think you can still select items with at least 1 bid. That gets rid of all the ridiculously high ones. But it doesn't work for copmpleted items.

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Posted By: Alan U

The one advantage of setting a high price and then allowing "best offers" is that you can be a little more selective about your buyers. Without the best offer choice though, I agree, museums.

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Posted By: Anonymous

Eric has hit the nail on the head here. Ebay is having a special promotion for the fixed price listings; 25 cent insertion fee, regardless of how much the price is. They're just hoping to find a fool or two out there.

Paul

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Posted By: barrysloate

I know a few of the cards listed in that top 50 will sell with a last minute bid. But my point is why don't dealers rely on the auction method and let items get multiple bids and go to the one who bids the highest? I've been doing that for 25 years and I find it works pretty darn well. No, I can't always get way above retail, but I can move a large amount of material at a time, and on average for a strong price.

Ebay started out as a place to auction material and now I think it's turned into a very expense retail shop.

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Posted By: Red

So the only way to sell cards that people have invested thousands into is to dump them at auction. Who cares what they sell for? The board's vote is for all those expensive BIN cards to be converted over to $1 auctions and in 7 days there will be no more cards expensive cards to look at. Sounds like the business model of every auction house clone pumping out thousands of lots a month, collecting a fee and oblivious to any profit or loss to the consignor. That's how everybody sells their cards, right?

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Posted By: Jason

What sucks about the business model is when the one card I need to finish my set is 135% marked up and I haven't seen another in a year. (I missed one that was sold four months ago for the correct price)

Just have to be patient.

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Posted By: barrysloate

Red- I find that when I start my lots low and let them sell for what the market will bear, my consignors do pretty well, often better than they expect. Besides, I can't take consignments, do all the work necessary to prepare an auction, and then return most of the lots because they didn't sell.

If you go the auction route no question there is a little risk involved.

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Posted By: Paul D

Barry, some old roommates of my used to sell those trendy red string kabbalah bracelets on ebay. They would have all the different types/styles in their ebay store and in auctions that ended every two or three days. The would have people by items from their store for twice as much as their auctions would end at; and sometimes within a few hours of their auctions ending. I think people just want the satisfaction of 'getting it now' and from a selling standpoint, it can't hurt to have some higher priced things just sit out there until the right buyer comes along. And as I mentioned above, with the ebay running the fixed price special, it is more attractive for some sellers to let themselves shoot for the stars on some things. I ran some numbers on the fee savings for a card that I might add to my store for $175 a few days ago, if it were to sell under the current ebay promo, my fees would be just over $4.00 less. Paul

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Posted By: Jim VB

Barry,

I agree. One of the forst things I learned in retail was that there were several methods available to value your inventory. A few people use FIFO (first in, first out). Most people use LIFO (last in, first out). The worst system for any retailer is FISH (first in, still here).

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Posted By: barrysloate

Paul- that is a fair point, but there is a distinction between kabbala bracelets and vintage baseball cards.

Collectors will compete fiercely for scarce and desirable vintage baseball cards. Will that same competitive spirit apply to the bracelets? Some things would do better at a fixed price, such as a toaster oven or a power tool. Could you see two bidders sniping on a new toaster oven?

I understand putting some high end items up for very wishful prices is a good idea. I hate to see my best items sell for less than top dollar myself (but it happens). I think though that these high BIN prices also trickle down to many less than top drawer items too; and there are dealers who put a thousand cards up on ebay dump days, and maybe 1% of them sell.

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Posted By: boxingcardman

I disagree with the implication of this thread that unless a seller starts every card in an absolute auction for a buck, he is doing something wrong. First of all, the sale Ebey is running is a fixed price sale, not an auction format sale. Second, not everyone who sells on Ebay has to unload their cards regardless of price; they can afford to wait if they don't get their price. Third, not everyone who sells on Ebay has the full-tiem dealer's or auction house's need to sell every item listed. They may be very happy if 1 in 10 actually sells. In fact, for many of the sellers during this form of Ebay sale, the listing is a cheap way to test the waters on rare and interesting items and see what sort of interest they bring. Some collectors are sellers if they can get their price and not otherwise. I know I have posted cards in these sales with that attitude and have turned down very nice offers on them simply because I wasn't going to sell unless the "magic" number came up.

On the buy side not everyone who is willing to buy an "overpriced" card is a "crazy"; I find that characterization to be quite condescending. They may have money to burn and not really care as much about price as they do about getting the card for a collection--and what's wrong with that. They may have been looking for a card for a while and finally finding it and being able to afford it, they aren't going to quibble over the price of an item that is going to be in their collection for a very long time. Yesterday, I got a W554 O'Doul from Kit Young's fixed price offering; the price was a bit more than I'd have liked but I've struck out trying to snag one on the cheap for quite some time, so I wasn't going to waffle on this one.

Finally, I like seeing really nice, really high ticket cards, even if they are "overpriced" for the market. I've seen some stuff that I could not afford but found very interesting.


Sic Gorgiamus Allos Subjectatos Nunc

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Posted By: barrysloate

Adam- your analysis is correct but the point of my main post was not whether it was right or wrong, but that to me it is a less than enticing business model. If I am a buyer and I see nobody has placed any bids on anything, I begin to think it's all overpriced.

It's like walking into a restaurant and you are the only people there. Wouldn't you have some hesitation about sitting down? It is more a perception, that's all.

It apparently works for some but if I put my inventory out and virtually nothing sold I wouldn't be a happy camper.

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Posted By: davidcycleback

Some dealers sell/auction most of their as Barry likes, while having certain items high priced.

I sell the way Barry likes, but will have certain items not for sale. Perhaps these dealers don't expect to sell these items, and are just showing them.

It used be before eBay 'privatized' everything, that off eBay sales were common. Posting stuff hoping for some inquiries may have been a fair model.

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Posted By: Bruce Babcock

I've seen the same practice at shows as well. The cards are on display with huge prices and at the end of the show they are packed up and taken home.

I think the catagories of "dealer inventory" and "auction items" have merged over time. Auctions items formerly were rare and unusually desirable items for which a "retail" price was difficult to determine. A T206 Cobb in vg/ex did not fit this description. Now everything is an auction item. Ebay and the internet have certainly changed the equation.

Still, for the situation that Barry describes, why not place a high reserve and start the auction with a low minimum and see what happens?

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Posted By: davidcycleback

In one of Mr. Mint's book from say 14 years ago, he told of people who bring their cards to a show just to show them off. They paid the table fee to not sell anything. So the practice of showing off inventory not expecting to sell is not new.

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Posted By: Rick McQuillan

This sounds like many of the card shops that I visit. They have had the same cards, in the same display case, with the same prices, for the last 10 years. They won't come down on the prices, so the dust continues to gather on the cards. Then they complain because sales are down. One of the dealers had a low grade Goudey Ruth sitting in the display case for at least 10 years. He had a ridiculous price on the card. Over the years I made him a couple of very fair offers, which he declined. Finally he decided to put the card on eBay where it sold for 200 bucks less than I had offered.

When I go to card shows I often wonder why some of the dealers bother to show up. They bring the same stuff to every show. They won't negotiate on prices, so they end up taking their stuff home at the end of the show. Why would I want to pay $50 at a show for a T206 common that I can get on eBay or Net54 for $20?

As far as the BIN's are concerned, I have made purchases using BIN when the prices are within reason. I will even pay slightly over book value for something that I want, but it seems that lately we are seeing 100's of vintage cards with BIN's that are priced at double or triple the average sale price of similar cards. Did the dealers overpay when they bought these cards so they have to price them high to recoup their investment or are they just looking for suckers? Do they take these same cards to card shows and put these same ridiculous prices on the cards at the shows?

Rick

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Posted By: Alan

As mentioned earlier, it's not just limited to ebay. Look at prices of cards at shows & it's the same idea.

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Posted By: Jimmy

Alan,

I agree with you about the shows, we have some great stuff sometimes, but we can be lost in crowd because customers focus on the two or three main rows of the show which have higher prices and larger dealers. On eBay they did change things around, but I have been able to get around that and setup my on searches to get what I would like to see.

Jimmy

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Posted By: Misunderestimated (Brian H)

I think that there are an especially large number of these on eBay these days because (as someone likely mentioned above and I missed because I only skimmed all of the posts) there is or was a special on fixed price listings.

This also seems somewhat consistent with what I have recently read about eBay in the business press in that these sellers -- full time large scale dealers are the types of sellers eBay is generally catering towards these days. (
Admittedly vintage card sellers are difficult to analogize with entities like Best Buys)

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Posted By: Jason

I agree somewhat of the restaurant analogy.

Its not so much what the person pays for the card or item they want. It's whether they have buyer's satisfaction after the purchase, next week, next month, next year.

If a person feels they got taken on a transaction it can affect their dealings with a dealer in the future.

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Posted By: Al C.risafulli

I definitely do not agree with the restaurant analogy.

In a restaurant, you have a finite amount of square footage that can generate profit. You have overhead you are required to pay - not only cost of goods, but overhead and payroll for service staff, cooks, busboys, etc.

Further, in a restaurant you are not letting customers bid on how much a plate of spaghetti should cost. You're still telling them the price, and unless you're planning on going out of business, you're setting your pricing in a way that's designed to make sure that, over the course of an evening, your table is profitable.

On eBay, you've got a cost of goods and then a very low listing rate if your material does not sell. When eBay has a special promotion on fixed price listings, sellers with large inventory in their eBay store can move their merchandise to fixed-price listings at the click of a button, and only need to sell a handful of items to cover their costs. When you've got a few thousand items in your eBay store, you'd be surprised at how profitable this can be.

I can certainly understand the idea of letting markets set pricing. But I can absolutely understand the idea of reducing volume and increasing profitability as well.

-Al

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Posted By: Eric Brehm

I suppose if the business model wasn't working, people would eventually stop using it. But I find it a bit puzzling too. I will occasionally pay an above-market BIN price, or make a high offer, if I see a card I need and it is unusually strong for the grade. But a lot of what I see is rather weak, that looks like it has been picked over repeatedly on-line, and perhaps at card shows as well. Some of the fixed priced stuff on eBay, at least in the categories I look at, has been recycling through the listings for a long time, in some cases for years. Yet rather than lower the prices, the dealers just keep throwing it out there.

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Posted By: barrysloate

I think my original observation was more about how ebay has evolved over the years. It started out as a place to auction goods, and at its peak it was on a daily basis the biggest auction venue in the world.

Today the idea of auctioning lots to the highest bidder seems antiquated, and ebay's business model is one of a high priced retail store (with plenty of items still be auctioned).

Ebay is forever changing, and in the future we will see more and more of this high priced and overpriced merchandise that may or may not sell.

Ebay was flourishing a few years ago but is struggling today. I can only feel that many of the changes they incorporated were not good ones.

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Posted By: boxingcardman

Based on the marketing analysis of its customers and its technical capaclties. Everything Ebay does to alter its product is carefully tested before it is made permanent. For example, they studied the outcomes and learned that listings with pictures do considerably better than those without (as they say whenever they offer a picture package special), so they decided that allowing a free picture per listing made Ebay more money than it was making charging for a picture.

I know these fixed price listing promos work; I've done very well selling from them. It is no great feat to figure out a price, either. You either work off your costs and mark them up with a return you like or, with services like VCP where you can readily determine the sales price for mainstream stuff, you price them to market. Combine that with the best offer option, which allows you to automatically weed out the nimrods trying to steal a deal, and you can control the outcome quite nicely yet still make the item attractively priced relative to the market.

Also remember that this two-week sales isn't a business model, it is a short term promotion. The other 50 weeks of the year sellers must deal with either the auction format or the fulll cost BIN format, and given the relatively small numberof BINs we normally see, thus far it appears that sellers in the collectibles category faced with full cost BIN listing fees are more likely to choose the cheaper auction format.

One last point: Although it means everything to us, collectibles are a tiny sliver of Ebay's business. I am pretty certain that the effect on tbe baseball card listings ranks rather low on the list of considerations when Ebay management kicks around the idea of a promotion. The vast majority of the items listed are consumer products that are readily priced through retailers. A fixed price model of selling works just fine with those and is already the accepted norm; you don't go into Best Buy expecting a $0.99 minimum bid on your new camera...

Sic Gorgiamus Allos Subjectatos Nunc

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Posted By: Eric Brehm

Actually, there are a very large number of BIN items in the eBay baseball card category at any given time, if you include the Stores Inventory stuff. I have never listed anything in a Store, but I understand the listing fees are lower, but the final value fees are higher, than in the regular section.