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eBay School: The auction

Learn about all the elements that make up an eBay auction.
by Gisle Hannemyr
Published: 2011-04-25.

An eBay auction take place over some time. Usually, the time it takes from an item appear for sale on one of eBay's sites, and until the auction end, is about a week, but sellers can choose different periods.

In this lesson, I'll take you through all the phases of an auction, from searching for things to buy, to giving feedback. Most of examples assume that you are logged on to your eBay account, so before you proceed make sure that you are signed in.

To sign in, just go to the eBay home page, and click on the link Sign in near the top. This takes you to eBay's sign in screen:

sign in screen.
The eBay sign in screen.

To sign in, you type your eBay user id and password in the boxes, and click on the blue Sign in button.

(If you do not have an eBay user id, you need to register first. In that case, start with our lesson about signing up for eBay.)

Finding items

Before you can buy anything on eBay, you need to locate the item you want to buy. In some of the reviews on this site, there are links to eBay that you may click on to search for the items described. To see how these look like, take a peak on the DPanswers' featured product page.

But of course you also want to find things to buy yourself. As a general rule, you do that by searching.

eBay search box.
The eBay search box. Searching for a nikon 50mm lens.

Searching is such an important part of the eBay experience that there is a whole lesson about searching. But for starters, just type in a description of what you are looking for in the search box, and click the green Search button. Hopefully, the list of items found contains something of interest.

Watching items

After you've find an item that interests you, the first thing to do with it, is to add it to your watch list.

The watch list is one of eBay's most useful tools. It let you keep track of items offered for sale on eBay without any need for record keeping on your part.

To add an item to your watch list, locate the Watch this item link in the listing of the item, and click it. That puts the item into your watch list. The link only appears in the listing while the item is for sale.

typical listing.
After you found an item that interests you, add it to your watch list.

To see the items in your watch list, put the cursor over the My eBay menu tab (right, at the top of screen), and click on Watch list. You can track up to 200 items in your personal watch list.

Your watch list is usually listed in the order the auctions close (shortest remaining bidding time first), but you can change the ordering by clicking on the column heads.

The most obvious reason for adding an item to the watch list is that you want to remember to bid on it later. (You should never, ever bid on it immediately. Why you should wait will be explained in a later lesson.)

However, watching an item may be a good way to learn about what things sell for on eBay, and why. While you can only add active listings to your watch list, it will stay in your list after the auction have ended, so you can go back an examine the listing in detail. I sometimes watch several similar items just to see what they end up selling for. If one finishes up at a premium compared to the other, I analyse the listings carefully and try to figure out why it attracted a higher price. This is of course most useful if you plan to sell an identical item, and need to fine tune the description of it to attract the highest bidders. But it can also be used as a tool when you are trying to learn how to spot bargains.

When you put an item in your watch list, you will automatically receive a Watch Alert email from eBay with a list of all items in your watch list that will end shortly. If you prefer not to receive this email, you can change this in the communication preferences. You find this, and other preferences, under the Account tab when you click My eBay. To access the watch preferences, show Buying activity. There are three separate watch preferences: Watch alert will alert you about most auction items ending; Watch item relisted will alert you if an item you have been watching is relisted; and Watch Alert SIF will alert you about fixed price store items ending (SIF is eBay-speak for “Store Inventory Format”).

The research period

The time interval from you've find an item of interest, and up to the time the auction closes, is time you have to research the item.

During this time, you should research the seller, research the item, ask the seller questions, and determine the fair market value of the item.

The reason you do this research is to determine what to bid just before the moment the auction ends?

Communication

As a general rule, you should not need to communicate with the seller. The description of the merchandise in the eBay listing should tell you all you need to know about the merchandise.

However, no rule without exception. The seller can have missed a vital point. For instance, if you are buying an oddball old flash unit, and its trigger voltage is not listed, you may want to ask the seller about this. Probably he does not know, and does not have the means to measure it, but since a flash with a too high trigger voltage is more or less useless, there is no point in bidding unless you know this particular specification.

contact
To ask the seller a question, click Continue on this screen.

Other grounds for contacting the seller is to ask about overseas shipping costs, if this is not specified in the listing. If you are planning to buy more than one item from the same seller, it may be a good idea to ask about combined shipping costs.

If you need to contact the seller, look for a link with the text “Ask a question” at the bottom of the item's description page. Click on this link. This usually takes you to a screen with some FAQs, but at the bottom of the list, there should be an item called “Other”, click on it, and you should get a button with the text “Continue”. Click on it, and a you get a form with some details about the item already recorded. Fill in this form and the CAPTCHA field, and click “Send”.

Remember that bidding obligates you if you are the highest bidder. If you need to ask the seller a question, make sure you do so before you bid anything. If you bid, and then ask, and the answer is not the one you hoped for, it may be too late to pull out if you've already bid.

Note that eBay does not require sellers to accept or answer questions before you buy an item. Such sellers are rare, but they do exist. My advice is simply to stay clear of these. If the seller is not willing to communicate, and something in the listing appears to be unclear, bidding still obliges you. You do not want that.

The bidding

In principle, you can bid on an item at any time from the item is listed on eBay, and until the second it closes. And you can bid as many times as you like.

However, bidding too early and often puts you at a disadvantage, so almost every eBay user with some knowledge about how the system works do not bid anything until very late in the bidding period.

Below, I've copied the bidding history from a typical eBay auction that was listed on eBay at March 1st, at 17:54:47 PST, and closed at exactly the same time six days later. The first two columns just show a pseudonymised member identifier and (in brackets) the number of transactions that member has conducted on eBay. The third column shows the amount entered into the auction and the final column the bid was made. To keep the table short and simple, I've only retained the final amount when multiple amounts has been bid due to eBay's automatic bidding feature.

3***3 (79)     US $241.50   Mar-06-11 17:54:11 PST
a***o (99)     US $239.00   Mar-06-11 17:54:44 PST
l***8 ( 1)     US $221.00   Mar-06-11 17:53:06 PST
h***h ( 9)     US $201.00   Mar-06-11 17:53:03 PST
s***s ( 6)     US $100.50   Mar-05-11 20:44:33 PST
n***r ( 3)     US  $25.00   Mar-04-11 16:25:48 PST
i***i ( 1)     US   $1.00   Mar-03-11 09:16:41 PST
Starting Price US   $0.99   Mar-01-11 17:54:47 PST

The Starting price was 99 cent, the closing price 241 dollars and 50 cents. As you can see, the auction did not receive any bids for the first two and a half day, and it did not receive any serious bids before the last minute before it closed.

This is typical. After an item is listed, it may take days before the first bid arrive. Then there is a period of several days when inexperienced buyers trade low bids. Then, in the last minutes before the auction closes, all the serious bidders appear out of the blue and settles the closing price.

The practice of bidding late on eBay is know as “sniping“. There is of course an entire lesson about this subject.

Automatic bidding

The bidding system on eBay is designed to let you enter as your bid bid the maximum amount you are willing to pay. However, eBay does not display this maximum as your bid. Instead, eBay displays only the amount necessary to beat the second highest bidder. Only if someone bids higher than this amount does eBay increase your bid, again with the amount necessary to become the highest bidder. This goes on until someone exceeds your maximum bid, and becomes the highest bidder.

This is called automatic bidding, because eBay will automatically keep making bids on your behalf up to the amount you've entered as your maximum. The idea behind this feature is to allow you to take part in the bidding action when you are not sitting in front of your computer.

This also means that the selling price of auction items on eBay is not determined by the highest bidder. They are determined by the second highest bidder with just a small increment over that amount.

The automatic bidding is the main reason it is so important to bid late. Not only do you want to end up as the highest bidder, but you want the bid from the second highest bidder to remain low, so that you can buy the item at the lowest possible price.

For example, let us say you are willing to pay USD 101 for an item, so you enter USD 101 as your highest bid. Now, if the second highest bidder never bids more than USD 16 for this item, eBay's automatic bidding will enter USD 16.50 as your bid. Unless you are outbid, that is what you will pay. Nobody will know that you were willing to pay USD 101.

However, if you place your maximum bid too early, that second bidder will see that you outbid his USD 16 with 50 cent, and will increase his bid to USD 17. eBay will automatically up your bid to USD 17.50, and so on, until the other bidder either gives up (in which case you end up paying a lot more than USD 16.50), or the other bidder bids USD 102, (in which case you will not get the item).

By not bidding until at the last second, the second bidder will not have time to react, and you get to buy the item at a small increment over what the second highest bidder bid.

The automatic increments vary with the amount. For example, it may be 5 cents when the highest bid is less than a dollar, and USD 100 if the highest bid is thousands of dollars.

In some auctions, the seller sets a reserve price. This is the minimum price the seller is willing to sell for. If nobody bids at least that amount, the item is not sold. The reserve price may be a lot higher than the opening bid price. Before you bid, there is no way of telling if an auction has a reserve price. If it does, and your maximum exceeds the reserve price, eBay will automatically enter the reserve price as your initial bid. So in practice, with automatic bidding, you are not only bidding against other bidders, you are also bidding against any secret reserve price set by the seller.

You should never place a maximum bid higher than what you would want to pay. This is why it's important to figure exactly what the item is worth to you, and bid exactly that. This is so important that there will be an entire lesson on that specific subject.

Buy It Now

bin.
“Buy It Now”. Screen capture from an eBay listing.

On eBay, Buy It Now refers to feature where you can buy an item for a fixed price preset by the seller. In the screen capture on the right, you can buy the used Nikon F90x offered for sale for USD 119 by clicking the Buy It Now button.

Buy It Now works completely differently from anything else on eBay. With regular auctions, your best strategy is to wait to the last minute before the listing closes before you bid for it. With Buy It Now, it is the other way round, the better the deal, the faster it is sold. If you really want an item offered with a Buy It Now option, you may need to act quickly, otherwise someone else may beat you to it.

As long as an item is unsold, the seller is free that alter the Buy It Now-price at will. Some sellers use this to simulate a reverse auction. They start out by offering the item with a Buy It Now price-tag high above fair market value, hoping that some sucker will not notice, and buy it at that price. If nobody bites, the seller will reduce the price and try again. If you do your homework, and know the right price, you should not fall for this.

As you can see from the screen capture above, it is possible to list an auction where the buyer have a choice between two actions: Place bid, or Buy It Now. In this type of dual action auction, the seller often makes the Buy It Now-price go away as soon as somebody bids on the item, because sellers know that bidding attracts bidders, so it is very likely that an item that is actively bid on will spiral past the Buy It Now-price.

Bidding early is always a bad move, but even more so in these combined auctions. If you do not want it for the Buy It Now-price, but believe the starting bid price is fine, just watch the item and try to snipe it at the starting bid price just before the auction closes.

Sometimes, a Make Offer link appears along with the Buy It Now button. This means that you can make the seller an offer to buy the item. You can offer any amount you like, but it obviously only makes sense to offer less than the Buy It Now price. Your offer is valid for 48 hours, and if the seller accepts your offer within that time-frame, the listing immediately closes and you're obligated to buy it at that price.

When you make an offer, the seller can accept, or come back to you with a counteroffer. The feature is clearly designed to allow buyer and seller bargain about a price. Personally, I do not care much for the Make Offer feature. Making an offer obligates you for two full days, and that does not suit my style of trading at eBay. But the Make Offer feature is there as part of the eBay anatomy. Maybe you find it more useful than me.

Second chance offers

If you're not the highest bidder, you may receive a message from eBay with a Second Chance Offer after the auction closes. The second chance offer will appear in your message box on eBay with the subject line “You have a second chance offer”.

You may receive a second chance offer if:

  • The reserve price is not met in a reserve price auction.
  • The seller has more than one item to sell.
  • The highest bidder defaulted on paying for the item.

A second chance offer is an offer to buy the item at the same amount as your last bid in an auction. The offer is only valid for a preset time (usually 24 hours after being made). The expiration time is listed in the offer. You can accept the offer at any point up to its expiration time, or ignore it.

If you bid early, in combination with eBay's automatic bidding feature, some sellers use shill bidding to “smoke out” what you entered as your maximum bid. If you're outbid by a single bidder with very low feedback, and the seller almost immediately re-lists the same item with your maximum bid as the starting price, or sends you a second chance offer with a price equal to your maximum bid, it is very likely that you've just met a shill bidder.

The payment

When you've bought something, you must pay for it. There is no reason to delay payment. Sellers love a buyer that pays for an item quickly, and will often mention fast payment in their feedback note. This will make you more attractive as a buyer. In some cases, for instance when you want to convince a seller that do not ship abroad that he should make an exception for you, having such praise on file may make a difference.

Assuming the merchant accepts PayPal (and those are the only eBay merchants I bother with) there will be now be a “Pay Now”-button that takes you to PayPal as part of the listing for any the item you've bought.

After you log in on PayPal, the payment form will already be filled in with the correct amount, shipping charge and shipping address. Complete the form, indicating how you want to fund your purchase, and you've bought the item.

The delivery

As soon as you've paid, the seller is supposed to ship the item to you with the selected shipping method. For items costing more than a few dollars, a shipping method that allows tracking and recorded delivery is strongly recommended.

If you look at the list of items under Purchase History in My eBay, you will see that a box icon will show up when the seller indicates that the item is shipped. After the item has been shipped, you just have to wait until it shows up.

Feedback

Feedback is the core component of eBay's reputation system. In another lesson I tell you how you can tell good sellers from bad by analysing their feedback.

Since 2009, sellers on eBay can only leave positive feedback. The reason eBay took away from sellers the option to leave negative or neutral feedback was because prior to the change, some sellers retaliated when they received negative feedback from dissatisfied customers by giving these customers bogus negative feedback.

After this change, this is no longer possible. But a seller can still damage the reputation of a dissatisfied customer by attaching a disparaging remark to any negative feedback left by the customer.

The proper protocol for feedback on eBay is that the seller should always leave feedback first, and this should happen as soon as possible after the buyer has bought and paid for an item. At this point, the buyer has fulfilled all of his obligations to the seller, so the seller has all the information he needs to provide feedback.

The buyer, on the other hand, should withhold his feedback until he has received feedback from the seller, received the goods, unpacked it, and thoroughly checked that its condition and appearance matches the description in the auction.

If the item you receive is broken or sub-standard, you should try to get the problem resolved by communicating with the seller. Leaving negative feedback takes away the seller's main incentive for correcting the problem (fear for receiving negative feedback), so you should keep it open and only use it if absolutely necessary.

Having even a single negative feedback attached to your account makes you less a attractive member of the eBay community. When I run into one of these sellers that do not leave feedback, I also withhold my feedback, even if I am unhappy. Instead, I make a note in my records never, ever to do business with that seller again. The seller is apparently not trusting his own ability to satisfy his customers. Then I don't trust him either.

If I am otherwise happy with the transaction, I do not give positive feedback to sellers that has not given me, as a buyer, feedback first. A seller that does not give the buyer feedback after the buyer has fulfilled all the buyer's obligations is not playing by the rules and should not receive positive feedback. And, as I said, I never buy from such a seller a second time.

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2 responses:

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eBay watch list issues

Unfortunately. there is a down side to placing an item in your watch list, based on recent ebay updates!

Currently, the more "watches" an item gets, the more likely it is that ebay will promote that item in its sidebar and other promotions, and thus the price of the item increases, especially if there are few items of this type in searches.

In this way, ebay has seriously betrayed buyers by constantly misusing their watch lists to increase final item prices. If there is an item you really want to purchase and hope for a low price, it is better to bookmark it, check in periodically, and avoid the dangers of the watch list!!

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Bidding a little bit higher than you really want to

Nice article.

One thing I will add is that I often bid a little higher than I really want to pay, normally if the item is hard to find, or in unusually good condition. I have lost a few auctions where I thought afterward, why did I just lose what I really wanted to save maybe $.50 cents, $1.00, $2.00, etc. For example, if I am bidding a coat and I want to bid a maximum of $35.00, I will probably bid $38.37 - $41.61 (see why the odd values next). I know I risk paying more, but I definitely know that I do not want to pay more than my maximum bid and won't regret it so much if I lose the auction.

Another thing is that I bid an odd number of cents and not an even dollar amount. For example, I almost never bid $5.00, but $5.28 or $5.87. The point is that a lot of people do this. If I bid $5.00 and the second-highest bidder bids $5.10, from my experience he/she wins -- even if the next increment over my bid is $5.25. I lose for a dime.

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