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eBay School: Sniping

Why you almost always should delay bidding to the last minute.
by Gisle Hannemyr
Published: 2011-04-25.

On eBay, sniping means waiting until just before an auction before making a bid. Understanding the principles behind sniping is essential if you want to avoid paying a premium for auction items.

Sniping is a widespread practice on eBay, but not talked much about. The reason eBay does not tell you anything about sniping is because sniping keeps prices low, and eBay want the prices to be high. Since eBay makes its money by charging the seller a fee that is a percentage of the final selling price, higher prices means that eBay earns higher fees. But more important: High prices attracts sellers to eBay. More sellers means more transactions, which translates into higher profits for eBay.

For this reason, eBay auctions are deliberately designed to tempt you into placing an early bid for any item. And as soon as you bid, you start getting automated emails from eBay every time you are outbid, to make sure you too participate in the bidding frenzy that spirals the price of the auction item upwards.

But then, the starting bid for most auctions are often very low. Why not place a very low initial bid, and perhaps get the item at a bargain price? Here's why.

Benefits of bidding late

I should state up-front that the benefits of bidding late only apply to auctions. For fixed price items (also known as buy-it-now), there is nothing to be gained from waiting.

But for auctions, bidding late helps keeping the interest and the price lower. And it also gives you more freedom to pursue alternative items. Below, I discuss each of these points in some detail.

Bidding early stirs up interest

There is a significant psychological component to auctions, and eBay is very good at exploiting it. In all auction listings they prominently show the number of bids on an item, along with the current highest bid. It is just too easy to think that if something has received a lot of bids, and the price already is high, that something must be very desirable.

There are even websites where you can search for items on eBay and get the listings sorted to have the items with most bids on top! Early bidding generates extra publicity for an item, which attracts more bidders and more bids, jacking up the price.

When bidding early, you are making other people want to pay more for the item. As a buyer, you do not want that to happen, because it reduces your chances for getting the item at a sane price.

Bidding early increases the price

In any eBay auction, you are bidding against other people who want the same item. Some of these people are fools suffering from auction fever. This is of course mainly their problem, but by placing a bid, you encourage such fools into placing a higher bid. This, of course, is a bid that you then have to top if you still want the item. By not placing an early bid, you simply keep the fools from jacking up the price.

An auction on eBay is not at all like an real-life auction, where all bids have to be said out loud and the auctioneer makes sure that the auction does not close until every bid has been heard.

On eBay, there are actually two separate biddings going on. The first is the open bidding, where fools outbid each other, and in the process jack up the price of the item. And then there is the secret bidding, where snipers exploit the fact that all eBay auctions close exactly at a preset time. Snipers make sure that they do not reveal the amount they are willing to pay until a point in time when it is too late for any other bidder to increase his or her bid.

While eBay does not offer bidders the option of handing in sealed bids, the fact that the bids are made so late in the action that nobody have the time to react make them work as if they are sealed.

There is of course no way for you to stop fools from outbidding each other, and if two fools happen to crave the same item, you just have to sit back and watch while the price spirals through the ceiling. But by not participating in the bidding frenzy, you are at least doing your part to keep prices at eBay sane.

Bidding early obligates you

According to eBay rules, once you've placed your bid, you're obligated to buy if your bid is the highest at the end of the auction.

That means that if you today bid on some item that closes in a week, and then tomorrow find an even better alternative, you can't bid on the second item because you may still be stuck with the first item if nobody outbids you.

By sniping (i.e. waiting placing a bid until just before the auction closes), you haven't committed to buy anything, and are free to bid on alternative items.

Automated sniping

There exist a number of programs and web based services that can help you automate the process of sniping. What these things do is to run a software robot that monitors the auction and logs on to your eBay account and bids on your behalf just seconds before the auction closes. I.e. they use the sniping method for placing bids, but do it automatically. The benefit of using a robot is that you don't have to be in front of your computer to bid at the appropriate time.

Some of these tools are standalone programs that run on your computer. Two fairly popular ones are esniper (Linux, Unix and MS Windows) and JBidwatcher (Linux, Apple OS X,and MS Windows). These are both free, and works, but do not have great user interfaces, and may be confused when eBay changes something. Since they run on your computer, in order to work, you need to have your computer switched on and connected to Internet when the auction closes.

Other sniping tools are websites where you set up an account, and manages your sniping through a dashboard on the website. The site then operates the robot that places sniping bids on your behalf.  logo.The best known free web-based sniping service is Gixen, created by Mario Vodopivec. The basic service is free (and paid for by advertising). The site also offers a premium service called the Gixen Mirror Service with multiple mirror servers for higher reliability for USD 6/year. I am currently testing out the free version. It seems rudimentary, but sufficient.  logo.In the past five years, I've used a fee based service named Auction­Sniper on a regular basis, and have nothing bad to say about them. I am not a high volume eBay user, so the AuctionSniper fee structure suits me well. I like the fact that there is no subscription fee. They charge me 1 % of the final auction price, with a minimum of 25 cents and a maximum of $9.95, for each auction where I become the highest bidder.

In other to work, the sniping program or service need to know your eBay user-name and password. This is a security risk, in particular with a third party sniping service such as Gixen and AuctionSniper. I've used AuctionSniper for the past five years and have never experienced any irregularities with my eBay account. I consider them trustworthy. I've just recently signed up with Gixen, so I cannot say anything about its trustworthiness yet, but the site has a lot of happy users, and appears to me to be legitimate.

However, if you want to use an automatic sniping service, you must weigh the convenience against the risks.

In order to work, the robots used by an automatic sniping program or service must be able to carry out two tasks unsupervised: 1) Log on to you eBay account; and 2) Place a sniping bid.

If you have a very weak password at eBay, eBay may as an extra security measure present you with a CAPTCHA when you log in. No present robot makes it past this, so if this happens, you must change your password into something that is more obscure.

Also, eBay is designed to be used by humans, not robots. At random intervals, eBay may change its login prompts and display various intermediate ads and messages before you actually can bid on an auction item. This means that sometimes these robots gets confused and are unable to place a bid on your behalf. The free ones seems to get it wrong more often than the fee- or subscription based web services. But if the item you are trying to buy is a rare one and getting it is important for you, you should not rely on automatic sniping to get it. Be present, watch the countdown clock, and bid in person.

Final word

There is no official policy about sniping on eBay. One of the companies that offer sniping services (BidSlammer) asked eBay about its policy in sniping, and received this reply:

It is permissible to use eBay bidding utilities which place bids at the last second. Please note that eBay neither approves nor disapproves of the usage of these tools. You may use them at your own discretion.

Some people argue that sniping is unethical, or shows poor sportsmanship. But eBay is not a game or a contest, it is a marketplace. If every buyer on eBay behaved rationally and just bid up front the maximum amount he or she would be willing to pay, there would be no point in sniping. The only reason sniping offers a benefit, it because there are buyers that do not keep their cool, but treats eBay like some sort of game and keeps bidding even after the item is valued way above its fair market value. Sniping, simply put, is a way of not participating in this stupid game.

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4 responses:

As a seller on ebay who just wants a fair price for the items I sell you sir are a w**ker of the highest order!

I loath snipers

I too sell on eBay and can regularly sell crap items at cost but higher ticket items are usually 1/4th costs because of the practice of sniping. You keep the price arbitrarily low and is more akin to changing the price tag while in store than talking someone down to a lower price. Yeah I know it is a risk in auctions but this is an unfair practice that is only for the douchiest pricks!

Puzzling sellers

Surely you can set a reserve price, or would that affect your margin too much? And if you run on such tight margins, should you be in the game at all?

Get a grip

Your job as a Seller is to try to get the highest price you can for your item. That's fine.

The job of a Buyer is to purchase the item they want for the LOWEST price they can. They do not (nor should they) have any responsibility to care in the slightest about making sure a seller gets the highest price possible, as that idea (from the seller's perspective) means more of their hard earned money out the door unnecessarily.

Sellers and Buyers are, by definition, at cross-purposes to each other. If, as a seller, you cannot deal with this, then stop selling items in an Auction environment. The days of auctioneers/sellers jacking up the price in a wild frenzy of bidding are over.

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