To hear some people describe eBay you'd imagine that it's little more than a rigged game in which eBay or eBay sellers constantly separate unsuspecting, naive people from their money using shills. Various kinds of anecdotal evidence are given to support this characterization. So is it true? Has eBay been entirely overrun by shill bidders, or worse, does eBay itself secretly employ an army of shill bidders to ensure that it turns a profit?
The answer to these questions is, quite simply, no, though it can be very difficult to convince some buyers of this reality. The fact is that eBay prohibits shill bidding and employs agents not to bid on eBay's on listings, but rather to use sophisticated tools to ensure that shill bidding doesn't happen. So why does it so often seem some buyers as though shill bidding dominates the eBay landscape, and why does it come up so often in discussions about eBay? Here are answers to some common accusations about shill bidding on eBay, as well as some important things to know about the eBay marketplace that may help you to understand why shill bidding may be less likely than you imagine it to be.
If there's not much shilling on eBay, why do I always get immediately outbid?
Repeatedly getting immediately outbid by another eBay member is not a sign that the member in question is sitting at a desk somewhere, watching their screen and making sure to keep you bidding again and again. In fact, most of the time it's an artifact of the way that eBay's unique and automatic bidding system works for eBay members that choose to use its automation features.
Members using eBay's automatic proxy bidding system have previously instructed eBay to place bids on their behalf when they are outbid. Each time you place a bid against them, eBay responds with their pre-approved bid in a fraction of a second. Seem unfair? It might, until you realize that all buyers have access to eBay's automatic bidding system, including you—so you can have eBay do the very same thing for you.
If there's not much shilling on eBay, why did a second bid get placed only minutes after I placed the first bid on an item?
It can be frustrating to patiently watch an item with no bids for days, hoping that nobody else notices it and nobody else bids on it, only to finally decide to place a bid near the auction's closing time and quickly see a second bidder outbid you within minutes or even seconds.
"I've been watching this auction and biding my time for days," goes the thinking, "and there were no bids that entire time, and now, after I finally decide place my bid, somehow magically another bid comes along just minutes later. It's obviously a shill trying to get me to pay more!" This argument may sound persuasive, but think of it this way: you were willing to watch an item like a hawk for days without bidding on it. What makes you so sure nobody else doing exactly the same thing? In all likelihood, after you placed the first bid, someone else that had been watching it quickly responded with a bid of their own so as not to "lose out."
Neither of you is bidding very effectively; if you really don't want to bid until the "last moment," consider using a sniping service to place your bid, but keep in mind that others may be doing the very same thing. Remember, too, that eBay's own automatic proxy bidding system does something similar, allowing you to place counter-bids automatically, without having to be present or even aware, right up until the very last moment of an auction, and will always win against a lower sniped bid.
By not bidding until the last moment, you're hoping to win based on the assumption that you know something the other guy doesn't—whether it's the existence of the auction listing at all, the size of your bid, or the existence of sniping services. Usually, this turns out not to work so well. Don't fool yourself—with a buying audience the size of eBay's, you were never likely to win that plasma television set or that diamond ring for the $1.00 they started at. The fact that the item ultimately went for something approaching market value doesn't indicate the presence of millions of shill bidders, just millions of regular ones like you, all trying to "fool the others" or "slide one under the radar" in the same way you just did.
If there's not much shilling on eBay, why does every single Desired Item X end up selling for almost exactly the same price?
Here again, it can be frustrating to see what seem to be fabulous deals (Lots and lots of $1,000 digital cameras from a high-quality seller all starting at $1.00!) that evaporate in the same way over and over again (This one sold for $997.32, that one for $998.00, and that other one for $994.64, sheesh!), particularly if you're putting a lot of time into trying to win one at a lower price, to no avail, after repeated attempts.
"It has to be a shill that's bidding these things up to the same list price, over and over again," goes the thinking, "and look, there are a couple of buyers that keep turning up over and over in these listings to bid them up. They're the shills!" Here again, the logic is tempting, until you realize that if you are working hard to get one of these items only to give up repeatedly when you're no longer willing to bid any higher, other buyers may be doing exactly the same thing that you are. Perhaps some of them even imagine you to be a shill bidder!
Often, winning bids cluster around a particular amount because it's about the same price at which the item can be bought at any number of other online stores as well—Amazon.com, Buy.com, Walmart.com, Target.com, Overstock.com, or other "dot-coms" that share the internet with eBay—or even at the local department store or wholesale club. It may be that what you're seeing is just the online price of the item, give or take a few dollars; people are willing to bid that high and very few or none are willing to bid higher.
Remember, too, that sellers use tools like sales reports, analytics, and other market research tools to measure which items are selling for good prices on the open market and to cluster their listings in categories, formats, and at times that mimic or reproduce their best results with that item so far. Sellers are in business, after all—those that sell items for well below market value won't survive. Neither will those that sell $1,000 cameras for an average of $990 on Wednesdays but only $450 on Fridays, but that continue to list them for Friday closings anyway!
If eBay doesn't rely on shill bidding, why don't they just do the sensible thing and automatically extend an auction's time every time there's a new bid?
Here the logic is that the "obvious" thing to do is to extend an auction's time if bids come in near the end. After all, this would mean higher fees for eBay in the end, and it would give all interested parties the chance to bid until they reached their maximum. The "only possible" explanation is that eBay can't do this, because then their shill bids would extend the auction, and ultimately "win" a lot of auctions instead of "real" buyers, leaving no fees for eBay to collect.
In fact, there are sensible reasons not to extend auction times indefinitely. The most obvious of these is that it would allow auctions to get out of hand much more easily and to continue indefinitely; if there's no end to a bidding war, and there's no enforcer other than eBay to get the winning bidder to "pay up," there are likely to be may more deadbeat bidders that continue bidding long after they stop being serious about an auction. This wouldn't just be bad for most professional sellers, who generally want to move as many items as possible in a predictable, accountable way and who have invested a lot of market research time into the auction format eBay already has and has had since the beginning; it would also be bad for eBay, who would look less like a serious retail marketplace and would have to find a way to patrol the site to look for "runaway" auctions.
Things to Keep in Mind about eBay, Auctions, and Shill Bidding
The discussion on shill bidding can be clarified a bit more if you keep a few things about eBay auctions in mind.
- Auctions are being displaced by fixed-price listings. If eBay's
business model relied on auction shilling, they'd hardly be pushing
fixed-price listings as hard as they are, to the point that auctions are
being displaced. Sellers increasingly seem only too happy to use fixed-price
listings in many cases, too, given the lower returns that auctions often
generate and the
issues and inconveniences that come along with the format.
- You're free to shop on eBay without bidding on auctions. There
are lots of ways to
use eBay without bidding, the most obvious of these
being to simply shop eBay for fixed price items,
adding them to your cart
and checking out like you would at any other online store. In a way, this
renders the shill discussion moot; why mess with listings you're sure aren't
honest ones? Just as importantly, you can't bemoan the fact that you won't
then get such a great deal—after all, the shills were going to bid it
up anyway, right?
- eBay auctions aren't like "real world" auctions. Not only do eBay
auctions have ending times, automatic bidding, and third-party sniping, they
are also seen and bid on by an audience measured in the hundreds of millions
(a lot of people to bid against) and exist within the context of an online
shopping world where the same items are also available in many other ways
from many other retailers. eBay auctions, particularly those for very common
kinds of consumer goods in new or nearly new condition, are thus much more
likely to close at or slightly above market value than they are below market
value.
- eBay is actually very good at catching shill bidding on its first occurrence. Remember, all of eBay's member information is their database, where they have access to real names, addresses, telephone numbers, email addresses, credit card numbers, bank accounts, IP addresses (and, by extension, location data about a member's whereabouts) and the item listings (including photo files, commonly used phrases, habitual misspellings, punctuation idiosyncrasies... you get the idea) posted by members, available for rapid, potentially even automatic cross-referencing. Shill bidding (including bidding by family and friends) is forbidden on eBay, and it's not easy to pull the wool over eBay's eyes. Just ask the frustrated former sellers out there that have left eBay after being suspended (often for things like placing a first shill bid) and have since tried to create new Bay accounts with new identities and new banking details, only to find that eBay seems to somehow immediately figure out who they are and suspends them again. (If you're a seller that's just been suspended, don't try this—you'll quickly learn just how good and how automatic eBay's site policing can be. Work to get reinstated through regular channels instead.)
