Automatic Bidding (What You SHOULD Know)
eBay's automatic bidding system is provided to the current high bidder in any auction listing. Through the system, eBay will bid automatically on behalf of the high bidder against underbidders. This allows bidders to bid very high while at the same time ensuring that they never pay more than the absolute minimum needed to beat the next highest bidder. Here's how it works:- To use automatic bidding, bid the absolute maximum that you're willing to pay instead of the current minimum.
- If the maximum you entered is higher than the bids entered by anyone else so far, you become the new high bidder. eBay "bids up" the auction on your behalf until the current bid is a small increment above your closest competitor's highest bid, but no higher.
- If your maximum bid is not the highest bid entered so far, eBay registers your bid, but continues to bid on behalf of the high bidder, automatically outbidding you by one bid increment and no higher. They remain the high bidder.
- eBay continues to automatically bid on behalf of whomever is the highest bidder at the moment, up to and including their maximum, until auction time runs out.
A Sample Scenario
The following scenario helps to illustrate the system.- Start.
Sam, the seller, lists a clock radio for sale on eBay via auction, with a minimum starting bid of $1.00 and a duration of 5 days.
- Day 1.
Current (public) bid: n/a; Minimum next bid: $1.00; Max: n/a.
The first bid is from Jack, who bids $10.00 even though the minimum is $1.00. Since there are no other bidders, eBay bids the minimum of $1.00 on Jack's behalf and changes the minimum for any new bids to $1.25—the current bid of $1.00 plus the increment of $0.25.
- Day 2.
Current bid: $1.00; Minimum next bid: $1.25; Max: Jack, up to $10.00.
The second bid is from Jill, who bids $1.25. Because Jack's $10.00 maximum was higher, eBay immediately bids $1.50 on Jack's behalf ($1.25 plus one increment) and resets the minimum to $1.75 ($1.50 plus one increment).
- Day 3.
Current bid: $1.50; Minimum next bid: $1.75; Max: Jack, up to $10.00.
Jill tries again, bidding $1.75. Jack's maximum is still higher, so eBay immediately bids on his behalf again and adjusts the minimum accordingly.
- Day 4.
Current bid: $2.00; Minimum next bid: $2.25; Max: Jack, up to $10.00.
Frustrated, Jill tries a fourth time, bidding $16.50. This is higher than Jack's maximum, so eBay sets the current bid to $10.50 (Jack's maximum plus one increment). Jill is now the high bidder and eBay is bidding automatically on her behalf.
- Day 5.
Current bid: $10.50; Minimum next bid: $11.00; Max: Jill, up to $16.50.
During the final moments of the auction, a new bidder named Ted bids the minimum of $11.00. eBay automatically bids on Jill's behalf, outbidding Tim by one increment at $11.50.
- End.
Winning bid: $11.50; Winner: Jill.
The auction ends after exactly five days. Jill is the highest bidder and wins, not for $16.50 (her maximum bid), but for $11.50 (one increment higher than her nearest competitor's bid). That's how much she sends Sam via PayPal, and she happily receives her clock radio several days later.
On the other hand, Jill is able to win the auction for $11.50 rather than her high bid of $16.50 thanks to the very same automatic bidding system.
Automatic Bidding Caveats
Automatic bidding sounds simple and great. If there's an item you want to be sure to win, you can place a single very high bid to be sure that you win without having to monitor the auction for days, yet at the same time you can rest easy knowing that you'll never pay more than you absolutely had to in order to win the auction.The complications and confusion arise for three reasons:
- Automatic bidding is for everybody. eBay does automatic bidding not just for if you are the high bidder, but for all of your competitors as well.
- The current maximum is secret. None of the bidders actually know the maximum entered by the current high bidder. There is thus no way to know "how much is enough" to "just barely" outbid them.
- Most people don't realize this. Many bidders don't realize that eBay has (and always has had) this feature. eBay doesn't advertise it much, though it is described in eBay's help pages.
- Auction sniping. An increasing percentage of eBay bidders use third-party tools sites to schedule their maximum bids to be placed automatically just moments before auctions end. This additional level of "automatic bidding" is called sniping.
Sniping tools aren't a part of eBay itself; they're third-party tools for placing carefully-timed automatic bids. Often, heavily "sniped" auctions see meteoric rises in the last few moments of an auction, something that can seem nefarious and unfair to new eBay users.
Sniping isn't against eBay policy, but there are both benefits and disadvantages for the bidders that use it. Because regular snipers swear by it and those that don't like it tend to feel the opposite, it can be a good idea to read about sniping and see comments from snipers, along with a discussion of their concerns.
eBay Bidding is a Mishmash of Opportunity
The combination of automatic bidding, auction sniping, secret maximums, and a large portion of users that either don't know about automatic bidding or prefer to use "traditional" bidding styles like one-click bidding means that eBay bidding is a mishmash of different strategies, expectations, and possibilities.It can take a certain amount of experience on eBay to really get a feel for how it all fits together, but in the meantime, beginners shouldn't hesitate to jump in and have fun. Who knows? Even if you lose a few auctions early on, you might also stumble onto one or a couple of lucky deals!
