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Ten Things to Know About eBay Auction Listings

The classic buying and selling format isn't always well understood

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Ten Things to Know About eBay Auction Listings

Auction listings are how eBay began, but they remain a mystery to many.

Image: khz / Fotolia

Auction listings are the original eBay selling format, and though eBay has long since added many other wrinkles to its marketplace, auctions remain the format most commonly associated with eBay in many peoples' minds.

As it turns out, though, many people—even those that regularly buy and sell in the auction format—don't know all that there is to know about them.

Here are ten facts that may help you to make more of auction format listings, whether you are a buyer, a seller, or both.

  • They can be 1, 3, 5, 7, or 10 days long. Not all auction format listings are created equally. Some of them come and go almost in an instant; others hang around for more than a week. Since the length of an auction on eBay is predetermined, rather than having anything to do with bidding activity, this can mean that items' sale values are related in many cases to how long they're going to be open for bidding.

  • Your bid is binding. Even though bidding has been around on eBay since its beginning, and eBay's beginning is no longer exactly recent, first-time bidders continue to imagine that eBay bids don't count for much, or can be undone easily. Not so. An eBay bid is binding. If you bid and win, you pay and buy. That's how it works.

  • Unless it can—but watch out. But no ironclad rule is without exceptions, including this one. In fact, there are a few practical cases in which fairness demands that bids be retractable or void—for example, if the seller significantly changes the auction listing in mid-sale. Just beware: using the retraction tool is neither secret nor private; retracting bids for reasons not covered by these exceptions can quickly lead to suspension from eBay.

  • eBay bids automatically for you (and others). eBay's proxy bidding system (these days often referred to as "automatic bidding" or other names in eBay help materials) has been around since the beginning. It's the thing that most regularly confuses eBay beginners, who imagine it to be everything from a bug to fraud to complete randomness. It's actually simple. Bidding on eBay is like hiring an assistant to go to an auction for you. You tell him what you want and the maximum you're willing to pay; he goes to the auction instead of you and fights the bidding war, trying hard to win (to win low, if possible), but bidding as high as you've okayed him to go—and never over that. That's exactly how bidding on eBay works, only on eBay, everyone has hired the same assistant, and that assistant is eBay. What this means is that the same $100 "bid" can give you a win at $10 in one case, but in the next you might pay $99.50 after a heated bidding war in which your competitors see you "bidding" repeatedly over the course of a week, even though you only touched your keyboard once, way back on Monday.

  • They can have a reserve price. Not all items will be sold to the highest bidder. Some items—those tagged with a secret "reserve price" by their sellers—don't need to be sold unless the bidding reaches some desired amount. Sellers set this amount if they want to (though these days it can often harm bidding, since people tend to give up on this kind of auction), and buyers don't get to know it. This also means that you might have to wait until an auction is over to find out whether you actually won an item, even if you were the high bidder all the way. If the bidding goes over the reserve price and you're the high bidder, you're on the hook to buy. If the bidding never reaches the seller's reserve, you don't get the item, even if you won the bidding.

  • They can involve multiple items. The multiple-item auction is little known on eBay but a powerful tool for buyers and sellers alike in some circumstances. We're not talking about bidding on lots here; we're talking about auctions in which there will be many winners. In a listing like this involving many identical items, everyone bids back and forth as though there was just one item, but when time is up, eBay takes each of the items and awards them, one by one, to the top bidders. The highest bidder gets one at his price, then the next highest bidder at his price, then the next highest bidder, and so on, until there are no items left. This can be a great way to get rid of excess inventory if you're a seller (it lets buyers decide what your items are worth, with a bias toward selling rather than toward getting any particular price) and a great way to get great deals if you're a buyer (because if there are a lot of items on offer, you don't need to be the highest bidder, but only make it into the top-however-many-bids—and often the total number of interested bidders is limited).

  • They often bring lower prices. For the same item, auction listings often close at a price below the "going rate" for fixed-price listings or for sales on Amazon or other online retail sites. As a seller, this means that you list at auction when you'd rather make a sale for sure than get any particular market price, and as a buyer, this means that you target auctions when you're hoping to score something at a price that's unusually low.

  • They can start as a fixed price listing. Sellers that want the best of both worlds—a shot at a market-rate sale and a more-or-less guaranteed sale in the end—actually have a way to meet both needs. eBay allows the creation of auctions that start with a Buy It Now button at a price that the seller sets. Until someone places an auction bid on the listing, anyone is free to come along and buy immediately at the seller's price. As soon as someone comes along and decides to place a lower bid instead, the Buy It Now choice disappears and the listing becomes a standard auction format listing.

  • They're trouble magnets. One of the reasons for the fall in the popularity of auctions, and for eBay's desire to find other ways to buy and sell on their site, is the fact that auction listings make trouble for everyone, often due to misunderstandings or the ease with which people can break the rules around them. Because payment for auctions is only made once the auction ends and a winner is declared, it's possible for someone to bid, win, and then disappear from eBay forever, leaving the seller twisting in the wind (owing eBay auction fees, but without having received payment for the item they've sold). Auctions are also the listing format susceptible to illegal bid retractions, which can reduce an auction's value drastically, late in the bidding process, and lead a seller to take a bath on an item that might have sold for much more if no retractions had taken place. Because many more recent eBay converts find auctions to be confusing (particularly the automatic bidding system), eBay and sellers also find themselves fielding complaints about fraud or shill bidding more often than they'd like to from furious—if well-intentioned—buyers.

  • They can be the cheapest way to sell on eBay. Most of eBay's promotions for sellers in recent years have been fee breaks on auction format listings, to keep some level of auctions alive on eBay. This means that for sellers that want to avoid insertion fees entirely, auction listings posted during eBay promotions are the way to go; during many stretches of the year it's been possible to do a fairly decent volume of trading on eBay without paying any up-front listing fees just by sticking to the auction format and discounts that eBay has offered on it.

If all of this sounds like a recipe for complexity, it is, and for a long time, it was thought that auctions were holding eBay back. That's why in recent years eBay has emphasized the fixed price listings that it added years after eBay's founding—a plan that has been very successful in helping eBay to stay competitive as other online retailers have gained steam.

But what you also see here is a lot of flexibility, for both buyers and sellers, so long as they understand what eBay auctions are all about and how they work. That's why auction listings on eBay aren't going anywhere, despite having become clear second-class citizens in terms of volume and importance to eBay's business model. There are a lot of cases in which what can be done with an eBay auction can't be done in any other way, and the buyers and sellers that need them will continue to use them as long as eBay offers them.

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