eBay

georgedward78 · ‎12-08-2018

Before I subscribed to a basic store level (yesterday) I developed an auction strategy that I'm sure many of you more experienced sellers can critique. All of this auctioning, 58 simultaneous at the moment, has me thinking... can't auctions be evaluated similar to the way derivatives with underlying assets can be?

There is always an element of randomness to any auction. That makes sense. My finance professor in college always said: "as long as there is time, there is hope," when talking about the value of a derivative. As time runs out, hope runs out.

Supposed you purchase a derivative that allows you to purchase a unit of stock at a given time for a given price. The difference between the market price of that stock and the price on the derivtive contract is your gain or loss. Models such as the Black-Scholes model (a model that has since been frowned upon) have been somewhat succesful at evaluating the profitability of purchasing or selling derivatives.

An auction has the potential to pit two egos against eachother and rise in price far above going rates. Seemingly, putting a "buy it now" price on an auction would reduce upside potential.... but we are not dealing with automotons, once again, we are dealing with humans. Adding a "buy in now" option gives an ego driven person the ability to win the auction at any point he chooses. A sure sale or increasing the probability of a profitable sale increases the "value" of the auction (before the final outcome is known).

Suggested strategy one: Always have a competitive "buy it now" price for all auctions.

The second strategy concerning auctions is starting price. I think this very much depends on sales rank, volume, etc. When browsing ebay and even google, I've notice getting suckered in to auction listings because the price of an item was so low. I also remember purchasing a few books back in the day when seeing that the item was being auctioned and not wanting to wait until the end. I picked the item right in front of me.

Suggested strategy number 2: Price auctions low to get more bidders and "buzz" and go for the "buy it now."

Anyways, those are my thoughts with limited experience. Please!!! Let me know your thoughts as well.

luckythewinner · ‎12-09-2018

Both of your stategies are widely accepted views that require no understanding of derivatives whatsoever. They are simply common sense.

There are exceptions to these strategies, of course.

For intance, a competitive buy it now price may not make sense if the seller is not familiar with the item or the market, and really has no idea what a competitive price would be.

And a competitive buy it now price may not make sense when demand for the item outstrips supply by such a wide margin that buyer egos are likely to result in irrational bidding.

But generally speaking, I would say you are announcing a party to which everyone else has already arrived.

georgedward78 · ‎12-09-2018

So I guess I mean "if it were possible to sell an incomplete auction," which it is not, then you could price it like you would a derivative. You're not selling the actual asset, but the final value of that auction as determined by the results of the auction, the buy-it-now "cap," etc.

nobody*s_perfect · ‎12-09-2018

There is no Buy It Now "cap."

georgedward78 · ‎12-10-2018

The "buy it now" caps the "value" of your auction. If you were to turn your auction into a tradeable security, you might interchange the terms "buy it now" and "value cap."

Sorry for a messy first post. I really did glean some good info from this thread so far. I have 66 active auctions with buy-it-now prices and .25-.99 starting bids.... that may or may not end in disaster.

The ending times of my auctions are Friday, Saturday, and Sunday evenings. If I think about it, I'll report some stats back here.

castlemagicmemories · ‎12-10-2018

You're saying the buy it now limits the value or price that you may get. But it can be taken that you mean the BINs are limited as to how much they are allowed to be listed for.

The majority of listings are fixed price, IPR as bidding wars are not as common as they once were, and items can sail off into the sunset with only one bid. Still, I hope you have great sales!

georgedward78 · ‎12-10-2018

The goal is to have a buy it now sale.

georgedward78 · ‎12-10-2018

I’m hoping for a “buy it now” sale instead of a complete auction. No reserves.

georgedward78 · ‎12-10-2018

I’m going to go through and edit my descriptions to reference similar product auctions and fix the text-to-talk grammar from my phone.

ads*and*ends · ‎12-10-2018

You can do this! You can find a wide arrange of tips on the forum, some may be applicable to your specific items, some may not be right for you. My only advice is to not give up hope when situations do not work out according to calculation. There is a learning curve for everyone, and it's an individual curve at that. (because no two sellers are alike). I applaud your approach, and I have no doubt you will find what will work best for you and your specific kind of items. Just never stop learning, adapting. Even those with very high feedback must maintain a commitment to adaptation in an ever-changing market. There is no right/wrong, there is only constant improvement via self-evaluation. I wish you luck! And I admire your enthusiastic approach.