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Tip #1
What is the strategy behind an auction?
(Or, in other words, don't be a selling schmuck!)
Ever since I wrote the original 13 Ebay tips, this particular area has become a real sore subject with me! It’s like people read this, they understand it, but then forget when they go to make their listings!
Before you even make a listing, you have to know what just what an auction is! If you have been to a live auction, I know you will sitting here nodding your head as you read. But if you have never been to a live auction, then this is important to read and understand!
At a live auction, you have some guy standing there. He holds up an item, gives a quick description, then asks for bids! Now, nine out of 10 times these auctions are considered “Absolute”. What that means is that regardless of the amount of the final bid, that person will own it! So the auctioneer always starts out by asking for some stupid high number hoping to catch some sap sleeping. That number might be, say, $100. If no sap jumps on it, then he start to reduce the opening bid…..$75…..$50….$20 and so forth. FINALLY, at maybe $5 or $10, somebody raises their hands and the bidding begins! In the course of the next 60 seconds, that item might receive 15 different bids and close at $40! And at $40, the high bidder gets to take it home!
What has happened here is that the bidders, NOT THE AUCTIONEER, determined the final selling price of the item. Had the auctioneer started at $100 and never budged, what would be the chances of some sap raising their hand! Most likely, NONE! And the item would have never sold! So the strategy behind an auction is two-fold:
1.) It is the auctioneer’s job to sell the item for as much as he can get.
2.) It is the bidders job to buy the item for as CHEAPLY as he can get!
When you are running an Ebay auction, YOU have become the auctioneer! And you better keep in mind that Ebay bidders want bargains! And in keeping with what an auction is, you will be more successful if you allow the bidders to tell you what they want to pay!
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Unfortunately, too many people, for whatever reason, feel they have to use what is known as a RESERVE AUCTION. This is where the seller places a minimum amount he or she will accept before the item is considered sold. This selling price is kept secret from bidders. So regardless of how the bidding goes, there is a good chance this item will never get sold!
Now, the problem with RESERVE auctions is that bidders hate them! Why? Because you, the auctioneer, are dictating price! You, the seller, are telling the buyers how much they need to pay! And that is not how an auction works!
In addition, when a buyer bids on a RESERVE auction and the reserve isn't met, they are greeted by a big message from Ebay: RESERVE NOT MET. This big red message is one of the biggest turn-offs you can offer your buyers! Bidders want to know that the bid they are placing is a bid to own! They are not interested in playing games you have set the ground work for! Personally, I do not have time for these games. As soon as I click on an auction and see the RESERVE NOT MET sign, I click off before the ad even finishes loading! And believe me, millions of other bidders share the same attitude!
RESERVE FEE WARNING!
How badly does Ebay NOT want you to run a Reserve Auction? Enough to really jack up the reserve fee Feb. 2004! If you are going to run a Reserve Auction, be prepared to pay the piper! If your item does not meet the Reserve price, you maybe charged up to $100 in additional insertion fees! For example: An item that you list at a $500 reserve that does not sell....You will be charged a $4.80 insertion fee AND a $5 Reserve Fee! That's a $9.80 fee for an item that didn't sell!
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This 1911 Nippon Chocolate pot (with no lid) is a perfect example of running absolute auctions. I purchased it for $10. My auction started at $2 with NO RESERVE. The final selling price was $38.50.
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Folks, if you feel you need to run a reserve auction, don't! Instead, begin your auction at the minimum price you are willing to accept! If you need $100, then start at $100! That is being up-front with your bidders, and will increase your chance of selling the item! Although, this approach will usually limit the number of additional bids you may get!
Comments regarding seller's using RESERVE Auctions:
Lssmm says “As soon as I realize it's a reserve, I'm outta there!”
Katsachatter says “My thoughts exactly. After I put in the highest amount I am willing to pay.. if it hasn't hit the reserve I say "Yeah screw you.." and leave =D “
Sun4U2 says “As a buyer, I don't really care whether or not they have a reserve. I just know how much the item is worth to me. If I don't get to their reserve, oh well….”
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These three antique kitchen clocks are perfect examples of different selling styles. As you can see, the #1 clock was a RESERVE auction where RESERVE WAS NOT MET. Notice the closing price, it was well under value. This is a clock that should
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have realized more money! Now, the #2 clock is an interesting example of starting your opening bids too high. Knowing something about antique clocks, I really felt this clock should have closed between $135 and $150. But the seller took a conservative approach. Instead of putting a reserve on the clock, he started the bidding at what he felt was a "Safe" amount. Most likely, to protect what he had paid for the clock. Now, the clock did sell! But it only got one bid! In addition, the winner of this clock made his bid at the last few seconds. This proves that many people will HESITATE to make opening bids if they even think there is a chance of a better deal on another auction!
The #3 clock shows what happens when you start your bidding low and let bidders dictate the final price. This clock received $53 worth of bids during the last 4 hours. $9 of those bids came within the last 7 seconds.
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The RESERVE NOT MET line shown to the left is, to me, an auction killer. As a matter of fact, I think this whole approach is an insult to the buyer's intelligence. The seller began his auction at $12.50 making viewers believe there was a bargain. There was no bargain. And the lack of money just shows that Ebay bidders are not interested in playing guessing games designed by the seller!
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