Apr
14
eBay Reserve Auctions Revisited
Filed Under Sellers' Insights | Leave a Comment
This is Part II of our analysis of the utility of reserve auctions. Read Part I of our Reserve Auction Series
A while back I posted an article that summarized a university economics study that concluded reserve auctions produced less revenue than regular auctions. Today I’ll discuss a study that concludes the opposite - namely that reserve auctions generate higher revenue. The discrepancy between the two studies might lead some to confusion, but actually the different conclusions provide important insights into when auction sellers should employ a reserve price and when they should avoid it.
A reserve auction listing is one in which an eBay seller opts to set a secret minimum price. If the auction does not produce a bid that exceeds this reserve price, the auction does not result in a sale.
The study, “Pennies from eBay: The Determinants of Price on Online Auctions,” analyzed the data associated with over 20,000 listings of collectible U.S. pennies auction on eBay during two months during the summer of 1999. The average price these pennies sold for was $173.20 and the price range spanned from $4.99 to $3,500.00US.
When controlling for the other factors that influence the closing prices of eBay listings, the studies authors found that the “presence of a reserve price increases the auction price by about 15% on average, and the effect is statistically significant.”
So we have two studies analyzing the effects reserve prices that draw opposite conclusions regarding the benefits of this online auction tactic to sellers. While it is easy to conclude these studies are of little utility because they contradict each other, this is not necessarily the case. The first paper’s sample was strictly limited to inexpensive items - specifically Pokemon trading cards selling for less than $25.00. The second study focused on collectible pennies which had an average sale price of nearly $200.00.
Therefore, we can conclude that employing eBay reserve prices for inexpensive goods results in reduced income for sellers while reserve auctions increase revenue for more expensive items.
The study, “Pennies from eBay: The Determinants of Price in Online Auctions,” was published in January 2000 by David Lucking-Reiley, Doug Bryan and Daniel Reeves of Vanderbilt University.
Apr
13
eBay Disables Best Match Search Due to Keyword Spamming
Filed Under Best Match, Industry News | 1 Comment
Update: As of 6:30 pm EDT, Apr 13th, it looks like Best Match has been restored as the default search result. However it looks like time remaining is weighted significantly more - and keywords are currently weighted significantly lower. The other factors such as Shipping & Handling, & DSR’s appear to be still influencing the search results.
After Scot Wingo’s Blog reported that stuffing Key Words in your eBay listing title increased sellers’ placement in the search results pages significantly, eBay has apparently disabled the Best Match search algorithm.
I’m confident that this is a only temporary suspension of Best Match while eBay tweaks the search algorithm to deal with the keyword stuffing/spamming issue.
The eBay search results page still lists Best Match as the default sort method, however if you change the “sort by” method in the drop down menu found at the top of the search results to “Time: Ending Soonest,” the search results are sorted exactly the same as what is currently advertised as sorted by “Best Match.”
Scot’s blog post stated that eBay listings that stuffing keywords in the titles zoomed to the top of the listing results. Randy Smythe summarizes this technique well in his blog:
Now with Best Match, sellers add multiple keywords to their titles to get advantage in search. Now the following listing title: New, New, New, New, New, Wii5, 5, 5, 5 New New, carries more weight than New Nintendo Wii with 5 Game Bundle.
This was entirely predictable. When I broke the news about eBay’s Best Match patent application last winter, I discussed the possibility of exploiting the search algorithm in order to manipulate rankings on search results page. What is surprising is that eBay did not predict that users would attempt to exploit Best Match and have the mechanisms in place to counter the technique. Keyword stuffing is such a basic search algorithm spamming technique — Google and the other search engines fought and defeated this rudimentary tactic years ago. I’m amazed that eBay was not prepared for it.
eBay’s lack of foresight aside, you can rest assured that when they put Best Match back online, they will have reeingineered the search algorithm to counter the keyword stuffing spam techniques. I’m confident that the new algorithm will contain a penalty for keyword stuffing and the sellers who continue employ these tactics will find themselves at the bottom of the search results vice the top.
Scot Wingo’s post suggests that sellers should use these keyword stuffing techniques in order to gain higher listings. Let me take this opportunity to again suggest that optimization is different than manipulation and that eBay will eventually start punishing users that attempt to manipulate their search results. These punishments will start out relatively benign with lower search result rankings and will likely escalate to cancelled listings and closed accounts.
The temporary suspension of Best Match is an obvious signal that eBay is not going to sit idly by while users attempt to manipulate search results. I don’t think that they are going to continue such a passive approach to these efforts either. Disincentives for Best Match maniplation are on their way.
What is going to make you more money over the long term: Best Match optimization or Best Match spamming? The answer to that question is where you should focus your efforts to rank highly in eBay’s search results.
Apr
11
A Dear eBay Letter
Filed Under Miscellaneous | Leave a Comment
I saw this posted on SlashDot in response to eBay’s decision to require PayPal as a payment method on eBay Australia.
Hey eBay,
It was nice hanging with you when we were younger, but since then I can feel we’ve grown our separate ways. I still remember our first dot com bubble burst like it was yesterday.But, sadly it seems that you’re hanging out with a new crowd these days and you’ve changed, I can’t put my finger on it, but you’re somehow different. It seems like you don’t really care about me anymore, and you don’t seem to have coped very well with some of the new people in town.
I’m sorry to say it, after all of this time, but I’m seeing someone new they’re so much quicker and dealing with each individual companies policies still feels easier than dealing with your friend PayPal.
I’m sorry it couldn’t work out between us.Signed,
The Internet
Both funny and sad at the same time.
Apr
8
One Way To Increase Your Shipping & Handling DSR
Filed Under Feedback, Sellers' Insights | Leave a Comment
I recently ordered a book off of Half.com and, being both frugal and patient, I opted for the Media Mail shipping method. I was delighted when the book arrived just a few days later in a flat-rate Priority Mail box.
Value is defined as the difference between what a customer paid and the perceived worth of what a customer receives. I paid for Media Mail shipping and received Priority Mail service, so, for me, the value of the book increased substantially. Now, the book I ordered was a 1500 page text, and pretty hefty, so it might not have been a significant difference between the cost to mail it Media or Flat-rate priority. But that’s not what I focused on…
…My focus was diverted to the value I received by a clever note written by the seller on the packing slip:
