Jan
29
Some say a picture’s worth a thousand words. Professor David Eaton of Murray State University says its worth 40 bucks. At least for sellers of high-end guitars on eBay anyway. In his study, “Valuing Information: Evidence from Guitar Auctions on eBay,” Eaton found that by reducing the uncertainty of a product’s quality by adding more pictures, the average final selling price of Paul Reed Smith guitars increased by $40.00 for each additional picture included in the auction listings.
Information Uncertainty and the Auction Bidder
In his study, Professor Eaton points out the challenges faced by eBay buyers - significantly information uncertainty. The bidders face information uncertainty in the areas of:
- Quality of the product
- Quality of the seller
These uncertainties affect the amount of money the bidder is willing to risk on the auction transaction (read: affect the final purchase price).
Uncertainty Over the Seller
The uncertainty over the quality of the seller is mitigated somewhat by the seller’s reputation under eBay’s feedback system and through any buyer protections offered by PayPal, credit cards and reputable escrow services.
Uncertainty over the Product
The uncertainty over the quality of the product is mitigated somewhat by the reputation of the particular item’s brand and by pictures of the actual item being listed for sale. The pictures help to establish the item’s condition and validate any subjective rating of the condition the seller might have included in the listing’s description (such as “near mint” or “excellent” condition or “9.5 out of 10″).
The Value of Reducing Uncertainty
Several studies have validated the value of feedback as a mechanism to reduce uncertainty with regards to the quality of the seller. These studies have shown that higher feedback increases the final sale prices of eBay auctions.
What’s a Picture Worth?
Professor Eaton’s study was unique in how it was able to isolate the value of reducing the bidder’s uncertainty with regards to the quality of the product. Specifically, the research identified the value of adding additional pictures to the auction listings. He concluded that for high-end guitars (Paul Reed Smith guitars often selling for over $1,000), each additional picture included in the listing increased the final sale price by $40.00 (when holding other variables and factors such as seller feedback & shipping terms constant)!
While sellers of more inexpensive items aren’t going to see these kinds of returns for adding additional pictures, the significance of reducing buyer uncetainty with regards to the quality of the product should not escape you. It’s worth money to you!
An Action Checklist
Here are some things you can do to reduce buyer uncertainty of the quality of the product and improve your bottom line:
- Include actual pictures of the product - not just the stock photos from the manufacturer’s web site.
- When I’m buying something listed as “new in box,” I’d still like to see a picture of that box - with the shrink wrap intact. It’s OK to also show me stock photos, but its reassuring to know that the seller’s defination of “new in box” is the same as mine.
- Include multiple pictures from different angles.
- Hey, they’re worth $40 each if you’re selling Paul Reed Smith guitars!
- Include an independent appraisal
- The condition of many collector comics sold on eBay have been independently graded by the Certified Guaranty Company and prominently display their CGC rating in their auction title (improving their Best Match search result listing rankings, I might add).
- Identify the criteria by which you have judged or graded the product’s condition if applicable.
- When I sold comic books on eBay, I would state the item’s condition (e.g. “Very Fine”) and quote the grading criteria for a “very fine” condition comic from the current comic book price guide.
The study, published in 2002, analyzed the results of 325 auctions for four models of Paul Reed Smith guitars that sold on eBay between January and April of 2001.
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One Response to “What’s a Picture Worth? Reducing Uncertainty for eBay Bidders”
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I recently started selling on eBay and really like all of the articles and tips that you have on your blog. I will be back soon.
David