eBay. There’s nothing else quite like it. Which is probably for the best. Although monopolies are bad, it would actually be worse for everyone if there were multiple auction sites. It benefits both the buyers and sellers to have consolidation and concentration.
But anyway, I do like auctions, both as a buyer and seller. As a seller, I prefer to use an auction in cases where a) I don’t really care about the item being sold. That is, the trash is just as good as selling it. And b) when I don’t have any idea of what it’s worth. I’m fine with letting the market decide.
As a buyer, I like auctions because I very rarely lose at them. And that is where the focus of the absurdity in the title is from. There are people, still, who do not know how to effectively win an auction. It’s not that hard. The only thing that should stop you is someone who is willing to pay more. And that is the only time I lose, and I am not a sore loser at all in those cases, because I would not pay what the winner paid.
Here’s stage one of bidder dumbness. Making the first bid and that’s it. Or making one of the first bids and that’s it. These happen early in the listing’s lifetime. The auctions I participate in are for collector-grade CDs, so that’s going to be my references. Apologies to those who don’t really understand. So you have a lot of 10 CDs that’s ending in 6 days and you can generally assume each CD would fetch at least $5 individually. So you can predict the final price is going to be north of $50. These people who bid $1, $3, $4.45, and nudge the price up are doing themselves no favors. They are helping the seller, though. If the number of bids (albeit tiny) gets high enough, the listing is considered hot or popular and gets a little extra promotion. But the fact they expect they are going to win and never do any follow-up bids is just dumb.
In reality, auctions really are 6 days of waiting and 1 minute of real bidding. Today I was wondering if there could be a format that could exploit that design. Maybe I’ll write something up later. But yeah, everything leading up to that last minute is just play. The people that really want the item are going to be lurking and will jump in at the end. And most, if they are smart (like me), will not have made their presence known through "Watching" the listing or making a previous bid.
The second stage of bidder dumbness is not using eBay’s Max bid feature. Ideally, you should only make one bid on an auction. You should know exactly how much you are willing to pay and stick to it. Why people don’t use this confuses me. Maybe they think there’s a way to make your bid jump to the max right away? I’ve seen this in live auctions with absentee bids and it infuriates me. "We have an absentee bid of $10. Who’ll start the bidding at $11?" But eBay doesn’t work that way.
Let me explain my technique in opposition to how the other bidders operated. In this most recent case, I returned to the auction with 15 minutes to go, and the current bid was $60. So I was correct about the price ending north of $50. I didn’t visit the listing at all since I found it and I put the listing close time in Outlook to be reminded instead of using eBay’s "Watch" feature. As an aside, what I do use the Watch feature for is to get a better deal on Buy It Now items. If you Watch an item, eBay will sometimes send an email to the seller saying someone is watching the item and you should try to close the deal by offering them a special price. If the seller is motivated, then I get an email saying I can buy the item at this new, lower price, which in most every case, I accept.
Back to the auction. It’s at $60, 15 mins left, and has 20 bids. I scan the bids and I see the dumb initial bids that can be ignored. Looking at the last bidders, there are 2 active, interested bidders that I will have to compete with. I can see that one started at $40 and was currently the leader at $60. He had clearly set a Max bid and was automatically outbidding the other person as they increased their bids. Now, was $60 his actual max bid or was it higher? No way to tell yet.
As time ticked down, the price changed to $61. A new bidder has joined in. This exposed that the previous high bidder’s max was $60 and exposed another dumb bidder move – bidding in round, even numbers. I’ll explain that when I bid, but time is still ticking. It’s silent until 20 seconds left to go. That’s when I make my move.
I place a bid for $86.80. The most I’m willing to pay for this lot is $85, and the extra $1.80 protects me from anyone who tries to bid (or had a max bid) right at $85, a fairly round, even number. I’ll explain that here. First, the new bidder is shown to have a max bid of $65. I beat him with my max bid. I’m leading at $66. The former high bidder jumps in and shows his ignorance. He makes a bid, which is outbid by my max, then bids again and is outbid again. The new bidder tries to get in a bid in the final second, but is outbid by my max. I win the auction.
So let’s review those final seconds. Both of those bidders were not committed to their max price. They kept upping it as they went. This probably really hurt them to lose this auction because they kept making sacrifices to their commitment. But also from a practical standpoint, every bid they fail to make, they have to make a new bid. That is valuable time they are losing. We’re in the final 20 seconds of the auction. There’s no time to make mistakes like that. That is why I bid odd amounts. If I automatically outbid someone by 80 cents, they lose the same amount of time as if I outbid them by $20. It’s just one extra delay for a small amount of insurance.
And the guy who bid in the last second? Again, he didn’t have a max bid in mind. There’s no time to evaluate, "Am I willing to pay more" when you’re down to seconds. So he bid a max of $65 earlier, then made his last pitch at $77. That last bid was smart, as the current bid at the time was $74. If my max had been at $75 (a round number) and I was outbid, I might have rebid by the minimum $1 increment, which he would have automatically outbid and made me lose time. But it wasn’t to be. I won the auction at $78, a price under my max of $85 and only $1 more than the other bidder.
So my strategy boils down to only a few points. Stay quiet, bid late, bid once, bid with enough buffer to delay minimum upbidders, and use an odd bid amount to possibly get one extra delay in. Go win some shit now.
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