Ebay and Its Rival Competitors
The first auctions have generally accepted to have existed around since 500 B.C. and generally consist of the sale of collectables, antique goods and second hand goods. There are four main types of auctions: English (Ascending price), Dutch (Descending price), First price sealed bid, and Vickrey auction/second price sealed bid, however the most popular approach is the English ascending price2.
Traditionally these would be carried out in a hired room/area with the goods, customers and auctioneer physically present. However in the era of the dot-com bubble (mid – late 1990’s), Ebay was launched in 1995 – today’s most popular online auction based website. Amazon (non-auction based) also went fully online in the same year.3 Both transformed the way goods were sold and purchased – they gave sellers the option to sell online and customers to buy online. Ebid, another online auction website was founded in 1998, few years after Ebay and is considered as the best alternative to Ebay in the uk.4
Evaluation of Ebay: The Advantages and Disadvantages The advantages: Listing procedure: When placing an item on Ebay, seller can choose from two types, one which is called Quick Sell and the other Advanced Sell, both provide a good degree of customisability, with Advanced
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A listing can also be cancelled if necessary. Listing selling customisation and pricing: Ebay offers multiple listing types; a listing to be an auction type or a fixed one. The listing can be for, one, three, five, seven and ten days being the maximum before it is required to be relisted. Ebay also allows a high degree of listing customisation, including click counters to and customisable wallpapers/backgrounds. The relisting process is simple which just requires the seller to click relist. The fixed type offers a ‘Buy It Now’ (fixed) price or best offer where the customer can give offers to the seller and the seller has the choice to accept or decline. A starting price can be set, or a reserve price to prevent the item being sold for less than the seller initially wanted.
The Fees The fees take different values depending on whether the seller is private or a business one for a private seller fees are 10% + 3.4% (PayPal) = 13.4% and for a business seller (one who sells more than 100 items per month) fees are 8.75% + 3.4% = 12.15% (lower for higher price goods).5 These fees are not so bad, however there are other auction websites which have lower fees.
Payment Ebay’s primary payment method is via PayPal as over 50% of users prefer this payment method. PayPal is a reputable and well known ecommerce money transfer website giving Ebay users a high degree of security. Bidding Bidding on Ebay automatically takes the form of proxy bidding which proves to be more efficient as bids are automatically raised to the maximum specified by the bidder.
Sales Items on Ebay generally seller quicker due to Ebay having a larger numbers of visitors, and the majority of buyers are looking for a bargain as opposed to a product being sold at RRP. Postage and Packing The postage price can also be set accurately on Ebay, therefore the seller can base the postage cost on the weight and priority type of the mail. The Disadvantages: Ebay’s final value fees can be seen as considerable high, as they can reach 10-13.4%, meaning a seller selling a laptop for 400 would have to pay a total fee of 52 (if also using PayPal). Ebay’s high customisability can sometimes become a problem for some sellers as so many options and details required to be filled in mean a lot of time is spent on listing one item, even if the item is selected from Ebay’s existing database.
Items on Ebay generally will sell for cheaper as most buyers come for a quick and cheap deal. A high starting price may be used to avoid a product from being sold too cheap however, the seller will loose many customers due to the off-putting initial price. A reserve price can also be used however the fees will be much higher if sold. As Ebay is one of the most popular websites, it also targeted by scams, where a buyer contacts the seller and asks if the sale can be made outside of Ebay. A spoof mail is sent from the scammer saying the payment has been complete to the seller (this looks just like the original sent from PayPal).
Amazon is another option for online sellers founded in 1994, although not an auction site, it is an excellent website for selling products which are currently in the market. Amazon also sells its own products, but also has a section of first and second hand goods sold from sellers other than itself. Amazon’s popularity ranks at no.5 proving to be higher than Ebay’s rank.8 Amazon allows buyers to purchase from over 100 countries.9 Amazon charges a fee of ï¿½0.86 per item and a final value fee of 17.25% (11.5% for electronics and photo). Amazon charges a fixed postage price to the seller depending on the category of the product.
The Comparison: Ebay Vs Ebid Vs Amazon The most important criteria to a seller is profits. Therefore the seller fees can be seen as a very important aspect. Ebid if using only the standard Seller account (no subscription fee) proves to be much cheaper than both Ebay and Amazon. Ebid like Ebay also allows the seller to set the postage price, while amazon does not. Market size is also another important aspect, this is where Ebid fairs extremely low in comparison to Ebay and Amazon, if looking at the websites net popularity in terms of visitors/users Ebay and Amazon rank in the top 10 while Ebid ranks at 4,7236.
However there is catch when selling on Amazon, if the seller doesn’t set the price to be the lowest in its league, say for a book in the new category or second hand category, it is unlikely to sell, as the first to sell will be the lowest price even if it is only 10 pence cheaper. This is due to the way Amazon listings are displayed to the buyer – this is because when searching for an item on Amazon, a specific item is selected and it’s prices by various sellers are shown side by side, the cheapest standing out at the top. In the case of Ebay and Ebid the search results show the same product/different variations relisted at many different prices, making it harder to compare. Therefore a product being offered at the cheapest price on Amazon will sell fairly quickly – Why pay more when you can pay less even if it’s a difference of 10 pence?
Ebid also has a few simple but very effective features over Ebay, such as the auto-extend feature which allows the auction time to be extended if bids are placed in the last minute10, this can increase the final sale price of a product by a significant amount. Ebid also allows for the listing end time to be specified by the user which can be extremely useful, as a good time to end a bid is on Sunday evening, Ebay however only allows specific time intervals of days (1,3,5,7,10) from the auction start time.
Another neat feature of Ebid is that it has it’s own program called Ninja Lister which can be used to create multiple listings offline and upload in bulk.11 One of Ebay’s strong points is that it offers a high degree of customisability over Ebid and especially Amazon in its listings, sellers can use many tools/add-ons and make use of the power HTML text editor to create a page listing which look very professional and attractive with plenty of information. Amazon in comparison offers minimal customisability which simply requires the seller to search for the product on the database and to be selected from the index.
If a seller is putting a well-known product on the market and would like to be guaranteed a fair sale Amazon could be the most simplest and hassle free choice, despite Amazon taking a larger cut of the sale value the overall profit value is likely to be higher than an item sold on Ebay. The seller must however set the price to be the cheapest on Amazon for this to be the case or else they may be waiting a while for the sale.
However if the seller is simply looking to get rid of their product quickly Ebay would be a good choice, as many buyers are looking for a quick and cheap deal. If an item is also quite heavy and postage price will be fairly high sellers usually get underpaid on Amazon, as the postage price is fixed, however Ebay and Ebid’s seller’s can specify the exact postage price. Sellers also have the option to make a standard product to look fancy and can grab buyers attention using Ebay’s powerful HTML coding and fancy listing features. On the other hand if a seller feels they are willing to really maximise profits and are willing to wait for the sale to take place, Ebid would be the best choice due to its very low fees, however due to its much lower popularity its number of visitors/users is significantly low and a high/fair price sale may take a long time to be completed.
1.Lecture 5, page 4
2.Lecture 5, pages 5-11 http://en.wikipedia.org/wiki/EBay