eBay’s online marketplace raked in nearly $6 billion last year helping people sell nearly anything they’ve got, including a hocking a few iPhones. Savvy consumers often flock to the service, sniping for hard to get items or some deeper discounts than retail stores. Common sense says that markets prices goods appropriately, based on supply and demand. However some economists found otherwise.
A study from some UC Berkeley economists found that consumers didn’t always buy goods at the best deal. Here are some of the insights:
- Some buyers outbid the “Buy it now” price for a good, finding 45 to 50 percent of eBay auctions for a sample of iPods exceeded the “buy it now” price.
- The percentage of daily bids is highest at 8pm. The percentage of closing auctions is also highest at 8pm. The study says this may be counterproductive since it creates greater competition for bidders attention at that time.
- Buyers seem to favor auctions with more bidders.
- A comparison of CD auctions with equal total costs (price + shipping), found the low-cost, high-shipping auction attracted more bids, more bidders, and 25 percent more money.
- Secret reserves turn off buyers.
- Research on auction websites shows eBay attracted almost 60 percent more bidders and 30 percent higher prices than the same items on Yahoo Auctions. Maybe that’s why they shut down.