June 27, 2017

eBay Buyers Love Saving Money

A study at the University of Maryland of eBay buyer activity found those buyers gain satisfaction out of spending less than they thought they might on auctions. Sellers, well, they probably aren’t that ecstatic over it.

Sellers on eBay left billions of dollars on the table by not putting a higher price on their wares. A pair of University of Maryland statisticians discovered in their research what some eBay sellers have complained about: buyers are cheap.

Buying behavior in 2003 showed the thrifty shoppers saved $7 billion, according to Reuters. Researchers Wolfgang Jank and Galit Shmueli projected the numbers through 2007, where buyers may have saved some $19 billion in their shopping.

Though that sounds ominous for sellers, the researchers believe sellers benefit from the market liquidity of eBay.

It appears the savings come when an auction ends, and the winning bid exceeded the second place bidder by an increment in price. If the winner did not pay the full amount he was willing to pay, the difference becomes what the researchers call a consumer surplus.

That doesn’t help salve seller complaints from the past, where bargain hunters sniff at prices they find too expensive. Coupled with seller fee increases, some of the more frustrated sellers opted to head to competitors like Amazon.com or the now-defunct Yahoo Auctions.

Others set up e-commerce sites and spent money on contextual search advertising to find customers. Those sellers may have cause to look at eBay again, as CEO Meg Whitman’s retirement could spur changes, including adoption of volume pricing that sellers have wanted for years.

Volume pricing rewards the big sellers with lots of items stored up for sale. Individuals and small sellers won’t be nearly as delighted with paying a higher price because they are not selling in the volume of others.