When you think of eBay, what comes to mind? Likely, it’s the concept of competitive bidding and auctions. However, eBay is not, by any definition, a true auction.
eBay was originally called AuctionWeb before it was renamed in 1997. But despite how eBay began, its operation is very different today. In the past 20 years, eBay “auctions” have diminished tremendously.
The company introduced a “buy it now” button in 2000, allowing buyers to bypass the competitive bidding process. In fact, 88% of items sold in product categories on eBay’s marketplace in 2019 did not require bidding.
eBay calls itself a marketplace and you will rarely see the word auction in any of its terminology. If it is referenced, the company will use the words “auction-style.” Because again, it is not a true auction.
So what is a true auction?
A true auction allows bidders to defend their prior high bids until they decide to stop. On eBay, a pre-set timer stops competitive bidding. This countdown timer, in fact, favors bidders with sniping tools and fast internet connections.
The vast majority of auctioneers and auction houses who offer online auctions utilize modern online auction software. This software allows extended bidding, and for everyone to participate. These are called soft close or dynamic ending auctions.
Dynamic endings allow true price discovery by continuing until only one bidder remains. How bad someone wants something, after all, determines the outcome of a true auction. A clock should not determine the outcome.
Next time you consider buying via competitive bidding, do so with a professional auction company.