Thursday, February 14, 2013

Working the Bay

Ever since friends introduced me to Dragon Dice, I’ve been spending a lot of time on ebay. Unfortunately the market of markets isn’t what it used to be.

I registered with the auction house back in 2001 at a friends urging. He convinced me that I could save a bundle on warhammer 40,000 if I applied a little elbow grease and search-fu. Back then the bidding process worked pretty much as intended. Bidders found an auction, placed a bid, and waited to see if they won. I learned quickly to buy based on feedback history and retail value. It only took a few purchases of “beautifully painted armies” showing up with a single coat of primer before I was immured to flashy descriptions and poorly lit pictures. I got taken a few times, but generally came out ahead.

Then the environment changed. Companies like Amazon started offering competitive pricing and free shipping on everything from books to dry goods. The bay purchased PayPal creating an unholy union of commission fees. Ebay changed its policy so that sellers could only leave neutral or positive feedback. Buyers started placing their bids in the last five minutes of auctions, leading to greatly reduced closing totals. The net affect was a much diminished incentive to patronize the auction house.

Today one learns to bid strategically or suffer wallet shock. Deals can be had, but only if you hold the line. Here are my personal guidelines.

1. When you’re looking at an auction, decide whether it’s something you like, something you want, or something you have to have at all costs. Do this before you commit yourself to bidding.

2. Look at the auction contents and figure out what components you actually want to purchase. Do not get caught up in the trap of evaluating the entire lot based on total retail value. It’s important to know the difference between “oooo Shiny!” and “I could really use that.” An auction is only worth the components you would buy on their own.

3. Figure out how much it would cost you to buy your step one selections from retail. If it’s a collectable that’s no longer in production, look at the market value for the product. Check Amazon, Google, and other similar auctions for comparison. Be sure to distinguish between what people say it’s worth and what it’s fetching on the open market.

4. Based on steps two and three, decide what you’re willing to pay, right now, if you could have all your selections from step two in hand this very moment. How much would that be worth to you?

5. Subtract the listed shipping fees from that amount. Whatever that number is, that’s the most you should bid on the auction.

6. If there is a “buy it now” option and the amount+shipping is less than or equal to the total from step five consider buying the item and skipping bidding entirely. If you think the lot is a good deal than chances are someone else does too. You are probably better off buying the listing outright. (Abird in the hand and all that.)

7. If you’re going to bid, total up all your outstanding bids (including shipping.) Make sure that you can afford to honor them all. Don’t lose sight of the fact that no matter how good a deal is, you still have to pay for it. This is usually when I end up adjusting my bid down to something approximating reality.

Now comes the hard part. If you are mildly interested in the auction, put your maximum bid in and let it ride. I firmly believe this is the way the system was meant to work. If there are more committed buyers, let them out-bid you. If you were going to be out-bid anyway, better to know sooner than later.

If you really want the item than don’t do anything. It’s the hardest thing you can do, but bidding early on a high-value target just drives the end price up. Wait until the last day and check the price. Ask yourself whether your original maximum bid was less or more than the going rate. If the current price is close to that amount than do nothing. If it’s a ways off, then put in your maximum bid and let it ride. Finally, if it’s close, wait till the last 20 minutes or so and put your maximum bid in.

The challenge with eBay now-a-days is holding firm to your convictions. It’s so easy to get caught up in skyrocketing auctions that I’ve found myself paying entirely too much for lots that didn’t deserve it. By the same token, I’ve missed a really good deal a few times because I tried to go through the bidding process instead of going the buy it now route.

EBay is a business. It really pays to set up auto searches for things you’re interested in and to bid tactically. You will lose auctions, but you will also win auctions at excellent prices.

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