eBay bidding "saves buyers billions"

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A new study has shown that eBay buyers save billions buying on the site. The independent research by two statisticians from the University of Maryland’s Robert H. Smith School of Business measures the difference between highest bids and actual prices paid on eBay. Using data from bid sniping software Cniper and generalising that across all eBay sales, the researchers estimated that in 2003 (the year to which their data related), buyers would have saved $7 billion; a linear projection of the same figures would give $19 billion saved during 2007.

The study is useful in measuring “consumer surplus”, that is, the difference between what buyers would have been willing to pay, and what they did in fact pay. Normally this is very hard to quantify: Tesco checkout assistants can’t ask their customers how much more they would have paid for their shopping basket, or if they did, they’d get very few meaningful answers. But the eBay proxy bidding system, where the high bidder only has to pay one “bid increment” above their nearest rival, can provide much more accurate data on what buyers’ top prices would be. The less cheerful take on the same data, of course, says that last year eBay sellers lost $19 billion their buyers would have been willing to pay.

4 Responses

  1. this is a bit sideways,
    I have made my living from auctions for 30 years . I might have been prepared to pay more. though if I dont get a bargain I dont go back

  2. That’s a very interesting take, North – and even more difficult to measure. “I want to feel I got a bargain” is close to unquantifiable, I would have thought, though it definitely describes the expectations of a lot of eBay bidders (and my own feelings at real life auctions too. My thirty quid leather Chesterfield is still the delight of my eyes!).

  3. Auctions are a market place like no other,
    I have seen bidders buy goods for three times as much as they can buy normally over any retail counter

  4. That has to be one of the most useless researches ever!

    How on earth can you extropolate from approx 4500 auctions only, derived from a defunct snipe site to $billions of dollars worth of ebay sales ?

    Its a bit (no a lot) like saying if Northy added a mere 50p to his P&P charges he would have gained an extra £850 in the last 12 months -ergo ebay sellers are losing a £billion’s in extra profit by not adding 50p to P&P – or conversely ebay sellers are overcharging buyers by £billions by loading P&P 😆

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