Will Guns Change the Way eBay Auctions Operate?

By Paul Michael on 11 August 2008 (Updated 17 September 2009) 25 comments

The more I talk to people about eBay, the more they are annoyed by one simple fact; the auctions are not, well, auctions any more. Auction sniping and the ensuing last-second bidding frenzies have turned the auctions into something many people deem unfair. But, an auction site for firearms may just change all that.

If you know eBay, you know there are several ways to get your hands on the good. There are the usual auctions, which give you several days to bid on an item, the winner being the highest bidder. There is the Buy It Now button, which is a time-saver; bid a lower price and hope you don’t get outbid or see the price go higher, or But It Now for speed. And there’s the Make An Offer button, which is a hybrid of the two.

The trouble is, regular auctions have been hijacked by sniping (I should know, I have used sniping a lot in the past). This method, when first introduced, was designed to stop a bidding war. There was speculation that some sellers were even raising the price of the item artificially by bidding on their own items, and sniping put an end to that.

But now sniping has taken such a hold on eBay that people are just getting sick of being outbid at the last second. It’s not worth their time, and trouble, to bid on a regular auction. Instead, they are resorting to the more favorable But It Now button, which basically turns eBay into a giant storefront. No bidding, no fun, right? Like their own ads say, it’s more fun when you win something, especially when you know you got the item at a great price.

gunbroker

Well, a site called Gunbroker.com has found a way around that sniping issue with something called “the 15 minute rule;” and it could breathe new life back into eBay auctions.  

A friend of mine recently told me of “the 15 minute” rule after he purchased a replica gun from the site, and I was fascinated. To sum it up, it basically puts no hard stop on the auction. If there is a frenzy of bids in the last 15 minutes (something that happens often on eBay auctions) then the end time of the auction is postponed until all the bids have been taken. In effect, the “going, going, gone” aspect of live auctions is reintroduced on the web. Here’s the write-up from Gun Broker explaining it:

All of our auctions use something known as the '15 minute rule'.
In a typical auction setting, there is always a called out counting that happens to allow buyers time to decide to place higher bids. This 'final call' is reset each time someone places a bid. "Going Once, Going Twice, Going Three times" - someone places a bid - "Going Once, Going twice" - another bid placed - "Going once, going twice".. and on and on until the auctioneer completes the entire phrase "Going Once, Going Twice, Going Three times, SOLD to the highest bidder"

So this rule is no different, but because of delay caused by the internet and other possible technological speed bumps, we have a 15 minute final call time.

When the seller lists an item, he specifies the number of days the auction will run. The auction listings display the scheduled closing time for the auction. If there is bidding activity on the auction within fifteen (15) minutes of when the auction is scheduled to close, the auction automatically switches into a special mode analogous to the 'going, going, gone' period of a live auction. In this mode, the auction is automatically extended until there have been no bids placed within fifteen (15) minutes. When fifteen (15) minutes have passed with no bidding activity, the auction closes.

ARTICLE CONTINUES BELOW

ule makes auctions more fair, by allowing all bidders an equal opportunity to place their best bid. In other online auctions where an auction ends exactly at a given time, some bidders will hold their bids until the last minute or so, in the hope of winning an item on the cheap. This is referred to as 'sniping'. The 15 minute rule gives all bidders an equal opportunity to place their best bid on an item before the item closes. This way, no bidder loses an item to sniping, and the seller can be assured that he has gotten maximum value for the item.

Our auctions are more like a live auction. In a live auction, bidding continues until no one wishes to place another bid. The auctioneer does the 'going once, going twice' routine, and if someone places a bid the bidding resumes. Since all persons bidding on an auction are connected by the Internet, which can be slow and cranky at times, we picked 15 minutes as a reasonable amount of time to overcome any slowness or technical problems.

In a 'live' auction, the person who is willing to pay the most wins the item. Why should it be different on the Web? We certainly don't hide the fact we do this - you will find the 15 minute rule described in our Help Center, User Agreement, etc. It is also why our auction listings say "Ends On or After".

In a recent survey, a feature similar to our '15 minute rule' was the #1 most-requested feature addition that eBay users would like to see added to the eBay site.

So what does this mean to you? Well, if eBay redesigned the auctions to have a 15-minute rule (or something similar), sniping would disappear completely, at least in its current form. There’s not much point in putting a bid in at the last three seconds if it then extends the end time of the auction and opens it up to more bidding.

It may mean prices will go up in the auctions, which is much better for sellers but not so good for buyers. Now, the possibility of getting into a real bidding war is back on the table. Hopefully, the ability for sellers to artificially inflate prices and then ‘drop out’ of the auction can be combated.

Conversely, it could sometimes mean better deals. The auction snipers looking for last-minute deals won’t be as interested in getting into the bidding wars, so they may just forget the whole process and opt for the Buy It Now or Make An Offer features when they’re available. Less people in the fray for products means more chance that you’ll get it a little cheaper.

Either way, this could invigorate eBay auctions, which have been sadly declining over recent years. Will I miss sniping if this happens? You bet, I have got some killer deals through auction snipers. But everything must run its course, and a small part of me does relish the idea of seeing the real auctions return. There’s nothing quite like winning an item and getting a deal at the same time.

Additional photo credit: Gunbroker
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Guest's picture
Guest

This would be good for many. The non-sniping buyers, the sellers, Ebay, and the affiliates.

Bring on the changes. How can it be made to happen?

Guest's picture
Guest

The auction systems in some MMOs work like this.

In my experience, almost all items there sell based on the 'buy it now' option. However, a game auction system is used fairly differently from a site like ebay, both because people are not using real money (some take it just as seriously, some don't), and because it is the *only* way to exchange many goods. As such, it may have more in common with a commodities exchange than an auction house. A lot of people just want their stuff, and lots of it, and aren't interested in playing bidding games.

Andrea Karim's picture

What a great idea! I think that that would make things a little fairer. The system isn't awful right now, but I do get outbid frequently, and I don't want to use snipes for everything.

BTW, when I started reading this, I was thinking that there was a 15-minute waiting period before you were allowed to buy a gun online. And that freaked me out a bit. Actually, the fact that you can buy a gun online freaks me out a bit.

Paul Michael's picture

...but GunBroker sells thousands of guns every day. They do have to be shipped to a licensed firearms dealer who does a background check on you. But saying that, guns are way easier to get in the country than they should be (speaking as a Brit who was shocked when he came to this country and saw shotguns in Wal-Mart!)

Guest's picture
Ken

I can understand why EBay doesn't allow people to sell guns on their site, but their list of restricted items is a little extreme. You can't ANY reloading components, including cases. Guess those little hollow brass cylinders are some type of horrible threat. Thanks for the link to gunbroker, I'll have to check them out.

Cheers,
Ken

Andrea Karim's picture

At least they ship to a dealer. I'm not really anti-gun, but it would seem like a felon could easily get their hands on a gun if it was all online.

Paul Michael's picture

can easily get their hands on guns without the web. They don't need a traceable internet transaction to buy firearms.

Guest's picture
John K

People that complain about sniping don't understand auctions and the way ebay works. What does it matter if you're outbid two days before or two seconds before the auction ends? Put your highest bid in and forget about it. If you win, great. If you don't, move on to the next auction. But please stop complaining about sniping. And no, I do not normally snipe, just because it's a hassle to set it up. It's easier just to put in my max bid about, the same I would do if I was sniping. It wouldn't change my limit.

Guest's picture
Suz

I think the idea of a 15 min 'cush' time would bring back much of the traditional auction quality to ebay from the buyer standpoint. Although, I think that it would raise quite an uproar among regular users.

-Suz

Paul Michael's picture

Sniping hides the bid from eBay, it doesn't count. Putting in your maximum bid via eBay counts and pushes the price up. Auction snipers definitely affect the outcome. Also, in a live auction you have the chance to keep bidding to your max. Some people don't get that chance with sniping because the snipe comes in at the last second, stopping further bids from happening. I think the 15 minute rule would stop all of that.

Guest's picture
Guest

This is neither a new nor revolutionary idea. Both Amazon and Yahoo had a similar auction extension rule - I think 10 minutes - back in the days they had auctions.

Notice that neither site still has auctions.

I HATED, HATED, HATED waiting around for another 10 minutes to know if I had the auction or if the buyer had arranged for someone else to up the bid some miniscule amount to keep it going. I won't bid in those kinds of auctions. And I've bought a lot of stuff through online auctions over the years.

I snipe - sometimes I get the item. Sometimes I don't. Sometimes I lose to another sniper. Sometimes I pay a maximum bid price that I really, really, wouldn't have bid so high if I'd seriously thought someone else might snipe as high.That's simply the way it goes.

It will be interesting to see if this method fares any better second time around or if it will get as few takers as the first time.

Guest's picture
Guest

Not only is it "nothing new." The auction website onsale.com (don't think it is an auction site anymore) was doing this back in the mid to late 90s. I think it would extend the auction by an extra 5 minutes.

Guest's picture
Guest

That should read - seller arranged for someone to bid at the end to keep the auction going - not buyer:-)

Guest's picture
JoBo

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=232111

One of a number of papers written on the subject:
Last Minute Bidding and the Rules for Ending Second-Price Auctions: Theory and Evidence from a Natural Experiment on the Internet

There is a great deal of late bidding on internet second price auctions. We show that this need not result from either common value properties of the objects being sold, or irrational behavior: late bidding can occur at equilibrium even in private value auctions. The reason is that very late bids have a positive probability of not being successfully submitted, and this opens a way for bidders to implicitly collude, and avoid bidding wars, in auctions such as those run by eBay, which have a fixed end time. A natural experiment is available because the auctions on Amazon, while operating under otherwise similar rules, do not have a fixed end time, but continue if necessary past the scheduled end time until ten minutes have passed without a bid. The strategic differences in the auction rules are reflected in the auction data by significantly more late bidding on eBay than on Amazon. Furthermore, more experienced bidders on eBay submit late bids more often than do less experienced bidders, while the effect of experience on Amazon goes in the opposite direction. On eBay, there is also more late bidding for antiques than for computers. We also find scale independence in the distribution over time of bidders' last bids, of a form strikingly similar to the deadline effect' noted in bargaining: last bids are distributed according to a power law. The evidence suggests that multiple causes contribute to late bidding, with strategic issues related to the rules about ending the auction playing an important role.

Guest's picture
JoBo

Links to analysis done on online auctions:
Roundtable on the Economics of Internet Auctions
http://www.ftc.gov/be/workshops/internetauction/internetauction.shtm
Lots and lots of papers examining online auctions.

Summary with lots of references at the end:
www.ftc.gov/be/workshops/internetauction/Roundtable_Summary.pdf

Guest's picture
FlatGreg

People who snipe (myself included) will continue to, as it'll still be effective at avoiding a bidding war. Ebay tells you from the start to bid the max you're willing to pay, and they'll automatically bid up to that amount for you. Snipers simply take advantage of the fact that some people refuse to do this for some unknown reason.

The effectiveness of sniping will go down a bit, but don't even dream that it will stop. In fact, I guarantee the sniping services will adapt. If they see the end time has been extended, the bid will get delayed to the new end time. Sure the sniping bid (if higher than the current high bid) will extend the auction, but people aren't going to sit around watching an auction for hours.

Guest's picture
Mom of 6

"Either way, this could invigorate eBay auctions, which have been sadly declining over recent years. "

eBay auctions have been declining over recent years, not because of the bidding method, but because of annual February Fiascoes (billing and policy changes) the site implements. I am an ex-Powerseller, able to support my family with my eBay business prior to 2004. The constant increase in fees, lack of support for sellers and massacre of the better-working functions of the site in favor of dumbed-down functions that benefit no one has turned many a seller to other sites, or driven them out of business entirely.

It is time for a challenger to step up and become what eBay promised and never quite fulfilled.

Guest's picture
Guest

when I have used ebay, I put in as a bid the highest price I am willing to pay for an item; it automatically bids up for you; many times I have gotten the item or items for less than I was willing to pay (top price); if it went over no sweat, I tried again as many times multiple items of similar things come up; if someone wanted to pay higher than my i would pay for it, i didn't worry; so I don't understand what all the hoopla is; being frugal by nature, I will not pay over a certain amount for an item; if it goes far past what i will pay as top dollar let someone else spend their $ for it; I am more than willing to wait; if your price is lower than you want to pay to get a "deal" then you should not be upset if you don't get it; I may put $20.00 as top bid; if the bidding is only $4.70 & at the last minute folks are bidding $5 or $6 ebay automatically ups my bid; if someone is willing to pay $25 for what I would pay $20 tops for let them have it! seems easy enough for me! what amazes me continually with ebay is that folks will pay FAR MORE for the item just to "win" the bid; that to me is asinine but to each their own; if I can buy locally something for $15 but try & get it for under that with S&H etc; why would I pay $20 or higher?

Guest's picture

What's to stop snipers from placing their bid in the 30 seconds leading up to the 15 minute window? I have no experience with sniping, and have very rarely bid on anything on eBay, but as long as the bid is in before the 15 minutes, then in theory there's no extension of time, right?

Guest's picture
FlatGreg

Barbara - Nothing, but in that case other people still have 15 minutes to place a bid. Snipers usually bid in the last 5 seconds so no one else can manually respond to their bid. They'll still lose plenty of auction is the other bidders placed an original bid in high enough.

Paul Michael's picture

The problem is this: eBay sends out an alert saying you have been outbid. With traditional sniping, there's no time to respond. All a snipe would do here, just before the 15 minute deadline, is alert the bidder to come in and place a higher bid. Not saying there isn't a way around it, but that's not the answer.

Guest's picture
Greg

This proposal will likely push up prices. This would increase ebay commissions, so it would be in ebay's interest to implement the proposal. However, what would hurt is that you would be forced to review your bid multiple times. In my case, I am rarely at my computer at the close of an auction. Instead, I would be forced to bid my maximum amount, either directly or through a sniping system.

Guest's picture
Simon

From the perspective of a buyer, this format may seem to encourage overspending when engaging in a bidding war. As many others have said, if I wanted to buy something, I'd set the maximum price I'd pay and anything less is gravy.

As a seller, I love it!

Guest's picture
Anonymous Coward

I haven't used e-bay in about 2 years because of sniping. I would love to see this 15 minute rule implemented - I may start buying again.

It's not so easy to just set your maximum bid and not worry about sniping. I know from experience that I can't look at an item for sale and know exactly the top price I would pay for it. That's why I'm at an auction - not a store. If I see someone offering a $20 item for $1, I'll start bidding. I may decide $5 is my limit, I may go up to $10, but if my $5 bid stays unchallenged for 2 days and the item sells for $5.01 ten seconds before the auction closes, I don't ever get a chance to bid $6, $8, or more for the item. That's what sucks about sniping and that's why I don't shop on e-bay.

Guest's picture
JaFi

Sellers believe that they will get substantially higher prices if there is no sniping. The research shows prices go up - by an average of 2.5%. For the vast majority of auctions this means only a few pennies more- Maybe.

Research has also shown that with automatic auction extensions people bid earlier in the auction and there are very few last minute bids. The change in strategy is to get your bid in early. (vs. ebay where people bid late). The net result - prices don't get substantially higher and people alter their bidding behavior to compensate for the change in rules. The outcome changes very little.

ie. people have a maximum price they will pay and are rarely caught up in bidding fever unless it is a rare unusual item. 6 of 1, half a dozen of the other. People must have preferred the ebay format since the vast majority of auction sites that had automatic time extensions are no longer around.

BTW, word on the grapevine is that ebay is moving away from auctions in general and small vendors in particular to large vendors and buy it now. Note how many items Best Buy, Sears etc. sell on ebay these days and how ebay keeps upping requirements and fees for the sellers that are not large corporations. I doubt they would move towards a bidding time extension strategy. There is no evidence to support it and it doesn't fit with their general market direction.