Starting low, spelling mistakes and Sunday evenings – David Leafe reveals the secrets of successful online trading
For the past week, I have been checking my e-mail inbox with trepidation. Lurking within could be that most dreaded of all items of electronic correspondence: an eBay Outbid Notice.
Familiar to anyone among the 181 million registered users of the world's biggest online auction site, this little piece of bad news is the web equivalent of being elbowed to one side on the first day of the Harrods sale.
"Forget it, you also-ran," it might as well say. "Someone else has beaten you to that bargain."
Unless, of course, you're willing to increase your bid, which is when the rush of excitement so familiar to eBay shoppers kicks in.
If I'm not careful, this retail adrenaline could mean me paying much more than I had anticipated when, last week, I placed a bid of one measly pound for tickets to see my current musical favourites, Gnarls Barkley, in London this Sunday.
Now, I realise that I may have fallen prey to a dastardly trick. Researchers at the London Business School have discovered that the most effective way for eBay traders to achieve a high selling price for their products is to start the bidding as low as possible.
They reached this conclusion after following online auctions for a variety of products, including digital cameras, Persian rugs and T-shirts.
"It encourages lots of buyers to bid on the item initially and that makes other people think that it must be worth bidding on," explains Professor Gillian Ku, part of the team which undertook the research alongside colleagues at the Kellogg School of Management at Northwestern University in Illinois.
"Once those people have also started bidding on the item, they put time and effort into following it, and the more emotionally invested they become, the more likely they are to spend above the limit they originally set themselves."
This is part of a syndrome the report describes as "auction fever".
"We discovered that people get what we call 'e-motionally' caught up in online bidding," explains Prof Ku. "They experience a degree of physiological arousal which can impair their decision making and hype them up so that they no longer think rationally."
Humiliating though its findings are for unfortunate eBay addicts like me, the report makes fascinating reading for anyone who wants to make a killing on the site by whipping up the auction fever surrounding their items.
The length of an auction is a powerful factor in influencing the final price, according to Prof Ku. "Research in America has shown that the longer potential buyers have been following an item, the more committed they feel towards it and so the more they want it.
"That's perhaps a reason for considering a seven-day auction for your product, rather than three or five days."
This depends, however, on the rarity of the product being sold according to Christian Braun, who set up www.auctioning4u.co.uk, a website that sells around 250 items on eBay a day on behalf of buyers who lack the time or the will to put them on the site themselves.
"For common commodities like mobile phones, people won't have the patience to wait around for the end of a long auction because another one will come along quicker elsewhere.
"But if a woman is interested in a particular style of Jimmy Choo shoes and there is only pair available in her size on eBay, then obviously she will be prepared to invest much more time in waiting and bidding for them."
Perceived wisdom among eBayers is that the best time to close an auction is on a Sunday evening, when many people do most of their internet surfing. But, once again, this depends on how unusual an item is, according to Prof Ku.
"If your item is very similar to lots of others finishing at the same time, there is little to differentiate it, but by setting the end of the auction just an hour or so later you can set your products apart from other people's."
Sellers also need to consider their target market when planning the end time, according to Braun. "Women tend to surf the internet between 6 and 8pm, whereas there are more men online between 9 and 11pm," he says.
Braun suggests that eBay sellers put particular effort into writing the main heading to accompany the description of their item. "Research shows that 97 per cent of people search on eBay based on the headings, rather than the main item description itself," he says.
"Remember, also, that people often make spelling mistakes when they are entering the search terms so it might be worth putting common misspellings in your heading, too, for example Bakerlite as well as Bakelite."
Other tips include putting a photograph of your item next to its description. This sounds obvious, but it plays to another aspect of consumer psychology.
"Research suggests that if people see a picture of something, they already start to feel ownership of it," says Prof Ku, "and that can only help push up the final price."
If only I had known all this before I fell susceptible to the promise of those Gnarls Barkley tickets. They started at only £1, they had a photograph with them and, yes, they were part of a long auction, but, miracle of miracles, with three hours remaining I am still the highest bidder.
Of course, it's often in the last few minutes when the frenzy really begins – I should know, I have been there many times – but this time I hope to remain immune to auction fever. At least, that's the plan.
After all, as Prof Ku points out, it's not only the sellers on eBay who can benefit from research into the habits of online auction customers.
"If buyers know what kind of auctions tend to end up with the highest finishing prices, then they can use that knowledge to hunt out those more likely to secure them a bargain. It's a marketplace and it works both ways."
Top tips for selling on eBay
• Set a low starting price
• Avoid reserve prices if possible, as they put off buyers
• Get as many specific keywords into a heading as possible — instead of "watch" say "Rolex watch", or "Manolo slingbacks" rather than "designer shoes". The majority of eBayers search on headings
• Consider putting alternative spellings or even misspellings into your item heading. The www.fatfingers.com website is a useful way of finding out the errors people are most likely to make
• Longer auctions work best for more unusual items, giving buyers the time to become 'emotionally invested' and therefore pushing up the price
• Shorter auctions work best for more common items
• Make your item unique by setting the end time before or after those of competitors selling similar items
• Women tend to be online earlier in the evening than men, so consider this when planning the end time of your auction
• If your product is aimed at younger people, bear in mind that they surf the web later than their older counterparts
• And if this all seems too daunting, consider getting a company like www.auctioning4u.co.uk to do all the hard work for you
