Dealing with Different Types of Auctions

As you've worked your way through eBay's item listing process, you've discovered that there are some variations on the main auction themein particular, reserve price and Dutch auctions. (There's also the option of including a Buy It Now price, which we'll discuss in Chapter 16, "Selling Items at a Fixed Price.") Each of these variations requires a slightly different listing approach, which we'll discuss next.

Set a Higher Minimum with a Reserve Price Auction

A reserve price auction is one in which your initial bid price really isn't the minimum price you'll accept. Even though bids might exceed the initial bid price, if they don't hit your reserve price, you don't have to sell.

Many buyersespecially those just getting starteddon't like reserve price auctions, and shy away from them. That's probably because they appear more complicated than regular auctions (and they are, just a little), and also because the reserve price is never disclosed to bidders. In this case, lack of familiarity definitely breeds contempt, at least from a certain class of bidders.

But there's something to the confusion factor. Let's say you set a minimum price of $5 for an item (really low, to get a buzz going and attract some early bidders) but a reserve price of $50 (because that's what you believe the item is really worth). If the high bidder bids $25, that bid doesn't winbecause it's less than the $50 reserve. Unfortunately, bidders have no idea how much more to bid to hit the undisclosed reserve price. Messy and confusing, eh?

Tip

If your auction ends and the high bid is below your reserve price, you don't have to do anythingyou are not obligated to sell the item. However, you may want to use the Second Chance link on the item listing page to contact the high bidder and see whether he or she is willing to pay the reserve price for the item, or perhaps you can negotiate a fair price in between the high bid and your reserve. If you don't want to do this, you can always relist the item in a new auction, in the hope that a new round of bidders will push the price up to what you expect to receive. If you do relist, however, you might want to edit the item's description to make it more appealing, or even rethink your reserve price to make the item more affordable.

Why, then, would you opt for a reserve price auction? There are two possible scenarios:

• When you're unsure of the real value of an itemand don't want to appear to be asking too much for an itemyou can reserve the right to refuse to sell the item if the market value is below a certain price.

• When you want to use a low initial bid price to get the bidding going more quickly than if the true desired minimum price (now the reserve price) was listed; the reserve price still guarantees that you won't have to sell below a minimum acceptable price.

If you insist on running a reserve price auction, it's easy enough to do. On the Describe Your Item page, scroll down to the Selling Format section and enter a price (higher than your Starting Price) in the Reserve Price box. That's all you have to do; after that, the auction runs as normalor as normal as a reserve price auction gets.

Remember, if no one bids the reserve price or higher, no one wins.

"Mike Sez"

I personally don't like reserve price auctions, and I run them only on the rarest of occasions. My experience is that you turn a lot of potential bidders off by using a reserve price; it's better to create a regular auction with a higher minimum bid price, and be up-front about everything.

Sell Larger Quantities with a Dutch Auction

When should you place a Dutch auction? Simple: when you have more than one copy of an item to sell.

Dutch auctions are those in which you have more than one quantity of an identical item to sell. It's great if you have a dozen Scooby Doo PEZ dispensers, 10 copies of Lord of the Rings on DVD, or a hundred units of bright orange extra-large boxer shorts to sell.

To set up a Dutch auction, all you have to do is enter a quantity greater than 1 in the Quantity box in the Selling Format section of the Describe Your Item page. When you do this, eBay automatically registers your auction as a Dutch auction.

The way Dutch auctions work is a little complicated, so I'll refer you to the explanation in Chapter 8, "Bidding in Online Auctions." Suffice it to say that the highest bidder always wins somethingbut doesn't always have to pay the highest price. To be precise, all bidders pay the lowest winning price, even if they bid higher. (I told you it was complicated!)

In any case, eBay handles all the details automatically as long as you specify multiple quantities.