Monday, November 12, 2007

Another update

Well, the auction of the Negev Camel FDC with short tab closed this weekend. It attracted only a single bid, and went for the start price of $250. I am not sure if E-bay is an accurate representation of the value of Israel stamps however. I know when I look on E-bay, I am looking to find a bargain, not necessarily to pay a market value for an item. Although, since E-bay is a place where the market sets the price, does that mean that what an item closes at is its market value?

How much of the market is represented on E-bay? Certainly, there are some dealers that sell both conventionally and on E-bay (Doron Waide, and Marlen Stamps come to mind), but what percentage of buyers look to E-bay vs other avenues (Stamp shows, conventional auctions, stamp stores, approvals, etc). Having been to only a few shows in the last few years, I can say that I am generally among the younger attendees. The majority of stamp collectors I know are a generation or more my senior, and many are not exactly computer literate. Does selling on e-bay severely limit your market? Or, does it expand it?

I did spend 6 months tracking sales on E-bay, and what I found is a bit surprising. Less than 45% of lots managed to get a single bid, and those that did get a bid attracted only a bit over 3 bids each on average. So, with few exceptions, fierce bidding wars were avoided. In an auction based marketplace, this keeps prices down, since the lot sells for only 1 advance over the second highest bid. Also, the very nature of E-bay tends to hold down the number of bids on an item. Rarely do lots attract bids more than a minute before the auction ends. I know that if at all possible, I will wait to the last second before bidding, hoping to keep the price down. This is great for buyers, but not so good for sellers.

My theory is that if I bid at the last second, (a practice known as sniping) I will be able to get the last bid in, and prevent other bidders from rebidding on the item and driving the price up. As discussed in previous entries, this has worked well for me so far. There is another reason to bid late. I know one person who will track items bid on by specific bidders in order to spot lots he may have skipped over. Knowing that another person is interested in a specific lot is a trigger for him to look more closely at a lot, and perhaps bid on it. Bidding late avoids this issue.

When I sell on E-bay, there are 2 ways I handle these tactics. The first way is to set the opening price for the lot at a level you are willing to part with the item for. Listing a $300 dollar item for $1 is not recommended. While you may get $300, you are much more likely to sell the item for less then $100. I was able to buy 3 copies of 237a (Freedom from Hunger Tete-Beche Sheet) for an average of $100 each, and then re-sold them for close to $200 each by just describing them properly, and starting them at a higher start price. Doubling my money in a few weeks. Too bad I can't do that more regularly.

The second way to handle this is to just list the item cheaply (usually starting at $0.99), and just taking what I can get. I use this tactic when I am not sure of the value of an item, and I ma just trying to get rid of it. One example of this was a Pigeon Post cover that I recently sold on E-bay. This was one of the 2100 covers that I bought in a large lot a few weeks ago. I had paid less than ten cents a cover, and wasn't interested in adding this cover to my collection. I ended up getting over $11 for this one cover, so I am well on my way to paying for the whole lot. Of course, the second cover I listed only went for the $0.99 opening bid. While still a profit, after the E-bay and Paypal fees, it was barely worth listing. The hard part is figuring out which covers will garner more than a single bid. I have another four covers from the same lot listed today, hopefully I will do well on these. Time will tell. Check back here next week for my results, or you can always bid on one of the items.

1 comment:

Ringling said...

Ebay is by definition, the market.
The actual public sets the strike price, regardless of what the dealer fantasizes a lot may be worth! If the public says it's it; THAT is the current market!