Buying and selling on eBay

By Jon: First published in Online Currents 2003 – 18(10) 18-19, 24

Metcalfe’s Law of networks applies also to online auctions: their usefulness increases proportionally to the square of the number of their users. Having seen off its rival Yahoo Auctions, eBay is now the only global auction system with an Australian presence. Yahoo Auctions still lingers on in the USA but its numbers look very small beside eBay’s and its demise surely cannot be far away. For the moment at least, eBay is the online auction site of choice.

Part of the attraction of eBay lies in the simplicity of its business model. It exists only to put people in touch with each other; once contact is made the details of payment and delivery can be arranged between them. Defaulters on payment or delivery are removed from the system, but no further action is taken by eBay itself. It handles no money other than the fees paid by sellers, and it is free for buyers to use.

Someone listing an item for sale on eBay Australia can specify whether they also want it to be available to buyers overseas, and someone searching for an item can specify whether to restrict the search to their own local eBay system or to look overseas as well. The various national eBay sites – which include the UK, France and Germany – are built to a similar design with some local modifications; unfortunately this also includes local variations in the hierarchical item browsing system.

As well as private individuals, many merchants now list goods through eBay, often listing dozens or hundreds of items for sale. Where a merchant has several units of the same item to sell, he or she can list it once and then sell the units to as many of the highest bidders as they have goods for. Sellers can set reserve prices as well as a minimum price, and they can schedule a listing to start on a particular day or time.

Anyone can browse through eBay listings from anywhere in the world whether or not they are registered with eBay. To become a bidder requires a simple registration, while to become a seller involves submitting further details including a credit card number.

Becoming a bidder

Becoming a bidder on eBay involves choosing a unique username and selecting a password. These details are retained through a cookie system so that you don’t need to re-enter them when you return to the eBay site. One single registration entitles you to bid and buy on any eBay site worldwide: the same is true of a selling registration, which entitles you to sell items on any eBay.

Some of a bidders’ details are made available to the public; in particular, a potential seller can see a bidder’s eBay rating, a number out of 100 which summarises any positive or negative comments made about that individual by others who have had dealings with them, either buying or selling. If a seller (or bidder) requires further information they can view the individual comments or even get in touch with the person who made the comment. While a buyer who has had negative ratings can register under another name, this is not so easy for sellers, who must supply their credit card details. Most eBay ratings are in the high 90s, indicating a generally high level of satisfaction with the system.

Once you have registered as a bidder, you can search for items. Australian bidders can search for items on sale on eBay Australia (these may not necessarily be located in Australia) or for items listed elsewhere in the world which the sellers have marked as ‘available to overseas bidders’. Naturally, the majority of items are listed in the USA, followed by Britain, then Canada.

Searching for items can be done by keywords or through a categorical system. For instance, fiction books are categorised by genre and non-fiction books by subject. There is no cross-referencing as such, but by paying an extra listing fee, a seller can have their item appear in two or more places in the category hierarchy. The keyword search can be of titles only or of the text associated with an item.

If a particular item is not available – or not at the price you want to pay – you can ask eBay to alert you if and when items matching a particular text string are listed: e.g. an Anthony Buckeridge fan could receive an alert whenever a book by this author was listed for sale.

Items and prices

A ‘basic search’ through the Australian, British and global eBay sites yields the following numbers of matching items:

Item Australia Britain Globally available
Copies of Harry Potter and the Order of the Phoenix 1 11 49
Morris Minor cars 3 19 5 (including one from NZ)
Copies of The Eagles Greatest Hits 0 2 9
Slim Dusty CDs and LPs 188 4 172
Copies of the Microsoft Windows 95 operating system 25 16 55
A search on ‘indexing’ 10 1 40
His Dark Materials trilogy by Philip Pullman 1 4 11

The non-English speaking eBay sites in France ( and Germany ( can be useful sources for foreign-language books and other material – provided you can communicate well enough in French or German to complete the sale.

The home page of eBay France (eBayFrance.jpg)

Becoming a seller

Becoming a seller on eBay requires you to submit your real name, address and credit card details: these are used to set up an account. To list an item, the seller goes through a five-step ‘wizard’ online, followed by a review during which the user can change any details or cancel the listing. Listings can go up immediately or for a small extra fee (20 cents in Australia) can be set to start on a specified date and time. Listings can be enhanced in various ways for an extra cost, but the basic fee for listing on eBay Australia is around $1.00. If the item sells the seller also incurs a fee of 3% of the sale price. Items are normally listed for seven days, but the seller can extend this to ten days – also for an extra cost. One digital picture can be included in the listing for free; a charge is incurred for additional pictures. A free hit counter can also be added to the listing page so that the seller can get an idea of how much interest their was in the item.

Once a seller has listed one item they can use the details for that one as the basis for another, making it easier to list multiple items. Items that do not sell remain on the system for 30 days after the closing date, and for an additional fee the seller can relist these at any time, changing any details if necessary.

Sellers select a minimum price for their items. They may also specify a reserve price, which is hidden from the bidders, although this practice is not recommended. Regular sellers may also specify a ‘Buy it now’ price which, if met, concludes the auction at that point without collecting further bids.

The final step in listing an item

Enquiries and bidding

At any time while the item is listed, eBay users can send enquiries to the seller; these are sent via eBay and relayed to the user’s email address. Sellers may respond the same way or directly to the enquirer’s email address.

Bidding is done in small increments based on the initial price; 50 cents at a time for low-priced items, five dollars or more at a time for high-priced ones. If there is only one bidder, he or she can place a bid at the minimum price; where there are two or more bidders each indicates the highest price they are willing to pay and their bids are incremented alternately until one exceeds the highest price set by the other. Where two bids tie the earlier one is given priority.

For instance, assume two people are bidding for a book where the minimum price is $AU10, and the bid increment is 50 cents. Bidder A comes along first and offers a maximum of $13, but because there are no other bids, his first bid is shown as $10.50. Bidder B then offers a maximum of $12.50, and the bids are incremented as follows: B: $11.00 – A: $11.50 – B: $12.00 – A: $12.50 – B: $12.50. The bids are a tie but because A’s $12.50 bid was made first, A is the current winner.

EBay notifies bidders by email when their bids are beaten, allowing them to log on and increase their bids if they wish. In practice, many items attract no bidders, and many more attract only one, especially in Australia where the number of bidders is relatively small. Where there is fierce bidding for an item it is likely to take place towards the end of a listing, often in the last few minutes before it is closed. Keen bidders in Australia may have to sit up till the small hours in order to successfully bid on items listed in Europe or the USA.

At the close of a listing period the seller is notified whether or not the item has sold, and if so is given details of the successful bidder. The winning bidder is also notified and the two are expected to make contact within five days. It is up to them to arrange details of payment and delivery, though eBay supports the use of PayPal, the global Internet system for small payments.

Have you noticed a decline in the number of second-hand dealers lately? It may be too soon to tell, but perhaps this is the effect of Metcalfe’s Law and eBay – yet another example of the Internet at work cutting out the middleman.