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**Kristijntje** · 03-01-2006, 12:26 PM,

Quote:eBay sellers can boost profits by setting a low opening bid price and charging higher shipping charges, according to a recently published study by economics professors at the UC Berkeley Haas School of Business and Hong Kong University of Science and Technology...

In the eBay auctions, Morgan and Hossain varied the opening bid price and shipping charges on identical CDs, ranging from Britney Spears to Nirvana, and video games, including Halo and NBA 2K2.

"In theory, dividing a price into these two pieces should have little effect on overall demand for a good," they note. "A perfectly informed and fully rational consumer will merely add together the two parts of a price to obtain the total out of pocket price for an item and then decide whether to buy and how much to bid based on this total price."

But that's not what happened in their eBay auctions. Instead, they found that lowering the opening bid price while raising shipping charges attracts earlier and more bidders and ultimately leads to higher revenues compared with doing the reverse. Those findings suggest consumers pay less attention or even completely overlook shipping costs when making bids, the professors conclude.

In addition to applying to auctions, the results could have implications for fixed-price retailing, including electronics and books, where it's also common marketing practice to divide a price into two pieces. "Framing the same price as a total of different attributes may significantly affect consumer behavior," Morgan says...

full press release: http://newswire.ascribe.org/cgi-bin/beho...228.115246&time=13%2013%20PST&year=2006&public=0

http://www.bepress.com/bejeap/advances/vol6/iss2/art3/

sneakymagenta · 03-01-2006, 04:47 PM,

Quote:More recently, Morgan compared auctions on eBay and rival Yahoo! with UC Berkeley Dept. of Agricultural & Resource Economics graduate student Jennifer Brown. After auctioning off identical Morgan Silver Dollars on both sites, they found that eBay auctions averaged almost 60 percent more bidders than Yahoo! and generated about 30 percent higher sales prices on identical items.

Those findings could have antitrust implications in the US online auction market because they suggest Yahoo! is not a formidable competitor to eBay, Morgan says.

Next time save yourselves some time and look at the listing numbers before wasting time on a study. Boinktard

bargainbloodhound · 03-01-2006, 06:47 PM,

[quote author=sneakymagenta link=topic=2849.msg10218#msg10218 date=1141231632]

Quote:More recently, Morgan compared auctions on eBay and rival Yahoo! with UC Berkeley Dept. of Agricultural & Resource Economics graduate student Jennifer Brown. After auctioning off identical Morgan Silver Dollars on both sites, they found that eBay auctions averaged almost 60 percent more bidders than Yahoo! and generated about 30 percent higher sales prices on identical items.

Those findings could have antitrust implications in the US online auction market because they suggest Yahoo! is not a formidable competitor to eBay, Morgan says.

Next time save yourselves some time and look at the listing numbers before wasting time on a study. Boinktard

[/quote]

Quote: "A perfectly informed and fully rational consumer will merely add together the two parts of a price to obtain the total out of pocket price for an item and then decide whether to buy and how much to bid based on this total price."

But that's not what happened in their eBay auctions Instead, they found that lowering the opening bid price while raising shipping charges attracts earlier and more bidders and ultimately leads to higher revenues compared with doing the reverse. Those findings suggest consumers pay less attention or even completely overlook shipping costs when making bids

So is he saying eBay buyers are uninformed and irrational? :twistedevil: I think Adam the PosterBoy with his $0.99 prices and $8.95 shipping (and mandatory insurance fee) is the best example of that strategy working...the downside is even eBay bidders pay attention when they get the invoice and you'll wind up with a bunch of pissed off customers.

***mandy*** · 03-03-2006, 09:54 AM,

An article on this study:

Quote:In three out of four experiments, a lower opening bid and higher shipping charge generated more revenue than when opening bids were high and shipping charges were low.

For example, the professors auctioned 10 video games for the Xbox console. In one experiment -- where the opening bid was set at a relatively low level and the shipping charges at a relatively high level -- the average revenue for the auction was $41.06. That was 11 percent higher than the average revenue of $36.95 for instances with higher opening bids and lower shipping charges.

In one instance, of selling music CDs, low item prices and high shipping costs produced 34 percent more revenue.

But it doesn't always happen that way. In auctions of music CDs, which tend to cost quite a bit less than video games, it was difficult to get away with shipping charges that greatly exceeded the cost of the CD. When there was a real disparity, such as an opening bid of $2 and a shipping charge of $6, average revenues when the shipping charges were high fell 3 percent below the high-bid, low-shipping scenario.

"When we jacked up the shipping charges to $6, a lot of people perceived us as being crooks," Morgan said.

full article: http://www.mercurynews.com/mld/mercuryne...997485.htm

xppman · 03-03-2006, 03:04 PM,

Quote:"When we jacked up the shipping charges to $6, a lot of people perceived us as being crooks," Morgan said.

Fee avoidance is a good thing.

Bad feedback to those charging unrealistic S&H is a good thing too.

The overall perception by the public that feebay is were you go when you want to get reamed, scammed, or slammed is also a good thing. IMO

Happy001

bargainbloodhound · 03-04-2006, 03:57 AM,

Quote:The overall perception by the public that feebay is were you go when you want to get reamed, scammed, or slammed is also a good thing.

Except when people do get reamed, scammed, and slammed on eBay (or by PayPal) many of them become distrustful of all online sellers.

I've had several buyers on Yahoo Auctions over the past several years who had either been ripped off on eBay (or lost money due to PayPal's failure to protect anyone but itself) who needed extra hand holding because their eBay/PayPal experience had convinced them that they were more likely to be ripped off than not. They all ended up being satisfied customers but I had to send several additional emails to walk them through the sales and reassure them or to arrange alternate payment methods besides PayPal.