Understanding the eBay bidding process
eBay was founded in 1995 as AuctionWeb and was one of the first marketplaces of its kind on the internet.
Despite 88% of products now being sold via fixed, buy-it-now prices, buyers must still understand the eBay bidding process to avoid paying too much for an item or indeed missing out on it completely.
The seller also chooses the length of the auction, which may span 1, 3, 5, 7, or 10 days.
In the final 15 minutes of an auction, when bidding activity tends to peak, buyers can save time and click on the “1-Click Bid” button to bid one increment higher.
Automatic bidding for buyers
Fundamental to purchasing items in this way is automation.
Essentially, eBay’s system enables the bidder to place a maximum bid for an item which is then adjusted automatically to beat any other bid that is lower than their maximum bid.
This amount is slightly higher than the second-highest bid and the process repeats until the auction price has reached the buyer’s maximum bid.
The automatic bidding process makes it easier for buyers who are no longer required to manually place a new bid every time their previous bid has been exceeded.
Manual bids are only required when the current bid for an item exceeds an individual’s maximum bid. If the buyer is willing to part with more money, they can also increase their maximum bid.
- For a bid price up to 99 cents, the bid increment is 5 cents.
- For a bid price between $5 and $24.99, the bid increment is 50 cents.
- For a bid price between $250 and $499, the bid increment is $5.
- For a bid price between $500 and $999, the bid increment is $10.
- For a bid price over $5,000, the bid increment is $100.
Example of eBay’s automatic bidding system
Here is how the above process plays out in a hypothetical example:
Suppose that Jack wants to bid on a pair of wireless headphones.
Since the current bid price is $275, Jack’s bid of $300 is adjusted by eBay down to the nearest bid increment for that bid price range.
Thus, Jack’s bid becomes $280, or $275 + $5.
The next day, the bid price for the headphones reaches $400 with Jack and another bidder called Peter the two main players.
When Peter enters a bid price of $420, eBay adjusts Jack’s price to $415 and, since this is his maximum bid, notifies that him he has been outbid on the headphones.
At this point, Jack has the option to increase his maximum bid price and make another bid.
But since maximum bid prices are kept private, he has no idea what Peter (or indeed any other bidder) may want to spend on the headphones.
- eBay bidding is a way for buyers to bid on a product whose sale price is decided by auction. The bidding process itself is automated with eBay acting on the buyer’s behalf.
- eBay’s system enables the bidder to place a maximum bid for an item which is then adjusted automatically to beat any other bid that is lower than this maximum amount. The adjustment depends on the bid price increment which is itself correlated with the current bid price of the item in question.
- The automatic bidding process makes it easier for buyers who no longer have to manually place a new bid every time their previous bid has been surpassed.
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