Do you have time for auctions?

online-auctionsThe American National Bureau of Economic Research (NBER) recently published a paper that documents the decline of auctions on online marketplace eBay: today, less than 15 percent of eBay listings are in the auction-only format.

The researches say the main reason is the narrowing of margins, leading sellers to opt for posted (fixed) prices. Another reason is a shift in shopping habits. After all, the researchers point out, ten years ago internet auctions were a form of online entertainment. In the meantime, the likes of Facebook and YouTube have taken over that role. Nowadays, shoppers what to come, see, and buy, in as a short period of time as possible.

What’s more, the increased use of smart phones is likely to result in further decline in auctions. People who visit eBay via a mobile spend 25 percent less time on the site than people using a computer, which probably means that they are more likely to buy quickly than to see out an auction.

So much about the fate of the auction format on eBay.

But what about bidorbuy? Does Africa’s largest online marketplace display a similar auction fatigue?

We took a snapshot of current offer and found that, as far as listings go, indeed it does.

Out of about 1.3 million items currently listed for sale on bidorbuy (excluding the classifieds), almost 81 percent are in buy-now format, and only a little over 19 percent in auction format.

However, the picture changes if we look at the demand side. Here, the numbers are (still) skewed in favour of the auctions.

Of more almost 27,000 items bought during last week, a little over 70 percent were won on auction, while almost 30 percent were purchased at a fixed price. High as the auctions percentage is, it is still decreasing: five or so years ago, the ratio was 80:20 percent in favour of auctions.

Auctions may be in decline, but there’s still life in them, because:

  • Auction listings tend to have lower prices, but higher sale probabilities, say NBER researchers. So, if it is more important for you to sell quickly than to sell at a higher price, you’d probably do well to opt for auction format.
  • Sometimes, it’s a good idea to offer a same or similar item both on auction and at fixed price and see which one fares better.
  • Many items are more suitable for auctions, like collectibles, jewellery, or locks of some celebrity’s hair.
  • Buyers who do a lot of shopping tend to focus more on auctions. Their reward is a better deal, because auctioned items usually sell with a lower price tag than similar items offered at fixed prices.