eBay: Should the System be Changed?

The Crow has been using eBay for many years now, and has seen most of the auction problems one might encounter. This leads to the question, "should the system by changed?"


Before learning that sniping was the official term for it, the Crow called the following bidding technique "wire-bidding", that is, bidding at-the-wire. ebay auctions have an absolute end time. This is not congruent with a real auction. Consider a classic auction's procedure:

Auctioneer: "Do I hear ten dollars for this item?"

(bidder A raises number card)

Auctioneer: "I have ten dollars, do I hear fifteen dollars?"

(bidder B raises number card)

Auctioneer: "Fifteen dollars..fifteen...looking for twenty..twenty dollars. Do I hear twenty dollars?"

(no bidders raise cards)

Auctioneer: "I have fifteen dollars on the block. Fifteen, going once. (pause) Fifteen, going twice. (pause) Fifteen going for a third and final time--"

(bidder C finally decides not to pass and raises card)

Auctioneer: "I have twenty dollars! Twenty to the bidder in the back. Twenty, do I hear twenty-five? Twenty-five dollars?"

(again, no bidders raise their cards)

Auctioneer: "I have twenty dollars. Going once, going twice, going for the third and final time...(long pause) SOLD! to bidder C for twenty dollars. The next item is..."

This example demonstrates every aspect of an auction. Note how the auction looked like it might end at $15 but when the $20 bid came in, the auctioneer returned to the formal bidding process! The auction did not end immediately! It is this specific case that is lacking in the eBay auction style, and leaves the door wide open for sniping. The goal of sniping is to bid at the very last possible moment in order to claim the winning bid on an item by depriving the other bidders of response time--by the time they see the snipe bid show up on the item page, the auction has ended.

Before using eBay, the Crow used (and still uses) Onsale, which is now owned by Egghead. Onsale's auction style is significantly different in that they implement a "going once, going twice" mechanism. What Onsale does is state a default end time, but the auction actually ends five minutes after the last bid is received. This has in many cases extended the auction hours beyond the original projected end time, but no interested bidders were left out by being deprived of response time. If a sniper tried to win an Onsale auction, they would find the effort fruitless--if they bid 5 seconds before the default end time, they discover that the new end time is five minutes later! their advantage just evaporated.

The Argument in Favor of Sniping

There is one good argument the Crow has in favor of sniping: Onsale-style auctions always favor the bidder(s) with the most money. eBay-style auctions provide a chance for a bidder to come away with a bargain, without necessarily having to be the one willing to pay the most for the item. It is for this reason that the Crow hesitates to petition that eBay modify the basis of its auction format. It is far better to live with an opportunity of windfall than to forever give the advantage to the people who have more money. Sniping is an equalizer of sorts.

The Crow uses a bidding agent called BidWatcher to assist in eBay auctions. As a selling tool, it lets me see how items for sale are progressing. As a buying tool, it likewise allows tracking of a list of items without lots of wasteful browser thrashing. It also allows the use of an automatic snipe bid. You set the snipe time in terms of the number of seconds before an auction is to end and set a snipe bid amount. The program will synchronize to the official eBay clock and enter the bid at the specified time without any user intervention. Very handy tool. It doesn't hurt to have a high-bandwidth permanent IP connection, either.

Bid Shielding

The matter of "bid shielding" is rather different. While it cannot be called fraud, it is quite unethical. Bid shielding exists because eBay allows bidders to cancel their own bids. The eBay literature says you cannot cancel a bid, but this is not true. You can. Bid shielders depend on this capability.

Bid shielding works by using two (or more) bidder IDs, a real one and a "fake" one. A fake one is often created by signing up for a free hotmail.com or equivalent email account using bogus information, then using that email address when signing up for an eBay user ID. If eBay cancels that ID, then one simply signs up for another "throwaway" email account and signs up to ebay again..and again..and again.

The real bidder sees some item he wants to grab at a rock-bottom price. Say there is a *non-reserve* MP3 player starting at $25 with no bids (or a few small bids) on it. The real bidder enters a bid of $240 and jumps to the front of the bid list--not at $240, but at $25 or whatever the current (low) minimum bid is.

Then, the fake bid is put in, using the "fake" bidder ID. The fake bidder bids an amount just above the real bidder, such as $250. All of a sudden the $25 item bid price rockets up to $245--beating the real bid maximum by the $5 minimum bid increment. Now that the item is bidding at essentially retail price, no other bidders will be interested. Unless of course, they're fools. One cannot compete with fools and win. :)

The item bid status remains this way right up until it is nearly time for the auction to close. At this point, however. The final step in the bid shield technique is executed--removing the "shield". With just a matter of seconds left until auction close, the fake bidder cancels his bid. The $250 evaporates from the bid list, and the $245 current bid plummets back down to $25 (or whatever small bid the item was at). THe auction closes, and the bargain was just achieved.

It is called bid shielding due to the fact the fake bid is creating a disproportionately high bid to protect/shield the real bid at the much lower price from being overtaken by standard bidding practices. To combat bid shielding, ebay needs to make one or both of the following changes:

1) Only allow sellers or eBay officials to cancel bids. If a bidder mistakenly enters 1,000.00 instead of 100.00 then the bidder can contact the seller or eBay to resolve the issue.

2) Only allow bid retractions to be made by a bidder within one hour of submitting a bid.

Other Improvements

eBay could implement other smaller changes to improve the auction process:

*) In order to bid in the final hour of an auction, you had have at least one bid placed earlier. This would deter hit-and-run sniping. There may be snipers waiting to make their move among the listed bidders, but at least one knows who they're up against.

*) To register as a bidder, you must submit a more positive proof of ID than an email address. A credit-card number, social security number, etc.

Why These Improvements May never Happen

All of the changes discussed on this page have one basic problem: getting eBay to do anything to implement them. The problem is that ebay is very, *very* nervous about implementing any broad-sweeping changes that could shift the opinion of their userbase in a negative way. Ebay stock shares are valued [well, *were* until the dotbomb went off] in the hundreds per share, and they are not about to tamper with anything that could collapse their market capitalization. Good or ill, sniping and absolute end times are likely going to be around for a long time--they're ingrained into the eBay auction "atmosphere" and their image is more important to them than any changes--reasonable or not. Measures to combat bid shielding have a better chance, as these affect canceling bids, which is not something every bidder does.

The Old Crow