Analysis of the online auction platform eBay. Advantages and disadvantages

Projektarbeit, 2019

15 Seiten, Note: 1.3

Adam Liskar (Autor:in)



1. Introduction

2. What is Ebay?

3. Participation in an auction as an eBay-user

4. Different types of auctions

5. eBay the industry’s new distribution channel?
5.1. eBayasanothersaleschannel
5.2. Safety precautions

6. Law Setting for eBay in Germany

7. Obstacles of the platform

8. Analyzing the competitors of eBay

9. The problems of online auctions
9.1. Theperfectmarket

10. Conclusion


1. Introduction

Bidding over the Internet brings with it several advantages, but also disadvantages. Especially buyers can be harmed by opportunistic behavior of the transaction partner. Companies that want to sell their goods electronically will have to consider soon whether eBay is not a good alternative to the traditional online shop (ecommerce platforms, 2009, n.p.). The services offered are aimed at almost every type of user and meet the requirements of large companies. Both the simple evaluation of figures and the constant presence of customers suggest that shop providers with fixed prices must prepare for new competition (ecommerce platforms, 2009, n.p.). For them, the type of eBay use is irrelevant, since the application flow for pure sales via eBay is the same as the implementation in an existing sales system (Mishra, 2010, S. 62 ff.).

The main problem with Internet auctions is the fact that the players involved do not know each other. Trading between two individuals via online auctions therefore requires a high degree oftrust (Mishra, 2010, S. 62 ff.).

Customers also enjoy more and more auctions and the possibility to get high-quality goods at good prices (Mishra, 2010, S. 62 ff.). It must be considered, however, that the inhibition threshold for Internet shopping is still quite high in the population.

The eBay platform certainly offers new sales potential in all areas with low investment costs at the same time. However, the market must be constantly monitored, as changes in demand can often be perceived too late (The Economist, 2016, n. p.).

2. What is Ebay?

eBay is an Internet auction platform whose transactions and communication are handled completely electronically. This means that in almost all auctions the bids of other bidders are visible and the price increases. The main difference to the real auction is the time period, which is freely determinable on eBay (Roth & Ockenfels, n.d., S. 3). Real auctions end as soon as no further bids are placed. On the Internet every auction has a fixed end time. No matter how many bids have been received, the hammer falls at that time (Roth & Ockenfels, n.d., S. 3). On eBay, search queries for items to be auctioned are carried out almost exclusively via the main page The program works like a search engine and provides an overview ofthe results found (Roth & Ockenfels, n.d., S. 3).

If you have no concrete ideas and are looking for a group of articles, you can display all articles for a specific category.

In order to participate in an auction, it is necessary for both buyers and sellers to register by entering various personal data. In the past there have been rumors about security deficiencies, so eBay has increased the requirements for new participants considerably (Roth & Ockenfels, n.d., S. 3).

3. Participation in an auction as an eBay-user

As a real auction, you must bid on eBay. This is done on the respective auction page by logging in with your virtual name and password and typing in the maximum price you are willing to pay. There are different price steps depending on the amount of the current price. If you offer more than one price step, the bidding agent becomes effective. Thus, everyone has the possibility of indicating its price upper limit, without having to constantly observe the auction (Nield, 2018, n.p.).

Different types of auctions

Selling an item on eBay is controlled via an online form. Fill in the required fields and select additional options if desired. Basic information is item description, starting price, auction duration, pictures, shipping method and costs and payment options (Nied, 2018, n. p.).

At the end of a successful auction, both participants receive a message generated by the system with all the information they need to complete the transaction. Nowadays a seller puts his account data and shipping costs online to avoid additional e-mail contact and time loss. eBay almost exclusively pays in advance by bank transfer. If the buyer now retrieves the data, he sends at the same time an info mail over the eBay system to the salesman, who is paid. The seller waits for the money to arrive and then sends the goods (Nield, 2018, n.p.).

4. Different types of auctions

Three different retail formats are available to eBay users: The classic online auction, the online auction itself with buy-it-now option and the pure fixed-price format (Hasker & Sickles, 2010, S. 4). For each retail format, a registered user who wants to sell something can choose an auction duration of three, five, seven orten days. However, there are also exceptions. The most common form of auction among auction houses, including eBay, is the long-term auction, the end of which is set by a predetermined time limit. The seller places an item on eBay at a certain starting price and bids can then be placed on it (Hasker & Sickles, 2010, S. 4). At the end of the auction, the highest bidder is automatically awarded the item. In contrast to conventional auctions, there is no auctioneer here, but the knockdown is made independently by the system. In this type of auction, the classic online auction is provided with an additional function: In addition to the starting price, the seller sets an immediate buy price. If an interested buyer wants to buy this item at auction without waiting for the end of the auction to come, he uses this function to secure the item immediately (Hasker & Sickles, 2010, S. 5). The auction is then finished. The disadvantage for the buyer is, of course, that this buy-it-now price is higher than the starting price and he therefore has to spend more, perhaps even more than he would have had to pay if he had only placed a classic bid and then waited for the end of the auction. The advantage, however, is that he has secured the item before another bidder has been able to beat it, either by a higher bid or by using the buy-it-now option (Hasker & Sickles, 2010, S. 5). However, the buy-it-now option can only be used by sellers who have a rating profile of at least ten points or who are a verified member. I will go into more detail on the rating profile and the verified member in connection with the topic of security (Hasker & Sickles, 2010, S. 6).

With the pure fixed price format, an item can only be purchased at a buy-it-now price set beforehand by the seller, in order you cannot place a classic bid. Many sellers use this feature to sell several single items. As a buyer, you simply specify the desired number of items you want to buy at auction and then activate the Buy Now option. The advantage for the seller is that he does not have to start several auctions if he wants to sell a larger number of the same item (Hasker & Sickles, 2010, S. 6).

However, this form of auction already resembles the classic online shopping such as at, because you buy an item at a fixed price and no longer bid as it would be usual in an auction.

5. eBay the industry’s new distribution channel?

Manufacturers usually sell their products via traditional sales channels with several intermediaries. The typical stages are wholesale, retail and end consumers. Each intermediary charges a fee for its services, which is added to the selling price. This is how the prices of the goods that can be found on the shelves in the stationary trade are generated (Kenton, 2019, n.p.).

Over time, the first online shops developed, and the idea was born to sell products directly to consumers via the Internet without intermediaries (Kenton, 2019, n.p.). Many manufacturers, such as Sony, now use this method of direct selling. For a comparatively low cost, the full selling price can be achieved by the consumer, in contrast to the price paid by the wholesaler (Kenton, 2019, n.p.). The profit is maximized at the expense of the middlemen. Now it would be conceivable for manufacturers to sell products via the eBay platform instead of their own online shop (Turner, 2017, n.p.). This would have further advantages, as the costs would be reduced to a minimum and customers would not have to be recruited. Problems could arise in pricing if items are offered below the usual selling price and suddenly a downward spiral in prices could develop. The reaction of retailers could be a further price reduction, which in turn would lower prices on eBay (Turner, 2017, n.p.).

5.1. eBay as another sales channel

eBay offers merchants many ways to customize their auctions to almost any situation. This way, certain types of consumers can be satisfied by determining the length of the auction, the visual appearance, the type of goods and finally the type of sale (Mishra, 2010, S. 62 ff.). Finally, it is also possible to sell at a fixed price, which in a broader sense is a common online shop and does not consider the advantages of an auction.


Ende der Leseprobe aus 15 Seiten


Analysis of the online auction platform eBay. Advantages and disadvantages
Macromedia Fachhochschule der Medien München
ISBN (eBook)
ISBN (Buch)
Auction platform, Microeconomics, VWL, Ebay, Analysis, Online auction
Arbeit zitieren
Adam Liskar (Autor:in), 2019, Analysis of the online auction platform eBay. Advantages and disadvantages, München, GRIN Verlag,


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