Equipment Auction Bidding Strategy

A look at how online auctions work, and some discussion on wise bidding and buying strategies. December 24, 2012

I have recently been purchasing equipment at online auctions. The last three times I entered my maximum bid, and when the auction was over I was the "winner". The price was within $10 of my maximum bid amount. Itís starting to seem suspicious. I was wondering if anyone else has had the same experience.

Forum Responses
(Business and Management Forum)
From contributor G:
It doesn't surprise me. In the past I thought that would happen to me but it didn't. It has been a while since I bought at an online auction.

From contributor M:
The same thing happened to me twice - $10 both times. I don't put in a max bid anymore.

From contributor F:
Auctions that continue the bidding while there are bids will auto increment until one bidder stops bidding. This is more like a live auction where the bidding isn't complete until the final bid is placed.

From contributor P:
I don't get something, unless two bidders are coincidentally within $10.00 of each other, the automatic bidding would stop before it is within $10.00 of the high bidder and unlikely to happen this frequently?

From contributor P:
To contributor P: The suspicion on part of OP is that the auction company, having access to bidders' bids, including maximums can themselves bid the price up to someone's max. It seems equally likely that early in an on-line auction, the auction company can hedge its bets and bid up the pricing on some machines, even when not bidding against someone's maximum bid. I'm not saying it happens, just very plausible.

From contributor A:
If the current bid is $3000 and I am willing to pay $6000 I don't put in a max bid of $6000, I put in $3150 or $3350 to see if the other guy goes away.

From contributor E:
eBay and specialized auction sites are two entirely different animals. eBay, reliant on tens of millions of buyers has become totally buyer-oriented, to the detriment of sellers. Sellers can no longer leave negative feedback. eBay actively pursues and boots sellers who engage in shill-bidding, but never sanctions bid retractions used to uncover maximums. Buyers are supposed to be booted after failing to pay for three items, but eBay regularly accepts the lamest non-payment excuses, obviating the rule.

A specialized, low-volume, high-ticket site wants to maximize fee revenue and the obvious and easiest way to do that is shilling. The less information disclosed about individual bidders, the more likely it is to happen as it's harder to detect a pattern of shilling, even if they get lazy about concocting new shill IDs. When you get bid to within a hair of your max repeatedly or, if you don't use a max, stuff you were outbid on gets relisted repeatedly, it becomes obvious what's going on. You can't be reliably shilled if you don't enter a maximum and make bids one at a time. Now, certainly not all or even most sites engage in shill-bidding fraud. Equally certainly, some do.

From contributor R:
You can drive yourself crazy wondering and worrying about this and honestly if you want to bid online the whole thing is out of your control short of not participating.

I used to only attend live auctions where you can get involved face to face and get a real feeling about other bidders and the flow of the auction. Once you learned the skills necessary to play this game you could do pretty well. But now most of the auctioneers are running an on-line bidding station alongside the auctioneer and you really never know if another bid came in or not or whether they are phantom calls to drive the price. So either way you go these days you have to accept this controversy and either walk away or play.

From contributor I:
The rule with eBay is that if the item is something people actually want it will end up selling for what it is worth. There are also far too many people who will over pay for used items. This is often a supply/demand issue. Not necessarily shill bidding, which I suspect may be more likely with online auctions run by traditional auction houses.

Take a look at camera equipment for example which will sometimes sell just shy of its retail price if purchased new. The one time that I feel I got a good deal I took a risk and purchased an item from a seller that raised too many red flags. Otherwise it would have been bought by a pro buyer who scans eBay within seconds. With eBay I generally just wait until the auction has almost expired and enter a max bid of the most I am willing to pay. Premature bidding can alert the seller, or other buyers that you may be inexperienced.