ebay: auctions vs fixed price, which one will succeed?

Fixed price models were a thing of the last 100 years – now we all thought that auction platforms like ebay would revert to variable price models. Not so. Even worse: ebay might have been a fad, argues Nick Carr, citing an article of business week.

Auctions were once a pillar of e-commerce. People didn’t simply shop on eBay. They hunted, they fought, they sweated, they won. These days, consumers are less enamored of the hassle of auctions, preferring to buy stuff quickly at a fixed price.

In fact, fixed price is gaining ground:

At the current pace, this may be the first year that eBay generates more revenue from fixed-price sales than from auctions, analysts say. „The bloom is well off the rose with regard to the online-auction thing,“ says Tim Boyd, an analyst with American Technology Research. „Auctions are losing a ton of share, and fixed price has been gaining pretty steadily.“

With users increasingly being able to research prices online, the need for speculating at an auction site decreases. At some point it’s pretty clear what a gadget should cost – so why bother bidding in an auction in which probably everyone has the same knowledge about the likely price ceiling? Why not buy it right away somewhere else?

Interesting thought: decreasing information assymetry will lead to an increase in fixed price deals (online, where things are comparable within a mouse click). Make sense, somehow.

[update: ReadWriteWeb has some more background to this.]



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