Seller's market

From: Richard Erlacher <>
Date: Sun Mar 21 11:30:44 1999

Well, I'm with you on this one. Your remarks are right on the money. An item is worth exactly what someone will pay, no more, and no less. As I wrote before, I may see some of them as idiots, but idiots have a right to the market as much as any of us. If my hardware is worth more to someone else than it is to you, it is my responsibility to see that I get the benefit I feel I deserve. If I sell to you for $50 when someone else offers $500, the blame is on me for taking less than the highest offer, not on someone else for overbidding.

You've undoubtedly read my comments about the low (70%) completion rate of eBay transactions. It is easy to agree that people should follow through when they offer the winning bid as opposed to what nearly one in three apparently does, which is to walk away, having ruined the auction by bidding out the more serious bidders, when there was no serious commitment to buy.

Unfortunately the law is unclear as to the rights and obligations of the parties involved in this type of transaction. I've always felt that internet commerce needs to be handled in such a way as to share the risk, i.e. not require that one party take all the risk by, say, demanding the buyer pay in advance, using "good" funds (cash or certified) or that the seller ship in advance of payment. There are escrow agencies who support transactions of this type, and they can superficially verify that the package sent contains something other than a brick, but they can't be relied upon to verify that the condition of the package contents are as the seller advertised beyond superficial examination.

How, then, could one improve on the 70% completion rate?

The validity of the funds is easy enough to verify, but what about the merchandise? It would cost a fortune to verify that every item, be it a Ming Dynasty vase, or a memory card from an antique 8008-based computer is in the condition advertised by the seller. You'd have to engage a panel of experts. True, every item could be sold "as is" in order to avoid having to verify condition, but what about completeness and authenticity?

The problem with "bonded" status for buyers and sellers, is that it essentially means that the organization becomes involved in the transaction. EBay manages to avoid this. The eBay auction does essentially nothing more than the newsgroups, except for the very thing that Sam Ismail has been complaining about, which is imposing a hysterical framework around what should be a sensible and orderly process.

Now, I don't draw the same conclusions he does, nor do I believe people to be the "idiots" he finds them to be. I do see his viewpoint, but, like you, I disagree with his ultimate conclusions. EBay does charge the would-be seller a fee based on the final bid price and not on the actual selling price. It benefits them to have the prices as high as they will go. My belief on this matter is that the very thing which drives the prices up is also the thing that causes the high transaction failure rate.

The various auction pages around the web stay out of the transaction in order to avoid liability for perceived misrepresentation on the part of the seller as well as failure of the buyer to make valid payment. That's the only position they can take in order to avoid this liability. The buyer is, indeed, offering to pay for an item, sight unseen, while the seller is offering to deliver the merchandise without any binding assurance that the funds will be forthcoming.

How can you envision solving this dilemma?


-----Original Message-----
From: Barry A. Watzman <>
To: Discussion re-collecting of classic computers <>
Date: Sunday, March 21, 1999 9:13 AM
Subject: Seller's market

    The messages by some of the participants shows that they really do not understand [or perhaps do not want] the concept of a free market. What they really want is a highly imperfect market so that they can buy things at low prices even though there are people around who are willing to pay more [given the presumption that all sellers will sell to the highest bidder ..... and I use the term bidder loosely, not necessarily to imply an auction type format].
    The internet is having a huge impact on buying and selling because it is creating the most free and perfect market that ever existed. The definition of such a market is that every buyer knows of every seller, and vice versa; the sellers are able to find the buyer willing to pay the highest price, AND the buyers are able to find the sellers willing to sell for the lowest price.
    GROW UP ! You have no right to complain because someone else is willing to pay more than either you are willing to pay or than you think that the item is worth. In the latter case, someone else obviously disagrees with you, and IS willing to put their money where their mouth is.
    That said, I do feel that steps should be taken to INSURE that bidders complete their deals. If I were a seller, and someone bid $5,000 and then backed out, I'd seriously consider legal action to enforce specific performance. I believe that bids on E-Bay are legally enforceable, but in 90% of the cases, because of both the amount and the fact that the buyer and seller are probably in different states, it is just not practical to try and enforce it. However when the bids get into the thousands of dollars, the situation changes and it may become practical to seek a court order of specific performance.
    But, perhaps a better way would be for E-Bay to create a new class of "Bonded Buyers and Sellers", in which E-Bay has credit card numbers from both buyer and seller, and both buyer and seller have agreed to binding arbritration by a 3rd party [E-Bay]. A bonded seller could designate an auction as open only to bonded bidders, with the assurance on both sides that the transaction WOULD be completed and that items offered would be as described.

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