September 25, 2005

Why auction sniping is bad for business

Auction sniping is the act of using automated software to bid the minimum extra amount, often $1, in the closing seconds of an auction in order to win an item. This practice is damaging to sellers, buyers and the companies that make a profit from online auctions.



Why is it bad for sellers? Firstly lets see why its bad for buyers.



As a buyer, you lose out because some one has out bid you with out giving you a chance to respond. You could be in the position to be willing to bid another extra $10 but there is nothing you can do - the auction has ended, some one else has walked away with your sought after item for an extra $1. If this has ever happened to you, you know how frustrating this is. Its the lack of ability to respond to challenging bids that makes auction sniping unethical - every one is suppose to have an equal opportunity to bid, not just the people who have a high bandwidth or employing auction sniping software.



Its easy then to see why auction sniping is bad for sellers - you have a customer willing to pay more than the closing amount but they can't because they have been snipped. You end up selling an item for less than its market value, and that's bad for business.



It follows then the companies who make a profit from hosting online auctions by taking a small commission from the sale also loses out - a lower closing amount equates a lower commission. Its obvious that its in every one's interest but the sniper's to put a system in place to prevent auction sniping - and such a system exists.

Auto-extension
is implemented by trademe.co.nz, a New Zealand online auction site. This extends the auction by 2 minutes when any bid is placed in the last 2 minutes - the auction will only end when no bids has been placed in the last 2 minutes, giving every one equal opportunity to bid, giving sellers maximum sale value, giving trademe.co.nz maximum commission. Every one wins.



Auction sniping not only deprives buyers of equal footing, it also robs the seller and hosting company of profit - it should be banned and people who use it be dealt with as frauds.





Cheers,

Steve