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Auctionbytes-Update, Number 121 - June 20, 2004 - ISSN 1528-6703     Previous Story | Contents | Next Story


Lies, Damn Lies & Statistics: eBay Marketplace Research
By Andy Geldman
AuctionBytes.com

June 20, 2004
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People get into eBay selling for different reasons. Some are drawn to it by their hobby or business, others just enjoy the buzz of a sale. For me, it was a way to free up storage space at home and make a little extra cash. At first, sellers need to learn the basics: how the eBay system works, what the jargon means, and which buttons to press to get their items listed. When that foundation has been laid, sellers enter a new phase in their eBay education, one that for many is more about guesswork than facts.

Experienced sellers want to know, for example, which of the twenty thousand categories holds the best opportunities for them; which listing enhancements are worth the extra fee; and whether a Buy-It-Now sale will move their inventory faster than a Dutch auction. To be successful, sellers need to understand the dynamics of the eBay marketplace: supply and demand, the effectiveness of listing enhancements, timing, pricing, and more.

Research Alternatives
There are three main ways to get insight into the eBay market: doing your own manual research, using automated analysis software, and buying ready-made reports and statistics.

Manual research can range from regular browsing through categories and search results, to a rigorous analysis of completed auctions. The manual approach can be the best way to get a good "feel" for a category, something that is difficult to achieve from studying charts and statistics. The main downside is the amount of time required, especially if the aim is a reliable analysis of the market, and manual research isn't practical for researching a large number of auctions.

To make matters worse, there is huge potential to lose concentration. One of eBay's strengths is that the site is so addictive. You could start your research wondering if the bold option is worth the extra fee, and end several hours later no wiser, but with bids placed on several items that caught your eye. Searching only completed items will remove the temptation to bid, and show final selling prices accurately.

There are a number of software packages available that automate eBay research and analysis - the process of collecting a sample of auction data, and "number crunching" to find patterns and calculate statistics. Typically, analysis programs automatically run many completed item searches, for which you will need your eBay username and password, and store information from the search results in a database. The data can then be analyzed, and reports chosen from a list of standard formats.

Analysis software is well suited for researching a large number of auctions, and the reports are normally clear and well presented. Some packages allow the user to add data incrementally to a single database, so analysis can be performed over a longer period than the 14 days available from a single completed-items search. However, the data collection process can take hours to run (especially with a dial-up Internet connection), and the software tends to be expensive, requiring frequent updates to overcome changes to the eBay Web site. Analysis software is best suited to sellers who take a scientific approach to their business strategy, with great demands for accurate statistics.

The third option is Web-based analysis. This is a relatively new area with few vendors at present, but the typical model is that auction data is collected in advance - either using analysis software or eBay's official data licensing program - and reports are available very quickly online (if not instantly). This alternative has the advantage of speed, but there may be less variety of reports than are available with analysis software, and it could be costly for high-volume users as fees are often based on usage.

Three kinds of lies
The British ex-Prime Minister Benjamin Disraeli said "There are three kinds of lies: lies, damn lies and statistics" (popularized by Mark Twain in the U.S.). This does not mean that statistics are worthless, but that they can be interpreted and manipulated to support very different arguments.

When analyzing auctions, try to keep an open mind rather than trying to validate a preconceived belief. Ask, "how effective is the gallery option?" rather than trying to prove to yourself that it works.

Don't leap to conclusions when interpreting statistics: if auctions that end on a Wednesday are more successful than those ending on other days, is it because more buyers are active that day or is there one talented and high-volume seller who always ends her auctions then?

Above all, do not rely on analysis alone. Every seller is different, and what works for the market as a whole may not work for you. Use statistics as a source of ideas to be applied to a few test auctions. If you find something useful, that's great. If not, move on to something else.

The eBay marketplace is a complex and fascinating system. With a carefully chosen research approach and a good measure of skepticism, you could uncover a few of its secrets, and take some of the guesswork out of selling.

About the author:

Andy Geldman is a freelance e-commerce and IT consultant, and webmaster of the Auction Software Review, a guide to eBay software and services (http://www.auctionsoftwarereview.com). Andy lives in London, England and can be emailed at andy.geldman @ salubritas.com



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