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Comments on: The Best Offer http://www.oshane.com/2010/01/the-best-offer/ Continuously opining, intermittently publishing. Thu, 19 Aug 2021 23:20:11 +0000 hourly 1 https://wordpress.org/?v=4.5.24 By: Alan http://www.oshane.com/2010/01/the-best-offer/comment-page-1/#comment-340 Sun, 21 Mar 2010 17:16:57 +0000 http://www.oshane.com/wp/?p=199#comment-340 I agree with you completely. As a buyer, I simply don’t use Best Offer because I can’t specify the expiry time of an offer I make, and I’m sure that if I were a seller then I would be equally put off by not being able to specify the expiry time of any counteroffers.

It may be able to hack it by adding an extra term in with your offer, which states something along the lines that notwithstanding any time limits specified by eBay, your offer must be accepted by some time that you specify, and if accepted after this time then the sale is cancelled and the accepter is responsible for any eBay fees that may still be charged. At least, I *assume* that that would work, but it’s certainly messy.

By: oshane http://www.oshane.com/2010/01/the-best-offer/comment-page-1/#comment-326 Mon, 08 Mar 2010 06:47:08 +0000 http://www.oshane.com/wp/?p=199#comment-326 Adam – I am somewhat imprecisely conflating the efficiency of the market (100% efficient = no profit, as you so aptly put it) with the efficiency of the offer/counteroffer/acceptance process. I think what is disturbing is that eBay weighs this so heavily in favor of buyers. A buyer without the system cannot request a more favorable price, but with the system can preclude all other buyers by offering a price that is too low, but not low enough to cause the Seller to intuit that he isn’t serious.

If seller offers an item for $100 when its reasonable hypothetical value lies somewhere between $80 and $120, a buyer could offer $1. Seller will likely reject such an offer as a waste of his time.

Let’s say, however, Buyer offers N, where N is substantially but not absurdly lower than $100, e.g., $60. May the Seller take it in certain circumstances. Sure. Buyer runs the risk of Seller rejecting the offer, but if he can offer a price low enough, he can keep the product out of the hands of others (except, per eBay’s system, those who would purchase at full listed price) who might offer a more favorable price.

Assuming Buyer only means to buy one of the type of item Seller is selling, then I’m not sure that a shorter offer/acceptance time-frame will make it so much less efficient. Buyer runs the risk, upon offer, of having the offer accepted while he is scouring eBay for better prices, because, by definition, the offer is binding for 48 hours as well.

I’m not advocating for eBay to allow 1-minute offers – email notification is not instantaneous, but 30-minute offers might be worthwhile. In any case, I think the appropriate method is for eBay to allow the users to set their offer expiration times themselves, perhaps in certain increments. It allows buyers and sellers to reasonably decide how much temporal friction is worth. Maybe I’m willing to pay 15% more than I would have offered if the offer will be accepted in two hours. Otherwise, I foresee having to wait up to 46 more hours to find out whether Seller will accept or deny before I can move on to another more favorable Seller. Vice versa. That is, users are more apt to correctly gauge the worth of their own time with respect to the meta-transaction if they are given a choice.

I suspect, actually, that eBay does this to hinder off-line transactions while the user’s offer or counteroffer is valid. If Buyer only wants one item, eBay is betting on the fact that Seller, given a longer time frame, will have a more likely chance of saying yes to the transactions, thereby generating fees for eBay. Vice versa.

If Buyer offers $X for Y hours, which Seller misses altogether, there was actually no efficiency or time valuation problem for Seller at all, because he was unaware of the offer to begin with. But it does release buyer from his second-order obligation to eBay so that he can go elsewhere, including not-eBay to effect his transaction.

In fact, the more I think about it, the more I am sure that eBay does this to keep a higher likelihood of profits for itself. The irony is that with a freer system, I’m also convinced Buyers and Sellers would act in ways more beneficial to themselves, effect a higher number of transactions overall and lead to greater profits for eBay.

By: Adam http://www.oshane.com/2010/01/the-best-offer/comment-page-1/#comment-325 Sun, 07 Mar 2010 23:20:01 +0000 http://www.oshane.com/wp/?p=199#comment-325 Profits in the marketplace are derived not from absolute efficiency (no profits) but from being the more efficient than the alternatives, including quality of good delivered.

Marketplace rules, such as a 48 hour term, create well understood marketplace environment that meets the needs of most participants. The ability to make and then rescind a counteroffer before the 48 hour limit, may be very inefficient to another participant who has alternative buyers/sellers to consider and only allocates a small time slot in each 48 hour period to negotiate with you on this particular sale.

By extending a counteroffer (rather than accepting the buyers offer) you have increased the transaction cost for you and the buyer. In fact, if you now withdraw the counteroffer, you remove the opportunity for the buyer to even transact at that price and capture any value surplus which may compensate for the time spent negotiating, essentially transferring the cost of negotiations with you to an alternative purchase the buyer would now have to pursue anew.

If the burden of this time-limit as a component of transaction cost should in the future prompt you to suspend negotiations and accept the buyer’s offer, because you assess the cost of a 48 hour wait unacceptable.

On the other side, the fact is, because of the rule an optimal buyer knows he does not even need to evaluate your counteroffer for 47.999 hours and he can seek a better offer with a shorter time limit from other suppliers. That delivers significant negotiation value to the buyer and is implicit in your offer. When Ebay constrains the form of the offer it creates standard terms which for smaller purchase values create more efficiency because the time invested in negotiation quickly becomes the largest cost. Alternatively time limits are valuable when engaging in multiple simultaneous negotiations as it creates a time window to seek the best price from alternate suppliers.

While it may be efficient to you to place and rescind offers within 48 hours, it does create a significant transaction cost burden on other participants to monitor negotiations more frequently than perhaps is efficient for them.

By: Roland http://www.oshane.com/2010/01/the-best-offer/comment-page-1/#comment-319 Sun, 28 Feb 2010 18:38:36 +0000 http://www.oshane.com/wp/?p=199#comment-319 I’m quite confident of your ability to think and once again I see that you write well. I love the “what if” and of course the depth of your analysis. The solution is simple–competition. Is eBay the only thing going? Perhaps there is an opportunity for candeebar.com! 🙂

By: Internet Banking http://www.oshane.com/2010/01/the-best-offer/comment-page-1/#comment-297 Thu, 04 Feb 2010 08:16:27 +0000 http://www.oshane.com/wp/?p=199#comment-297 That was a different thought track. I like your quality that you put into your post . Please do move forward with more like this.

By: Thee.MB http://www.oshane.com/2010/01/the-best-offer/comment-page-1/#comment-294 Thu, 28 Jan 2010 19:52:23 +0000 http://www.oshane.com/wp/?p=199#comment-294 This should go under “Why Make It?”