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How Do eBay Bids Work? A Quick Guide for Sellers

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Ever since its founding in 1995, eBay has practically been synonymous with buying and selling online.

Due to its business model allowing users to list new and used items with low fees, eBay is still going strong after all these years. That’s not to mention its safety and reliability, as well as its ease of use.

Apart from regular fixed-price purchases, eBay auctions are another popular way to buy items on the platform. Many buyers are attracted to the opportunity to buy items at a bargain price.

Conversely, sellers see an opportunity to gain more money out of an item than they could otherwise.

Check out our guide on how eBay bids work so you can get the most out of your auction sales!

How Do eBay Bids Work?

eBay auctions follow a model called proxy bidding, a variation of the Vickrey auction.

As in the Vickrey model, the highest bidder wins but pays the second-highest bid in addition to a small, predefined bid increment.

The difference is that the bids aren’t sealed; the current highest bid is always displayed. Such a system lends itself to bidding wars.

The activity tends to peak during the last 15 minutes of the auction, which may span over 1, 3, 5, 7, or 10 days. This is why many bidders use the automatic bidding system, which lets them enter the maximum bid they’re willing to pay and keeps automatically raising the current bid until it reaches the maximum amount, so it remains the highest.

For eBay sellers, this gives an opportunity to earn incredibly high sums from bidders willing to raise their bids for the bidding war.

Why and When to Choose an eBay Auction?

When selling an item on eBay, sellers are faced with the dilemma of creating an auction-style listing or selling it as a fixed-price item.

Generally, it’s better to opt for an auction when:

  • The item is in high demand. If the item is something many buyers are interested in, especially if it’s in short supply, you’re highly likely to create a bidding frenzy and sell it at a high price.
  • You want to sell an item quickly. Items listed for an auction tend to be sold much faster than fixed-price items. Auctions run for 10 days or under, and buyers are more likely to try and snag an item that is nearing the end of its purchase deadline.
  • You aren’t selling in bulk. When selling at a fixed price, you can take advantage of eBay’s bulk-selling features and use a single listing for multiple copies of the same item. When auctioning them, you need to create individual listings for every single item, which is unwieldy and impractical.
  • You aren’t interested in soliciting offers. eBay sellers can enable a feature called Best Offer on auctions as well as Buy It Now listings. It lets potential buyers offer a price they’re willing to pay for an immediate purchase, and the seller can accept or reject an offer. However, with auctions, this feature is available only before someone makes the first bid.

How to Set Up an Auction Listing in 5 Easy Steps

To set up an auction on eBay, you should follow the steps outlined here:

Step 1: Set Up an eBay Account

If you don’t already have an eBay account, you should register either a personal or a business account.

To do so, click “register” on the upper left side of the site window and fill out the necessary forms. You will be prompted to enter your name, email, and password.

how do eBay bids work: create an account

After filling out the registration form, you should fill out your account details, including your personal and shipping address, contact number, and payment details.

Go to your account settings and fill out your profile so it includes your relevant personal and payment information.

To set up a selling account, you will have to connect your eBay profile with your debit or credit card, as well as the bank or Payoneer account that your money will be deposited in.

To finish the sync, you will have to go through a verification process after linking the accounts.

Step 2: Start the Listing Process

After you’ve successfully set up your eBay account, it’s time to list your first item.

Click on “Sell” in the site’s header, followed by “List an item.” You will be taken to a window prompt asking you to enter a keyword to help you potentially find a match for the product you wish to sell.

After entering your keywords, eBay will automatically recommend the product category your item should be placed in. Depending on the product category, you’ll be prompted to provide several extra details about the item.

If your item is a close match to an already listed item, eBay will scour its database to find a match and help fill the listing. This may also help you gauge the price you should be aiming for.

You will be taken to a window where you can complete your listing by adding a final title, description, item photos, and full specifics.

Step 3: Choose the Auction Format

In the same window, you can pick between Auction and Buy It Now formats under the Pricing subheader.

Choose “Auction” and fill out all the other details such as the auction duration, starting bid, the Buy It Now value, a reserve price (the minimum amount you’re willing to accept for the product), and whether you allow potential buyers to offer deals.

You can also schedule a bid to start at a certain date and time rather than starting it immediately.

Step 4: Set Shipping Options

The last step before listing your item is to set its shipping options. This details the shipping method, packaging, and service.

Step 5: List the Item and Wait for the Auction to Finish

Now you can finally list the item and wait for the bidding process to unfold.

The first 250 listings every month are free, but if you happen to go over the limit, you may have to pay a listing fee.

If you’ve picked the appropriate options during the previous process, the auction may end early if someone pays a fixed Buy It Now sum or makes you a private offer that you’re willing to accept.

After the bidding deadline is finished, the winning bidder will pay you the second-highest bid made during the auction. Depending on the product category, a set final value fee will be deducted from your payment, while the rest will be sent to your cash account.

5 Tips for Getting the Most Out of Your eBay Auction Sales

To increase the number of potential buyers, it’s a clever idea to consider the following tips:

  1. Make an SEO-friendly title and description. SEO-friendly titles and descriptions go a long way in making your offer more visible in eBay’s search as well as Google and other search engines.
  2. Don’t neglect product photos. A product photo determines the first impression prospective buyers get of the product. To make a good impression, high-quality photos taken from a nice, well-lit angle are essential.
  3. Take advantage of reselling. eBay has a thriving community of collectors and other people looking for rare, vintage items that you would hardly find buyers for elsewhere. This presents a great opportunity to start reselling on eBay.
  4. Offer free shipping. Free shipping is immensely appreciated by buyers, who see it as a sign of trustworthiness and forthcomingness. Shipping costs may be an issue with large, heavy, and fragile items, though, so make sure that it doesn’t cut into your profits too much.
  5. Offer a generous return policy. According to eBay’s data, a 30-day free return policy increases your sales conversion by 15%, while a 60-day free return policy increases it by 25%!

Frequently Asked Questions

What Is eBay Bid Sniping?

Bid sniping is a tactic popular with online auctions. When sniping, bidders try to outbid the highest bidder only a few seconds before the auction times out, often with the help of dedicated software. While eBay allows sniping software, it’s likely to be outbid by eBay’s automatic bidding system.

Do You Have to Buy if You Win a Bid on eBay?

An eBay bid is a binding contract, signaling buyers’ intention to pay if they win the auction. Breaking this contract is considered a violation of eBay’s abusive buyer policy and may result in restrictions and bans.

Wrapping Up

eBay bidding is an excellent way to earn money for online vendors. Many have been able to kickstart entire businesses on eBay by selling auction items to eBay bidders and earning a reputation as a reliable vendor.

We hope that this article helped you understand the eBay bidding process and inspired you to try setting up an eBay auction by yourself. If you found the article useful, please consider sharing it.

If you have any further tips on how to make a successful eBay auction, please share them in the comments below!

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