Presentation at the AMS2008 conference, on how customers define value on eBay.

1. The End of MSRP
How Customers Define Value on eBay
Rian Van Der Merwe
Manager, User Experience Research
eBay, Inc.
With research by
Tanaya Suveerachaimontian
Senior User Experience Researcher
eBay, Inc.

2. Agenda – The End of MSRP
• How sellers maximize profit
• How buyers determine value
– Shopping process
– Getting the right price
• The “eBay value” ecosystem

3. Phases of the Selling Experience on eBay
Selling on eBay has many decision points, both on eBay and off-eBay.
Savvy sellers use each of these decision points to maximize profit
Identify Item to
Sell
Find & Research Decide on Specifics
Similar Items for Price, Title, Decide When to List List Item
(Price, Product Description, Photo, Item
Details) ay etc. ay ay
n eB ay eB ne
B
O -eB
f On O
Of
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4. Pricing Decisions are Complex
Sellers must take into account several aspects of “price” when listing an item
on eBay. Ultimately, information found or decisions made in each area help
set the expectations of the seller on how much the item can or should sell for
as well as what their final profit margins will be.
What I originally paid for the item
Current (or past) selling prices Current (or past) retail price
Price
Starting bid price Shipping costs
How much can I sell
Cost of Packaging as well as
the item for? What
actual shipping charges
will my margins be?
“Buy It Now” price Reserve price
eBay fees (initial and final value)
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5. On eBay, sellers rely on each other
Most sellers do research by reviewing other sellers’ listings, primarily to set
price expectations for the item they are trying to sell.
Sellers are most interested in reviewing other listings to see how much items are going
for and how much they should charge for shipping.
– Sellers are using eBay to assess the true market value of an item on eBay before they sell,
using the same finding experience that buyers use to find value as well.
– The problem with inflated shipping becomes self-perpetuating as sellers research what the
“standards” are and follow the same approach.
Most Useful Item Details when Sellers Review
other Listings (Select top 3)
Final bid price Price
Item description
Shipping costs Price
Current bid price Price
Number of bids
Buy It Now price Price
Item pictures (on the item description page)
Item title or subtitle
Number of visits to the listing (hit counter)
Seller's feedback score
Item pictures (on the search results page)
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6. Agenda – The End of MSRP
• How sellers maximize profit
• How buyers determine value
– Shopping process
– Getting the right price
• The “eBay value” ecosystem

7. How do eBay Buyers describe shopping methods?
Most eBay buyers report that price checking (i.e., seeking the best value)
drives their online shopping behavior across the Web.
• Price Checkers
– Most eBay buyers are seeking the best deals they can find, whether that is on eBay or
other sites.
• Product Information Seekers
– Some eBay buyers will go to other sites to look for specific product information or reviews
for the item they are interested in (information which they can’t or don’t want to get on
eBay).
• Loyalists
– Some eBay buyers are grounded in eBay’s vast inventory. These users feel they have been
successful in finding items they want at reasonable prices in the past, so will continue to
shop there primarily.
• Reward Points Shoppers
– Some eBay buyers will start their online shopping through sites that offer reward points in
order to maximize their cost-savings.
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8. Types of Sites eBay Buyers Visit When Shopping
When eBay buyers shopped during a single online session, general shopping
sites were the most frequently visited type of site (much more so than
comparison shopping or manufacturer sites).
General Shopping Sites
Search Engines
Manufacturer Sites
Comparison Shopping Sites
Informational/Review Sites
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9. Illustration of Typical Pathways
During a single shopping session, users are more likely to end on eBay than
they are to start on eBay. This is because they check other sites first to find
items of interest, review product information and check “retail” prices before
seeing if it’s available on eBay and at what price.
Most Frequent Path: End on eBay (Price Checkers) “Where can I find the best deal? What is the retail price vs. the “eBay” price?”
Less Frequent Path: End on eBay (Product Information Seekers) “What are the specs and reviews for this product?”
Shopping Site or Shopping Site or
Search Engine Manufacturer Site Search Engine Manufacturer Site
User does a search for a User browses or searches User goes back to the User browses or searches User browses or searches the
product and clicks directly for an item, checks price, search engine, reviews the for an item, checks price, eBay site, views items and
to a shopping site from the may review product results and clicks on may review product may proceed further
the search results (this step information. another site (again this step information. (watch/bid/BIN).
step is optional as some is optional if user types a
start directly on the new site directly into their
shopping site). address bar).
Less Frequent Path: Start on eBay (Loyalists) “I can usually find what I want on eBay and at a good price, so why should I start anywhere else?”
Shopping Site Shopping Site
(maybe)
User browses or searches the User may go to another site to User may go to another site to After doing the additional
eBay site, views items, compare against the item they compare against the item they research, user may return to
checking to see what is found on eBay. Browses or found on eBay. Browses or eBay to proceed further
available and at what price searches, checks price, may searches, checks price, may (watch/bid/BIN).
points. review product information. review product information.
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10. Importance of Pricing Research in Showcasing Value
Today, eBay is used more frequently for pricing research than for product
research. Regardless of their typical path and whether they start or end on
eBay, price is extremely important for ALL eBay buyers.
• Most eBay buyers say they typically visit eBay when they want to compare
prices, vs. only some who say they visit eBay for product research.
– For product research, users tend to go to manufacturer sites, other retail sites or
product review sites instead.
• Price is by far the largest driver in buyers’ decisions of which site to
purchase from.
– Shipping costs are equally as important as the product price.
• As they are shopping for the “best deals”, some eBay Buyers have an
expectation that prices on eBay are going to be cheaper than what they can
find on other sites.
*Source: Basket of Goods Study Q1 07 10

11. Agenda – The End of MSRP
• How sellers maximize profit
• How buyers determine value
– Shopping process
– Getting the right price
• The “eBay value” ecosystem

12. Buyers & Sellers transact when value is in the right “range”.
Many sellers and buyers compare the true value on eBay against retail values.
Sellers try to sell at the highest prices that they will be content with, while
buyers will look for the best deals, wherever those may be.
$$$$ Buyers may on some occasions pay more than What sellers hope to get
than “retail” for a unique item or collectible
Retail “True Value”
Highest price buyers
are willing to pay on eBay
eBay
sellers
Price
range where
transactions
take place eBay “True Value”
buyers
Lowest price sellers are
willing to part with the item
Item
Price $
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