Online markets pose a difficulty for evaluating products, particularly experience goods, such as used cars, that cannot be easily described online. This exacerbates product uncertainty, the buyer's ...difficulty in evaluating product characteristics, and predicting how a product will perform in the future. However, the IS literature has focused on seller uncertainty and ignored product uncertainty. To address this void, this study conceptualizes product uncertainty and examines its effects and antecedents in online markets for used cars (eBay Motors). Extending the information asymmetry literature from the seller to the product, we first theorize the nature and dimensions (description and performance) of product uncertainty. Second, we propose product uncertainty to be distinct from, yet shaped by, seller uncertainty. Third, we conjecture product uncertainty to negatively affect price premiums in online markets beyond seller uncertainty. Fourth, based on the information signaling literature, we describe how information signals (diagnostic product descriptions and third-party product assurances) reduce product uncertainty. The structural model is validated by a unique dataset comprised of secondary transaction data from used cars on eBay Motors matched with primary data from 331 buyers who bid on these used cars. The results distinguish between product and seller uncertainty, show that product uncertainty has a stronger effect on price premiums than seller uncertainty, and identify the most influential information signals that reduce product uncertainty. The study's implications for the emerging role of product uncertainty in online markets are discussed.
Consumer return rates have been steadily rising in recent years, resulting in growing costs for retailers who must manage the returns process and the disposition of returned products. This cost ...pressure is driven in part by extremely generous return policies, such as giving consumers a full refund upon return. Interestingly, this common retail practice of full refunds is inconsistent with the recommendations of many analytical models of returns, which nearly always show that a partial refund is optimal. Such inconsistencies between theory and practice might arise when the decision drivers included in the analytical models do not match the decision drivers in practice. It might also be the case that retailers are overly optimistic about the value that consumers assign to a full refund, and thus assume that the value of such a policy outweighs its costs. In this paper, we use data collected from eBay, where identical products are sold with different return policies, to investigate these open questions in the literature. We analyze both the return policy drivers from the retailer's perspective and the return policy value from the consumer's perspective. Our results suggest that the value of a full refund policy to consumers may not be as large as one might expect, and it also exhibits a large heterogeneity across buyers with different levels of online purchase experience. In addition, we provide empirical evidence for what has long been suspected by online retailers – that a non-refundable forward shipping charge quickly erodes any value that consumers assign to return policies. The generality of our results is limited by the fact that eBay differs from traditional retail contexts in many respects, including the fact that eBay buyers may not be representative of the general buyer population. However, our study of how eBay consumers value free returns provides new insights into an understudied area, and it can serve as a starting point for future studies of the value of return policies in other retail contexts.
Immer mehr Menschen benutzen die Verkaufsplattform eBay als „Sprungbrett“ in die Selbstständigkeit. Wie diese „eBay-Selbstständigen“ in ihrer Alltagspraxis mit den Anforderungen von ...Selbstverantwortung und Selbstgestaltung umgehen, ist Thema dieses Artikels. Anhand von empirischen Beispielen werde ich die individuellen Gestaltungsspielräume in der Verhandlung von Arbeit und Leben genauer untersuchen. Die Interpretation orientiert sich dabei an Perspektiven der Arbeitsforschung, die beschreiben, wie das Individuum als sich selbst-regierende Einheit verstanden wird und sich als „unternehmerisches Selbst“ entwerfen muss.
The present study adopts a data mining approach based on support vector machines (SVM) for modeling the number of sales of smartphone devices by eBay sellers. The data-based sensitivity analysis was ...adopted for extracting meaningful knowledge translated into the relevance of each input feature for the model. Such approach allowed unveiling that the number of items the seller also has on auctions, the price and the variety of products the seller offers are the three features that influence most the number of sales, in a total of almost 25%, surpassing the relevance of the features related to customers’ feedback.
Humankind's appreciation for butterflies spans cultures and millennia, including the practice of assembling butterfly collections. We monitored the global e-commerce platform eBay.com for one year ...and obtained 50,555 time-stamped transactions of 3767 species (739 genera) of butterflies. This is nearly 20% of all butterfly species on Earth. A total of 552 sellers were based in 44 countries across five continents. At least 96% of the traded species required transportation of the specimen from its country of origin to its seller, usually from the Global South to the United States and Europe. To our knowledge, this is the most spatially and temporally detailed record of trans-boundary wildlife movement of any taxonomic group. We quantified the aesthetics of butterflies deemed desirable (e.g., size, shape, and color) and showed that while endangered species command higher prices, a butterfly's aesthetic ranking, not its range, abundance, nor phylogenetic status, best predicts its trade volume. These results emphasize the complicated interplay between wildlife market economics and human aesthetic appreciation.
The two leading online consumer-to-consumer platforms use very different revenue models: eBay.com in the United States uses a brokerage model in which sellers pay eBay on a transaction basis, whereas ...Taobao.com in China uses an advertising model in which sellers can use the basic platform service for free and pay Taobao for advertising services to increase their exposure. This paper studies how the chosen revenue model affects the revenue of a platform, buyers’ payoffs, sellers’ payoffs, and social welfare. We find that when little space can be dedicated to advertising under the advertising model, the brokerage model generates more revenue for the platform than the advertising model. When a significant proportion of space is dedicated to advertising under the advertising model, matching probability on a platform plays a critical role in determining which revenue model can generate more revenue: If the matching probability is high, the brokerage model generates more revenue; otherwise, the advertising model generates more revenue. Buyers are always better off under the advertising model because of larger participation by the sellers in the platform’s free service. Sellers are better off under the advertising model in most scenarios. The only exception is when the matching probability is low and the platform dedicates considerable space to advertising. Under these conditions, the sellers with payoffs similar to the marginal advertiser who is indifferent about advertising can be worse off under the advertising model. Finally, the advertising model generates more social welfare than the brokerage model.
Reciprocity in feedback giving distorts the production and content of reputation information in a market, hampering trust and trade efficiency. Guided by feedback patterns observed on eBay and other ...platforms, we run laboratory experiments to investigate how reciprocity can be managed by changes in the way feedback information flows through the system, leading to more accurate reputation information, more trust, and more efficient trade. We discuss the implications for theory building and for managing the redesign of market trust systems.
This paper was accepted by Teck Ho, decision analysis.
Buyers in online markets pay higher prices to sellers who promise a high-quality product in auctions of used goods, even though they cannot assess quality until after the sale. The principal argument ...offered in prior work is that reputation systems render sellers’ ‘cheap talk’ credible by allowing buyers to publicly rate sellers’ past honesty and sellers to build a reputation for being honest. We test this argument using both observational data from online auctions on eBay and an internet experiment. Strikingly, in both studies we find that unverifiable promises are trusted by buyers regardless of seller reputation or the presence of a reputation system, and sellers mostly refuse to take advantage. We conclude that the prevailing conception of markets in economic sociology as made possible by opportunism-curtailing institutions is “undersocialized”: Reputation systems may be used to identify more reliable providers of a product, but that they would be needed to prevent otherwise rampant deceit relies on a cynical assumption about human behavior that is empirically untenable.
eBay’s proxy bidding: A license to shill Engelberg, Joseph; Williams, Jared
Journal of economic behavior & organization,
10/2009, Volume:
72, Issue:
1
Journal Article
Peer reviewed
Open access
We introduce a bidding strategy which allows the seller to extract the full surplus of the high bidder in eBay auctions. We call this a “Discover-and-Stop” bidding strategy and estimate that 1.39 ...percent of all bids in eBay auctions are placed by sellers (or accomplices) who execute this strategy. We argue that this kind of shill bidding is unnecessarily effective due to eBay’s proxy system and the predictability of other bidders’ bids. We also model eBay auctions with shill bidding and find that, in equilibrium, eBay’s profits are higher with shilling than without it. Finally, to determine whether bidders have an incentive to bid on their own items, we mimic the bidding behavior of shill bidders in actual eBay auctions and find some evidence of the strategy’s success.
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