Very interesting post from Nick Carr re. eBay’s auctions vs. fixed price selling. In a nutshell, Carr, and BusinessWeek, state:

“eBay’s auctions are “a dying breed.” Buyers and sellers are reverting to the traditional retailing model of fixed prices”

BusinessWeek goes on to state:

“Sales at Amazon.com (AMZN), the leader in online sales of fixed-price goods, rose 37% in the first quarter of 2008. At eBay, where auctions make up 58% of the site’s sales, revenue rose 14%.”

Economic theory suggests that auction pricing results in the most efficient prices for a given product. Throw the auction on the Interweb and the price efficiency should benefit from more buyers and sellers and more transparent information. In eBay’s prime, the end of fixed price product sales was predicted more than once. (Readers on the ball may notice the parallels between this and the oss/software market.)

The fact that we’re seeing increased interest in fixed price auctions is a natural result of human nature. We want the best price, but most of us are able to make pricing trade-offs for some other benefits (i.e. the time saved via a fixed price sale).

In certain situations, I’m willing to enter into an auction-based sale. In other situations, I just want to buy the widget and move on. Both forms of selling have their place (again, note the parallels to oss vs. proprietary software). To suggest that one form will (nearly) always win out over the other form ignores human behavior.

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This entry was posted on Friday, June 6th, 2008 at 5:24 pm and is filed under Uncategorized. You can leave a response, or trackback from your own site.

About the Author: Savio Rodrigues is a product manager with IBM's WebSphere Software division. He envisions a day when open source and traditional software live in harmony. This site contains Savio's personal views. IBM does not necessarily agree with the views expressed here.