Good Reading: Wired’s Take on the Decline of Auctions

Auctions have influenced a more dynamic shopping environment, but aren’t very important and have ended up as just a niche shopping format, argues James Surowiecki in the June Wired (article not posted). Even on eBay, they just make up 31 percent of all sales.

It’s a far cry from 10 years ago, when Priceline founder Jay Walker argued that auctions and dynamic pricing would become so omnipresent that price tags were history.

What happened? Surowiecki argues that last-minute “sniping” buys have alienated ordinary shoppers. Also, bargains have become less common as the market matured and people on both sides of the transaction became savvier. Moreover, “the imperialism of search engines” made it so that sellers no longer need an eBay listing to get their products in front of customers.

“The more familiar people became with auctions, the less exciting they seemed,” says Surowiecki. “As the novelty wore off, other factors, like convenience, grew more important. So, too, did things like shopping costs. Once Internet shoppers came to see free or low-cost shipping as their birthright, eBay’s high shipping costs became a serious disadvantage.”

Consumers are the ultimate winner, however, “pricing as a whole has gotten more competitive, which means it’s more efficient. Getting a bargain in an auction is less important, because it’s easier to find bargains at traditional stores,” says Surowiecki. “In other words, most what seemed distinctive about auctions — dynamic pricing, the possibility of bargains, competition — is now common. “

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