The cost of ... online auctions
of trying to convince the cat to honor the no-fly zone you've set
up around that vase of blown-glass flowers? You know -- the one
you never liked anyway?
Well, we suspect you are bonded to the cantankerous
old cat, so may we suggest you unload that fragile bit of frippery
in an online auction?
There's no shortage of places to ditch your unwanted
vase and to buy an indestructible replacement. More than 200 auction
sites have set up shop on the Web, according to Auction
Patrol, a portal for online auctions. Some are specialty exchanges
that deal in only one type of merchandise. Others -- including the
well-known trio eBay,
-- are generalists.
But whether you are buying or selling, how do you
make sure you get the best deal?
The worst deals of all come when you pay for something you never
receive or ship an item just before the buyer's check bounces.
An escrow service can help prevent such mishaps by
acting as a middleman. Escrow.com,
for instance, receives payment from the buyer, waits for the buyer
to notify the company that the merchandise has arrived and then
pays the seller.
The buyer must approve the merchandise or return it
within a set inspection period. If that period ends with no word
from the buyer, Escrow.com automatically pays the seller.
however, advises buyers to refrain from using an escrow service
for purchases of less than $75 because using such a service sets
some sellers' teeth on edge. It makes the transaction more difficult
for them by adding an extra layer.
Amazon.com, Yahoo! and eBay all offer payment services designed
to allow money to glide smoothly between sellers and buyers. And
there is an independent company that can also help.
Yahoo!'s PayDirect system allows buyers and sellers
to set up online accounts to receive money. Buyers can feed their
accounts with draws from credit cards. Then, when they buy items
at auction, the payments are deducted from the account and transferred
to the seller's account. The seller never sees the buyer's credit
card number and can transfer the cash to his own credit card or
checking account. The service is free to all parties.
Amazon.com's Payments takes the form of charges to
your credit card. There is no fee to a buyer who uses the system,
but a seller pays a fee.
eBay owns PayPal
uses the company to handle online payments -- either credit card
or electronic check payments. It is free to send and receive money
using a PayPal personal account but they do charge fees for their
Premier and Business members to receive payments.
PayPal.com actually pays you to use its service if
you are a buyer: $5 for signing up and another $5 for each friend
referred as a buyer.
It may also be worth your while to use an online payment
site to process credit card payments, despite the fees such sites
charge, because bidders tend to spend more when they can charge
a purchase than when they have to surrender cash, says Dennis Prince,
author of AuctionWatch.com's Official
Guide to Online Buying and Selling and a contributor to
If you're shopping, make sure you know the fair value of the item
you are looking for. It just might keep you from paying an arm and
a leg for something worth no more than a toe.
Shop around at online auction sites before placing
any bids in order to get a good idea of the going price for your
item. If you are having trouble finding the fair price of a collectable,
you might be able to find it through Collectorbooks.com.
Prince tells Auction Watch readers to avoid getting
so caught up in the adrenaline rush of competitive bidding that
they pay more than an item is worth.
Set a maximum on the amount you are willing to pay
and stick to it. It's OK to lose -- especially if winning is going
to cost you too much money.
Make sure the shipping terms are fair. If the price
of shipping is not spelled out in the offering, contact the seller
and get the specifics. Be wary of any seller who sounds like he
might be padding shipping costs or setting you up to absorb exorbitant
"handling" costs in order to compensate himself for a low asking
Before you close the deal, consider insuring your
purchase against seller fraud and shipping damage. Some auction
sites offer limited insurance, as do some shippers, and you can
purchase supplemental insurance from third parties, including U-Pic.com
according to Auction Watch.
Don't depend on a seller who claims he self-insures,
Auction Watch warns.
Supplemental insurance comes in handy under two circumstances:
- When coverage limits imposed by auction
sites and shippers are less than the value of the item being shipped
- When you found a steal of a deal. It can be purchased
to cover an appraised value -- even if that is more than the invoice
The insurance you choose is in large part dependent
on your tolerance for risk. After all, a large part of what you
are buying is peace of mind.
Seller be wise
There are a few sites that don't charge seller fees, and they typically
have less traffic on them than the larger, fee-charging sites, Prince
advises. So expect to pay a listing fee before you advertise your
But Prince says a number of other fees can be avoided
including those for title enhancements and special icons that add
eye candy to your ad but seem to do little to draw bidders. Instead,
he advises careful selection of keywords, the search words that
bidders use when they are trying to find specific items.
Yahoo! allows you to improve the placement of your
item on an auction list -- for a fee. So will Amazon.com and eBay.
If you want to make sure you get a minimum amount
for the item you are trying to sell, consider placing a reserve
price on your merchandise. eBay explains it this way: the bidder
knows there is a minimum price but does not know what it is; if
the minimum is not met during the bidding the high bidder does not
acquire the goods. eBay extracts a Reserve Price Auction Fee from
sellers who want to place a floor under the sale price.
Sample pricing information
for online auction sellers
Inclusion in this list is not meant to
endorse any particular auction site, but simply to give consumers
an idea of availability and costs. The prices, culled from
the sites, can change at any time.
||30 cents to $3.30 (depending
on minimum bid, opening value or reserve price)
|Insertion featured on home page:
||$99.95 (one item)
$199.95 (two or more items)*
||50 cents to $1, additional (depending
on amount of reserve price)
||At least 5.25 percent of the
final sale price, depending on the price
|Payments system -- PayPal:
||Free to open an account. Personal
account holders can send and receive money for free -- for U.S.
bank accounts. Premier/Business account holders can send money
for free but are charged a minimum of 2.2 percent plus additional
charges to receive funds.
|Featured in search list:
|| 50 to 75 cents (depending on
starting or reserve price)
||40 to 75 cents additional
||2 percent plus up to 1.5 percent
additional depending on the final price value
|Payments system -- Pay Direct:
|| no fee
||at least 10 cents per day; but
the more you spend, the higher your position on the list
|| 15 percent of the sales
price (10 percent for Electronics and Camera & Photo items)
||Amazon.com processes payment
from the buyer and deposits it in the seller's account.
|Editor's note: Each auction
site uses different terms to describe fees. Yahoo! and Amazon.com
call their fee to list an item Listing fees, while eBay refers
to listing fees as Insertion fees. The fee for the final sale
is called a Final value fee at eBay, and it's referred to as
a Closing fee at Amazon.com.
--Updated: Feb. 18, 2003